<PAGE> 1
As filed with the Securities and Exchange Commission on February 24, 1998
1933 Act. Reg. No. 2-87377
1940 Act Reg. No. 811-3886
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ---
----- ---
Post-Effective Amendment No. 34 X
----- ---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 35 X
----- ---
AIM ADVISOR FUNDS, INC. (formerly, INVESCO Advisor Funds, Inc.)
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, Texas 77046
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, Texas 77046
(Name and Address of Agent for Service)
-------------------
Copies to:
Ofelia M. Mayo, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
-------------------
Approximate Date of Proposed Public Offering: As soon as practicable after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (a)
- ---
X on March 3, 1998, pursuant to paragraph (b)
- ---
60 days after filing pursuant to paragraph (a)(1)
- ---
on (date), pursuant to paragraph (a)(1)
- ---
75 days after filing pursuant to paragraph (a)(2)
- ---
on (date) pursuant to paragraph (a)(2) of rule 485.
- ---
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
- --- previously filed post-effective amendment.
Title of Securities Being Registered: Common Stock
<PAGE> 2
AIM ADVISOR FUNDS, INC.
CROSS REFERENCE SHEET
REQUIRED BY RULE 495
UNDER THE SECURITIES ACT OF 1933
The enclosed Prospectus, Statement of Additional Information, and Part C
relate to AIM Advisor Funds, Inc. (the "Registrant"), an investment company
currently consisting of five separate series (the "Funds").
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
N-1A Item Number Prospectus Location
---------------- -------------------
<S> <C> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Cover Page; Summary; About the Funds;
Investment Programs; Investment
Restrictions; Additional Risk Factors and
Policies Relevant to the Funds
Item 5. Management of the Fund Summary; Management; General Information
Item 5A. Management's Discussion of [included in annual reports]
Fund Performance
Item 6. Capital Stock and Other Capitalization; Dividends, Distributions and
Securities Tax Matters; Miscellaneous; General
Information; Summary; Management
Item 7. Purchase of Securities Summary; Management; How to Purchase
Being Offered Shares; Terms and Conditions of Purchase
of the AIM Funds; Determination of Net
Asset Value; Reductions in Initial Sales
Charges; Special Plans; Sales Charges and
Dealer Concessions
Item 8. Redemption or Repurchase How to Redeem Shares; Special Plans; Sales Charges and
Dealer Concessions
Item 9 Pending Legal Proceedings Not applicable
</TABLE>
<PAGE> 3
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Statement of Additional
N-1A Item Number Information and Location
---------------- ------------------------
<S> <C> <C>
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Introduction; General Information About
History the Company
Item 13. Investment Objectives and Investment Objectives and Policies;
Policies Portfolio Securities Loans; Investment
Restrictions; Brokerage and Portfolio
Transactions
Item 14. Management of the Fund Management of the Company
Item 15. Control Persons and Principal Miscellaneous - Principal Shareholders
Holders of Securities
Item 16 Investment Advisory and The Advisory and Sub-Advisory
Other Services Agreements; Operating Services
Agreement; The Distributor; Distribution
of Shares; Miscellaneous - The Custodian;
Miscellaneous - Independent Accountants
Item 17. Brokerage Allocation and Brokerage and Portfolio
Other Practices Transactions
Item 18. Capital Stock and Other General Information About the Company
Securities
Item 19. Purchase, Redemption and Prospectus - How to Purchase Shares;
Pricing of Securities Being Prospectus - How to Redeem Shares;
Offered Prospectus - Determination of Net Asset
Value; Prospectus - Reductions in Initial
Sales Charges; Distribution of Shares;
Miscellaneous - Computation of Net Asset
Value; Redemptions
Item 20. Tax Status Distributions and Tax Information
Item 21. Underwriters The Distributor
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE> 4
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 5
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MARCH 3, 1998
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK--
AIM ADVISOR FLEX FUND
AIM ADVISOR INTERNATIONAL VALUE FUND
AIM ADVISOR LARGE CAP VALUE FUND
AIM ADVISOR MULTIFLEX FUND
AIM ADVISOR REAL ESTATE FUND
(SERIES PORTFOLIOS OF AIM ADVISOR FUNDS, INC.)
P
PROSPECTUS
MARCH 3, 1998
This Prospectus contains information about the five mutual funds listed above
(the "Funds") which are separate series portfolios of AIM Advisor Funds, Inc.
(the "Company"), a Maryland corporation. Each Fund's investment objective is to
achieve a high total return on investment through capital appreciation and
current income, without regard to federal income tax considerations. Each of the
Funds has separate investment policies.
This Prospectus sets forth basic information about the Funds that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated March 3, 1998,
has been filed with the United States Securities and Exchange Commission ("SEC")
and is incorporated herein by reference. The Statement of Additional Information
is available without charge upon written request to the Company at P.O. Box
4739, Houston, Texas 77210-4739 or by calling (800) 347-4246. The SEC maintains
a Web site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Company. Additional information about the Funds may also be obtained on the
Web at http://www.aimfunds.com.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 6
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY.................................. 2
THE FUNDS................................ 5
Table of Fees and Expenses............. 5
Financial Highlights................... 7
About the Funds........................ 12
Investment Programs.................... 12
Additional Risk Factors and Policies
Relevant to the Funds............... 16
Investment Restrictions................ 20
Management............................. 21
Capitalization......................... 25
Shareholder Reports.................... 26
Performance Information................ 26
Miscellaneous.......................... 27
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--..........
Introduction to The AIM Family of
Funds............................... A-1
How to Purchase Shares................. A-1
Terms and Conditions of Purchase of the
AIM Funds........................... A-2
Special Plans.......................... A-9
Exchange Privilege..................... A-11
How to Redeem Shares................... A-13
Determination of Net Asset Value....... A-17
Dividends, Distributions and Tax
Matters............................. A-18
General Information.................... A-20
APPLICATION INSTRUCTIONS................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS. AIM Advisor Funds, Inc., is a Maryland corporation organized as an
open-end, diversified management investment company. Currently the Company
offers Class A, Class B and Class C shares of AIM ADVISOR FLEX FUND ("Flex
Fund"), AIM ADVISOR INTERNATIONAL VALUE FUND ("International Value Fund"), AIM
ADVISOR LARGE CAP VALUE FUND ("Large Cap Value Fund"), AIM ADVISOR MULTIFLEX
FUND ("MultiFlex Fund") and AIM ADVISOR REAL ESTATE FUND ("Real Estate Fund"),
(collectively, the "Funds"). This Prospectus relates to all of such Funds.
INVESTMENT OBJECTIVES. The investment objective of each Fund is to achieve a
high total return on investment through capital appreciation and current income,
without regard to federal income tax considerations. Each of the Funds has
separate investment policies. See "Investment Programs."
MANAGEMENT. A I M Advisors, Inc. ("AIM" or "Advisor") serves as each Fund's
investment advisor pursuant to the Investment Advisory Agreement (the "Advisory
Agreement").
AIM, together with its subsidiaries, manages or advises over 50 investment
company portfolios encompassing a broad range of investment objectives. Under
the terms of the Advisory Agreement, AIM supervises all aspects of each Fund's
operations and provides investment advisory services to each Fund. As
compensation for these services AIM receives a fee based on each Fund's average
daily net assets. Under an Operating Services Agreement, AIM is reimbursed by
each Fund for its costs of performing, or arranging for the performance of,
certain accounting, shareholder servicing, legal (except litigation), dividend
disbursing, transfer agent, registrar, custodial, shareholder reporting,
recordkeeping, and other administrative services for the Funds.
INVESCO Capital Management, Inc. ("ICM"), a Delaware corporation and the
sub-advisor for the LARGE CAP VALUE FUND and the FLEX FUND, acts as investment
adviser to other investment companies and furnishes investment counseling
services to private and institutional clients.
INVESCO Management & Research, Inc. ("IMR"), a Massachusetts corporation and
the sub-advisor for the MULTIFLEX FUND, acts as investment adviser to other
investment companies and manages primarily pension and endowment accounts.
INVESCO Realty Advisors, Inc. ("IRAI"), a Texas corporation and the
sub-advisor for the REAL ESTATE FUND, acts as investment adviser to corporate
plans and public pension funds as well as endowment and foundation accounts.
INVESCO Global Asset Management Limited ("IGAM"), a Bermuda corporation and
the sub-advisor for INTERNATIONAL VALUE FUND, acts as global investment advisor
to AMVESCAP PLC affiliated companies. See "Management."
MULTIPLE DISTRIBUTION SYSTEM. Each of the Funds offers three classes of
shares, Class A, Class B and Class C. The three classes have the following
features:
Class A Shares -- Class A shares are sold with an initial sales charge
of up to 5.50% of the offering price for all Funds (4.75% for the REAL
ESTATE FUND) and are subject to an ongoing service fee of 0.25% and an
ongoing distribution fee of 0.10% calculated at an annual rate on the
average daily net assets of the Fund's Class A shares. The initial sales
charge may be waived or reduced in certain circumstances. Shares purchased
pursuant to waiver of the initial sales charge are subject to a contingent
deferred sales charge ("CDSC") of 1.00% if redeemed prior to the shares
being invested in Class A shares of a Fund class subject to a 12b-1 fee
("12b-1 Fund") for a minimum of 18 months. See "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to an ongoing service fee of 0.25%
and an ongoing distribution fee of 0.75% calculated at an annual rate on
the average daily net assets of the Fund's Class B shares. Class B shares
are subject to a maximum CDSC of 5.00% on certain redemptions made within
six years of
2
<PAGE> 7
the date on which a purchase was made. Class B shares automatically convert
to Class A shares of the Fund eight years following the end of the calendar
month in which a purchase was made. Class B shares are subject to higher
expenses than Class A shares.
Class C Shares -- Class C shares do not incur an initial sales charge
when purchased but are subject to a CDSC of 1.00% if redeemed prior to
being invested in Class C shares of a 12b-1 Fund for a minimum of 12 full
months after purchase and are subject to an ongoing service fee of 0.25%
and an ongoing distribution fee calculated at an annual rate of 0.75% of
the average daily net assets of Class C shares of the Fund.
Certain minimum purchase requirements apply. The Funds reserve the right to
reduce or waive the minimum purchase requirements in certain cases. See "How to
Purchase Shares."
SUITABILITY FOR INVESTORS. The multiple class structure permits an investor to
choose the method of purchasing shares that is most beneficial given the amount
of the purchase, the length of time the shares are expected to be held, whether
dividends will be paid in cash or reinvested in additional shares of a Fund and
other circumstances. Investors should consider whether, during the anticipated
life of their investment in a Fund, the accumulated distribution fees and any
applicable CDSC on Class B shares prior to conversion or on Class C shares would
be less than the initial sales charge and accumulated distribution fees on Class
A shares purchased at the same time, and to what extent such differential would
be offset by the higher return on Class A shares. To assist investors in making
this determination, the table under the caption "Table of Fees and Expenses"
sets forth examples of the charges applicable to each class of shares. Class A
shares will normally be more beneficial than Class B and Class C shares to the
investor who qualifies for reduced initial sales charges, as described below.
A I M DISTRIBUTORS, INC. ("AIM Distributors") intends to reject any order for
purchase of more than $250,000 for Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. See "How
to Purchase Shares" and "Special Plans." The distributor of the Funds' shares is
AIM Distributors, P.O. Box 4739, Houston, Texas 77210-4739.
EXCHANGE PRIVILEGE. The Funds are among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Funds may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set
forth herein. See "Exchange Privilege -- Terms and Conditions of Exchanges" in
the Investor's Guide to this Prospectus.
REDEEMING SHARES. Shareholders can redeem their shares in a Fund any day the
New York Stock Exchange is open, either directly through the Fund's transfer
agent or through the shareholder's securities dealer of record. A Fund will only
redeem shares for which it has received payment. See "How to Redeem Shares."
Class A Shares -- Only shares purchased pursuant to a waiver of the
initial sales charge are subject to a CDSC of 1.00% if redeemed prior to
the shares being invested in the Class A shares of a 12b-1 Fund for a
minimum of 18 months. See "How to Redeem Shares -- Contingent Deferred
Sales Charge Program for Large Purchases."
Class B Shares -- Holders of Class B shares may redeem all or a
portion of their shares at net asset value on any business day, less a CDSC
for redemptions made within six years following the date at which a
purchase was made. Class B shares redeemed after six years following the
date of purchase will not be subject to any CDSC. See "How to Redeem
Shares -- Multiple Distribution System." Class B shares automatically
convert to Class A shares of a Fund eight years following the end of the
calendar month in which a purchase was made. Class B shares are subject to
higher expenses than Class A shares.
Class C Shares -- A CDSC of 1.00% is applicable to shares redeemed
prior to the shares purchased being invested in the Class C shares of a
12b-1 Fund for a minimum of 12 full months after purchase. There is no CDSC
applicable to redemptions of additional purchases of shares in any of the
Funds by shareholders of record on April 30, 1995. Shareholders whose
broker/dealers maintain a single omnibus account with A I M Fund Services,
Inc. (the "Transfer Agent") on behalf of those shareholders, perform
sub-accounting functions with respect to those shareholders, and are unable
to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to
a CDSC on all purchases made after March 1, 1996. Class C shares are
subject to higher expenses than Class A shares.
The CDSC is assessed on an amount equal to the lesser of the original purchase
price or the redemption price of the shares redeemed. The amount paid upon
redemption will be the net asset value per share next determined after the
redemption request is received in proper form, less the amount of any applicable
CDSC. See "How to Redeem Shares."
DISTRIBUTIONS. It is the intention of each Fund to distribute to shareholders
of each Fund net investment income and net realized capital gains, if any. The
per share dividends and distributions on each class of shares of a Fund will be
reduced by expenses allocated to and borne by the class, including service and
distribution fees applicable to that class. It is intended that the LARGE CAP
VALUE FUND, FLEX FUND, MULTIFLEX FUND and REAL ESTATE FUND will make periodic
distributions of net investment income (including any net short-term capital
gains) quarterly, and will make an annual distribution of any net realized
long-term capital gain annually. It is intended that the INTERNATIONAL VALUE
FUND will make semiannual distributions of net investment income and an annual
distribution of any net realized long-term capital gain annually. All such
distributions will be reinvested automatically in additional shares (or
fractions thereof) of each applicable Fund pursuant to such Fund's Automatic
Dividend Investment Plan unless a shareholder has
3
<PAGE> 8
elected not to participate in this plan or has elected to terminate his
participation in the plan and to receive his distributions in excess of ten
dollars in cash. See "Dividends, Distributions and Tax Matters" and "Special
Plans -- Automatic Dividend Investment Plan."
RISK FACTORS AND POLICIES. Certain of the Funds may engage in investment
techniques that involve risks described more fully under "Additional Risk
Factors and Policies Relevant to the Funds." For instance, all of the Funds, may
invest in securities of foreign issuers, which may be subject to additional risk
factors, including foreign currency and political risks, not applicable to
securities of U.S. issuers. The INTERNATIONAL VALUE FUND will invest primarily
in foreign securities. The MULTIFLEX FUND may invest in securities rated lower
than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's, a division of McGraw-Hill Companies, Inc. ("S&P") but rated at least Ba
by Moody's or BB by S&P at the time of purchase. Such securities carry a high
degree of credit risk and are considered speculative by the major rating
agencies. Each Fund may purchase or sell options on futures, write purchase and
sell puts and calls and enter into swap agreements. Each of these techniques
involves risk, as discussed more fully in the description of the techniques
under "Additional Risk Factors and Policies Relevant to the Funds."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
4
<PAGE> 9
THE FUNDS
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Funds understand
the various costs that an investor will bear, both directly and indirectly.
Except where noted, the fees and expenses set forth in the table are based on
the expenses of the Funds for the most recent fiscal year. The fees and expenses
for Class B shares set forth in the table are based on the estimated expenses
for the current fiscal year. The rules of the SEC require that the maximum sales
charge be reflected in the table even though certain investors may qualify for
reduced sales charges. See "How to Purchase Shares."
<TABLE>
<CAPTION>
AIM ADVISOR
AIM ADVISOR INTERNATIONAL AIM ADVISOR
FLEX FUND VALUE FUND LARGE CAP VALUE FUND
---------------------- ---------------------- ----------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C A B C
----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on
purchase of shares (as a %
of the offering
price)...................... 5.50% None None 5.50% None None 5.50% None None
Maximum sales load on
reinvested dividends........ None None None None None None None None None
Deferred sales load (as a % of
original purchase price or
redemption proceeds,
whichever is lower)......... None* 5.00% 1.00% None* 5.00% 1.00% None* 5.00% 1.00%
Redemption fees................ None None None None None None None None None
Exchange fee................... None None None None None None None None None
Annual Fund Operating Expenses
(as a % of average net assets)
Management fees................ 0.75% 0.75% 0.75% 1.00% 1.00% 1.00% 0.75% 0.75% 0.75%
Rule 12b-1 distribution plan
payments.................... 0.25%(2) 1.00% 1.00% 0.25%(2) 1.00% 1.00% 0.25%(2) 1.00% 1.00%
All other expenses(1).......... 0.45% 0.45% 0.45% 0.46% 0.46% 0.46% 0.46% 0.46% 0.46%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses............. 1.45% 2.20% 2.20% 1.71% 2.46% 2.46% 1.46% 2.21% 2.21%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR
MULTIFLEX FUND REAL ESTATE FUND
---------------------- ----------------------
CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as
a % of the offering price)....................... 5.50% None None 4.75% None None
Maximum sales load on reinvested dividends.......... None None None None None None
Deferred sales load (as a % of original purchase
price or redemption proceeds, whichever is
lower)........................................... None* 5.00% 1.00% None* 5.00% 1.00%
Redemption fees..................................... None None None None None None
Exchange fee........................................ None None None None None None
Annual Fund Operating Expenses (as a % of average net
assets)
Management fees..................................... 1.00% 1.00% 1.00% 0.90% 0.90% 0.90%
Rule 12b-1 distribution plan payments............... 0.25%(2) 1.00% 1.00% 0.25%(2) 1.00% 1.00%
All other expenses(1)............................... 0.42% 0.42% 0.42% 0.45% 0.45% 0.45%
---- ---- ---- ---- ---- ----
Total fund operating expenses............... 1.67% 2.42% 2.42% 1.60% 2.35% 2.35%
==== ==== ==== ==== ==== ====
</TABLE>
- ------------------------
(1) AIM has voluntarily agreed to limit the Total Operating Expenses of the
Funds to assure that Fund expenses do not exceed the maximum amounts as
designated herein (See "Management"), subject to exceptions for brokerage
commissions, interest, taxes, litigation, directors fees and expenses and
other extraordinary expenses. The expense ceilings include reductions at
larger asset sizes to reflect anticipated economies of scale as the Funds
grow in size. Had expenses not been limited, All other expenses would have
been 0.46% for all classes of the AIM ADVISOR FLEX FUND and 0.46% for all
classes of the AIM ADVISOR MULTIFLEX FUND. See "Management."
(2) AIM Distributors has voluntarily agreed to limit the Class A shares Rule
12b-1 distribution plan payments to 0.25% for three years beginning August
4, 1997. If these limitations were not in effect, the 12b-1 distribution
plan payments and total operating expenses of the Class A shares would be as
follows: 0.35% and 1.55% for AIM ADVISOR FLEX FUND, 0.35% and 1.81% for AIM
ADVISOR INTERNATIONAL VALUE FUND, 0.35% and 1.56% for AIM ADVISOR LARGE CAP
VALUE FUND, 0.35% and 1.77% for AIM ADVISOR MULTIFLEX FUND and 0.35% and
1.70% for AIM ADVISOR REAL ESTATE FUND. See "Management" and
"Management -- Distribution Plan."
* Purchases of $1 million or more are not subject to an initial sales charge.
However, a contingent deferred sales charge of 1% applies to certain
redemptions made within 18 months from the date such shares were purchased.
See the Investor's Guide, under the caption "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
5
<PAGE> 10
- --------------------------------------------------------------------------------
EXAMPLES. You would pay the following expenses on a $1,000 investment in Class
A shares of the Funds, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $ 69 $ 71 $ 69 $ 71 $ 63
3 years................................... 98 106 99 105 96
5 years................................... 130 143 130 141 130
10 years.................................. 219 246 220 242 228
</TABLE>
The above examples assume payment of a sales charge at the time of purchase;
actual expenses may vary for purchases of $1 million or more, which are made at
net asset value and are subject to a contingent deferred sales charge for 18
months from the date such shares were purchased.
You would pay the following expenses on a $1,000 investment in Class B shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $72 $75 $72 $75 $74
3 years................................... 99 107 99 105 103
</TABLE>
You would pay the following expenses on a $1,000 investment in Class B shares
of the Funds, assuming no redemption at the end of each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $22 $25 $22 $25 $24
3 years................................... 69 77 69 75 73
</TABLE>
You would pay the following expenses on a $1,000 investment in Class C shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $ 32 $ 35 $ 32 $ 35 $ 34
3 years................................... 69 77 69 75 73
5 years................................... 118 131 118 129 126
10 years.................................. 252 280 254 276 269
</TABLE>
You would pay the following expenses on the same $1,000 investment in Class C
shares, assuming no redemption at the end of each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $ 22 $ 25 $ 22 $ 25 $ 24
3 years................................... 69 77 69 75 73
5 years................................... 118 131 118 129 126
10 years.................................. 253 280 254 276 269
</TABLE>
As a result of 12b-1 distribution plan payments, a long-term shareholder of
the Funds may pay more than the economic equivalent of the maximum front-end
sales charges permitted by rules of the National Association of Securities
Dealers, Inc. Given the maximum front-end and contingent deferred sales charges
and the 12b-1 distribution plan payments applicable to Class A shares, Class B
shares and Class C shares of the Funds, it is estimated that it would require a
substantial number of years to exceed the maximum permissible front-end sales
charges.
The above examples should not be considered to be representative of the Funds'
actual or future expenses, which may be greater or less than those shown. In
addition, while the examples assume a 5% annual return, each Fund's actual
performance will vary and may result in an actual return that is greater or less
than 5%. The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total fund operating expenses remain the same
for each year.
6
<PAGE> 11
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial information for Class C shares for each of the Funds
for the five years ended December 31, 1997, 1996, 1995, 1994 and 1993, and the
financial information for Class A shares for each of the Funds for the period
ended December 31, 1997 have been audited by Price Waterhouse LLP, independent
accountants. This information should be read in conjunction with the audited
financial statements and the Report of Independent Accountants thereon appearing
in the Fund's 1997 Annual Report to Shareholders and the Statement of Additional
Information. All of these materials are available without charge by contacting
AIM Distributors at the address or telephone number shown on the cover page of
this Prospectus. Financial information is not presented for Class B as no Class
B shares were publicly issued as of December 31, 1997. The investment advisor to
the Funds changed on August 4, 1997.
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR LARGE CAP VALUE FUND (FORMERLY, INVESCO ADVISOR EQUITY PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1997(a) 1996 1995 1994 1993 1992 1991(b)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 20.57 $ 17.60 $ 13.96 $ 14.90 $ 15.82 $ 15.85 $ 13.68
Income from investment
operations:
Net investment income....... 0.01(d) 0.05 0.1 0.09 0.1 0.15 0.16
Net gains on securities
(both realized and
unrealized)............... 6.21 2.97 4.11 0.32 1.35 0.61 4.41
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations.............. 6.22 3.02 4.21 0.41 1.45 0.76 4.57
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income......... -- (0.05) (0.10) (0.09) (0.10) (0.14) (0.17)
Distributions from capital
gains..................... (2.71) -- (0.47) (1.26) (2.27) (0.65) (2.23)
-------- -------- -------- -------- -------- -------- --------
Total Distributions....... (2.71) (0.05) (0.57) (1.35) (2.37) (0.79) (2.40)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period...................... $ 24.08 $ 20.57 $ 17.60 $ 13.96 $ 14.90 $ 15.82 $ 15.85
======== ======== ======== ======== ======== ======== ========
Total return(e).............. 30.66% 17.17% 30.28% 2.69% 9.16% 4.84% 33.59%
======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............ $172,228 $137,416 $113,573 $ 77,929 $ 86,659 $ 91,146 $ 81,732
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets................ 2.21%(f) 2.26% 2.28% 2.25% 2.25%(g) 2.18% 2.22%
======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets.................... 0.02%(f) 0.24% 0.64% 0.61% 0.62%(g) 0.90% 1.04%
======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate..... 34% 19% 17% 21% 47% 41% 47%
======== ======== ======== ======== ======== ======== ========
Average brokerage commission
rate paid(j).............. $ 0.0538 $ 0.0590 N/A N/A N/A N/A N/A
======== ======== ======== ======== ======== ======== ========
<CAPTION>
CLASS C CLASS A
------------------------------- ----------
YEAR ENDED DECEMBER 31,
------------------------------- ----------
1990 1989 1988 1997(a)(c)
------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $15.50 $ 14.22 $ 13.54 $ 20.57
Income from investment
operations:
Net investment income....... 0.26 0.3 0.3 0.23(d)
Net gains on securities
(both realized and
unrealized)............... (0.85) 2.78 1.56 6.17
------- -------- ------- -------
Total from investment
operations.............. (0.59) 3.08 1.86 6.4
------- -------- ------- -------
Less distributions:
Dividends from net
investment income......... (0.30) (0.32) (0.31) (0.15)
Distributions from capital
gains..................... (0.93) (1.48) (0.87) (2.71)
------- -------- ------- -------
Total Distributions....... (1.23) (1.80) (1.18) (2.86)
------- -------- ------- -------
Net asset value, end of
period...................... $13.68 $ 15.50 $ 14.22 $ 24.11
======= ======== ======= =======
Total return(e).............. (3.75%) 21.81% 14.02% 31.66%
======= ======== ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............ $69,279 $87,968 $92,983 $ 5,000
======= ======== ======= =======
Ratio of expenses to average
net assets................ 2.25%(h) 2.24% 2.21% 1.46%(h)(i)
======= ======== ======= =======
Ratio of net investment
income to average net
assets.................... 1.71%(h) 1.84% 1.81% 0.77%(h)(i)(j)
======= ======== ======= =======
Portfolio turnover rate..... 12% 21% 10% 34%
======= ======== ======= =======
Average brokerage commission
rate paid(j).............. N/A N/A N/A $0.0538
======= ======== ======= =======
</TABLE>
- ---------------
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split effected in the form of a 300% stock dividend on November 7,
1997.
(b) All per share data has been adjusted to reflect a 25 share for 1 share
stock split which was effected on December 31, 1991.
(c) From January 1, 1997 (commencement of operations of Class A) to December
31, 1997.
(d) Calculated using average shares outstanding.
(e) Does not deduct sales charges.
(f) Ratios are based on average net assets of $156,522,171.
(g) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 2.25% and 0.62%, respectively for 1993 and 2.28% and
1.68%, respectively for 1990.
(h) Ratios are based on average net assets of $1,570,213.
(i) After fee waivers. Ratios of expenses and net investment income to average
net assets prior to fee waivers were 1.56% and 0.67%, respectively.
(j) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
7
<PAGE> 12
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR FLEX FUND (FORMERLY, INVESCO ADVISOR FLEX PORTFOLIO)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1997(a) 1996 1995 1994 1993 1992 1991(b)
-------- -------- -------- -------- -------- -------- --------
A13CLASS C
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.63 $ 15.66 $ 12.63 $ 13.54 $ 12.76 $ 12.34 $ 10.57
Income from investment
operations:
Net investment income....... 0.30(e) 0.30 0.32 0.32 0.28 0.35 0.37
Net gains on securities
(both realized and
unrealized)............... 3.60 1.81 3.09 (0.23) 1.05 0.59 2.22
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations................ 3.90 2.11 3.41 0.09 1.33 0.94 2.59
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends (from net
investment income)........ (0.29) (0.29) (0.32) (0.31) (0.27) (0.34) (0.37)
Distributions from capital
gains..................... (0.50) (0.85) (0.06) (0.69) (0.28) (0.18) (0.45)
-------- -------- -------- -------- -------- -------- --------
Total Distributions......... (0.79) (1.14) (0.38) (1.00) (0.55) (0.52) (0.82)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period...................... $ 19.74 $ 16.63 $ 15.66 $ 12.63 $ 13.54 $ 12.76 $ 12.34
======== ======== ======== ======== ======== ======== ========
Total return(f).............. 23.64% 13.61% 27.30% 0.64% 10.48% 7.72% 24.80%
======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............ $603,179 $489,918 $399,162 $243,848 $274,349 $165,727 $104,204
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets................ 2.20%(g) 2.26% 2.28% 2.25% 2.25%(h) 2.17% 2.21%
======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets.................... 1.59%(g) 1.81% 2.28% 2.32% 2.10%(h) 2.81% 3.12%
======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate..... 17% 26% 5% 36% 27% 15% 24%
======== ======== ======== ======== ======== ======== ========
Average brokerage commission
rate paid(l).............. $ 0.0537 $ 0.0549 N/A N/A N/A N/A N/A
======== ======== ======== ======== ======== ======== ========
<CAPTION>
YEAR ENDED DECEMBER 31, CLASS A
------------------------------- ----------
1990(b) 1989(b) 1988(b)(c) 1997(a)(d)
------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 11.33 $ 10.10 $ 10.00 $ 16.63
Income from investment
operations:
Net investment income....... 0.41 0.43 0.22 0.41(e)
Net gains on securities
(both realized and
unrealized)............... (0.60) 1.29 0.10 3.63
------- -------- ------- -------
Total from investment
operations................ (0.19) 1.72 0.32 4.04
------- -------- ------- -------
Less distributions:
Dividends (from net
investment income)........ (0.44) (0.41) (0.22) (0.43)
Distributions from capital
gains..................... (0.13) (0.08) -- (0.50)
------- -------- ------- -------
Total Distributions......... (0.57) (0.49) (0.22) (0.93)
------- -------- ------- -------
Net asset value, end of
period...................... $ 10.57 $ 11.33 $ 10.10 $ 19.74
======= ======== ======= =======
Total return(f).............. (1.68)% 17.26% 4.45% 24.60%
======= ======== ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............ $96,772 $101,260 $54,941 $25,151
======= ======== ======= =======
Ratio of expenses to average
net assets................ 2.25% 2.33% 2.31%(i) 1.45%(j)(k)
======= ======== ======= =======
Ratio of net investment
income to average net
assets.................... 3.77% 4.08% 4.06%(i) 2.34%(j)(k)
======= ======== ======= =======
Portfolio turnover rate..... 31% 20% 2% 17%
======= ======== ======= =======
Average brokerage commission
rate paid(l).............. N/A N/A N/A $0.0537
======= ======== ======= =======
</TABLE>
- ---------------
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split effected in the form of a 300% stock dividend on November 7,
1997.
(b) All per share data has been adjusted to reflect a 25 share for 1 share stock
split which was effected on December 31, 1991.
(c) From February 24, 1988 (commencement of operations) to December 31, 1988.
(d) From January 1, 1997 (commencement of operations of Class A) to December 31,
1997.
(e) Calculated using average shares outstanding.
(f) Does not deduct sales charges and for periods less than one year are not
annualized.
(g) Ratios are based on average net assets of $556,338,988.
(h) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 2.26% and 2.09%, respectively, for 1993.
(i) Annualized.
(j) Ratios are based on average net assets of $10,010,061.
(k) After fee waivers. The ratios of expenses and net investment income to
average net assets prior to fee waivers were 1.55% and 2.24% respectively.
(l) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
8
<PAGE> 13
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR MULTIFLEX FUND (FORMERLY, INVESCO ADVISOR MULTIFLEX PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C CLASS A
---------------------------------------------------- ----------
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997(a) 1996 1995 1994 1993(b) 1997(a)(c)
-------- -------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 13.14 $ 11.68 $ 9.78 $ 10.04 $ 10.00 $ 13.14
Income from investment operations:
Net investment income................. 0.13 0.14 0.16 0.16 0.01 0.23
Net gains on securities (both realized
and unrealized)..................... 2.26 1.83 1.94 (0.26) 0.04 2.26
-------- -------- -------- -------- ------- ----------
Total from investment
operations................... 2.39 1.97 2.10 (0.10) 0.05 2.49
-------- -------- -------- -------- ------- ----------
Less Distributions:
Dividends from net investment
income.............................. (0.11) (0.13) (0.16) (0.16) (0.01) (0.22)
Distributions from capital gains...... (1.20) (0.38) (0.04) -- -- (1.20)
-------- -------- -------- -------- ------- ----------
Total Distributions............ (1.31) (0.51) (0.20) (0.16) (0.01) (1.42)
-------- -------- -------- -------- ------- ----------
Net asset value, end of period.......... $ 14.22 $ 13.14 $ 11.68 $ 9.78 $ 10.04 $ 14.21
======== ======== ======== ======== ======= ==========
Total return(d)......................... 18.55% 17.03% 21.58% (1.02)% 0.46% 19.40%
======== ======== ======== ======== ======= ==========
Ratios/supplemental data:
Net assets, end of period (000
omitted).............................. $376,804 $266,843 $174,592 $120,220 $12,241 $ 9,066
======== ======== ======== ======== ======= ==========
Ratio of expenses to average net
assets................................ 2.42%(e) 2.45% 2.50% 2.49% 2.50%(f) 1.67%(g)(h)
======== ======== ======== ======== ======= ==========
Ratio of net investment income to
average net assets.................... 0.92%(e) 1.16% 1.53% 2.01% 1.09%(f) 1.67%(g)(h)
======== ======== ======== ======== ======= ==========
Portfolio turnover rate................. 62% 62% 50% 81% 53% 62%
======== ======== ======== ======== ======= ==========
Average commission rate paid(i)......... $ 0.0592 $ 0.0577 N/A N/A N/A $ 0.0592
======== ======== ======== ======== ======= ==========
</TABLE>
- ---------------
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split effected in the form of a 300% stock dividend on November 7,
1997.
(b) From November 17, 1993 (commencement of operations) to December 31, 1993.
(c) From January 1, 1997 (commencement of operations of Class A) to December 31,
1997.
(d) Does not deduct sales charges and for periods less than one year are not
annualized.
(e) Ratios are based on average net assets of $325,274,785
(f) Annualized.
(g) Ratios are based on average net assets of $3,147,191.
(h) After fee waivers. The ratios of expenses and net investment income to
average net assets prior to fee waivers were 1.77% and 1.77%, respectively.
(i) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
9
<PAGE> 14
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR REAL ESTATE FUND (FORMERLY, INVESCO ADVISOR REAL ESTATE PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C CLASS A
-------------------------------- ----------
YEAR ENDED DECEMBER 31,
-------------------------------- ----------
1997(a) 1996 1995(b) 1997(a)(c)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 14.19 $ 10.76 $10.00 $ 14.19
------- ------- ------ -------
Income from investment operations:
Net investment income................................ 0.36(d) 0.33 0.16 0.34(d)
Net gains on securities (both realized and
unrealized)........................................ 2.26 3.51 0.75 2.39
------- ------- ------ -------
Total from investment operations..................... 2.62 3.84 0.91 2.73
------- ------- ------ -------
Less distributions:
Dividends from net investment income)................ (0.33) (0.31) (0.15) (0.44)
Distributions from capital gains..................... (0.74) (0.10) -- (0.74)
------- ------- ------ -------
Total distributions.................................. (1.07) (0.41) (0.15) (1.18)
------- ------- ------ -------
Net asset value, end of period......................... $ 15.74 $ 14.19 $10.76 $ 15.74
======= ======= ====== =======
Total return(e)........................................ 18.88% 36.43% 9.12% 19.78%
======= ======= ====== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............... $43,934 $20,566 $5,565 $16,507
======= ======= ====== =======
Ratio of expenses to average net assets................ 2.35%(f) 2.40% 2.40%(g) 1.60%(h)(i)
======= ======= ====== =======
Ratio of net investment income to average net assets... 2.54%(f) 3.21% 4.68%(g) 3.26%(h)(i)
======= ======= ====== =======
Portfolio turnover rate................................ 57% 25% 7% 57%
======= ======= ====== =======
Average brokerage commission rate paid(j).............. $0.0584 $0.0601 N/A $0.0584
======= ======= ====== =======
</TABLE>
- ---------------
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split effected in the form of a 300% stock dividend on November 7,
1997.
(b) From May 1, 1995 (commencement of operations) to December 31, 1995.
(c) From January 1, 1997 (commencement of operations of Class A) to December 31,
1997.
(d) Calculated using average shares outstanding.
(e) Does not deduct sales charges and for periods less than one year are not
annualized.
(f) Ratios are based on average net assets of $32,160,457.
(g) Annualized.
(h) Ratios are based on average net assets of $3,510,793.
(i) After fee waivers. The ratios of expenses and net investment income to
average net assets prior to fee waivers were 1.70% and 3.16%, respectively.
(j) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
10
<PAGE> 15
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR INTERNATIONAL VALUE FUND (FORMERLY, INVESCO ADVISOR INTERNATIONAL
VALUE PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C CLASS A
-------------------------------- ----------
YEAR ENDED DECEMBER 31,
-------------------------------- ----------
1997(a) 1996 1995(b) 1997(a)(c)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 13.42 $ 11.13 $10.00 $ 13.42
------- ------- ------ -------
Income from investment operations:
Net investment income................................ 0.01(d) (0.01) -- 0.17(d)
Net gain on securities (both realized and
unrealized)........................................ 1.73 2.34 1.13 1.69
------- ------- ------ -------
Total from investment operations..................... 1.74 2.33 1.13 1.86
------- ------- ------ -------
Less distributions:
Dividends from net investment income................. (0.01) -- -- (0.07)
Distributions (from capital gains)................... (0.22) (0.04) -- (0.22)
------- ------- ------ -------
Total distributions.................................. (0.23) (0.04) -- (0.29)
------- ------- ------ -------
Net asset value, end of period......................... $ 14.93 $ 13.42 $11.13 $ 14.99
======= ======= ====== =======
Total return(e)........................................ 12.98% 20.99% 11.28% 13.84%
======= ======= ====== =======
Ratios/supplemental data:
Net assets, end of period (000's omitted)............ $93,162 $51,916 $9,467 $ 8,444
======= ======= ====== =======
Ratio of expenses to average net assets.............. 2.46%(f) 2.50% 2.50%(g) 1.71%(h)(i)
======= ======= ====== =======
Ratio of net investment income to average net
assets............................................. 0.08%(f) (0.16)% 0.03%(g) 0.83%(h)(i)
======= ======= ====== =======
Portfolio turnover rate.............................. 9% 5% 2% 9%
======= ======= ====== =======
Average brokerage commission rate paid(j)............ $0.0507 $0.0602 N/A $0.0507
======= ======= ====== =======
</TABLE>
- ---------------
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split effected in the form of a 300% stock dividend on November 7,
1997.
(b) From May 1, 1995 (commencement of operations) to December 31, 1995.
(c) From January 1, 1997 (commencement of operations of Class A) to December
31, 1997.
(d) Calculated using average shares outstanding.
(e) Does not deduct sales charges and for periods less than one year are not
annualized.
(f) Ratios are based on average net assets of $77,973,564.
(g) Annualized.
(h) Ratios are based on average net assets of $3,145,579.
(i) After fee waivers. The ratios of expenses and net investment income to
average net assets prior to fee waivers were 1.81% and 0.73%, respectively.
(j) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
11
<PAGE> 16
- --------------------------------------------------------------------------------
ABOUT THE FUNDS
The Funds are separate series of AIM Advisor Funds, Inc., an open-end,
diversified management investment company, incorporated under the laws of the
State of Maryland on September 19, 1989. Prior to August 4, 1997 and January 16,
1996 the Company was known as INVESCO Advisor Funds, Inc. and The EBI Funds,
Inc., respectively.
The address of each Fund is 11 Greenway Plaza, Suite 100, Houston, Texas
77046, and the telephone number of each Fund is (713) 626-1919. The address of
the Distributor, A I M Distributors, Inc., is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAMS
The investment objective of each of the Funds is to achieve a high total
return on investment through capital appreciation and current income, without
regard to federal income tax considerations. The investment objective of each
Fund is a fundamental policy which may not be changed without the approval of a
vote of a majority of the outstanding shares of that Fund. Investments of each
Fund will be managed without regard to whether their distributions to
shareholders will be characterized as ordinary income or long-term capital gains
(i.e., will not be managed so as to minimize or avoid taxable capital gain
distributions), and therefore may be of particular interest to investors who are
tax-exempt. A more detailed discussion of each Fund's investment objective and
policies follows. No assurance is or can be given that any Fund will accomplish
its investment objectives, as there is some degree of uncertainty in every
investment.
LARGE CAP VALUE FUND. The investment objective of the LARGE CAP VALUE FUND is
to achieve a high total return on investment through capital appreciation and
current income, without regard to federal income tax considerations.
Substantially all of the Fund's assets will be invested in common stocks and, to
a lesser extent, securities convertible into common stocks. Such securities will
generally be issued by companies which are listed on a national securities
exchange (e.g., the New York Stock Exchange), or traded in the over-the-counter
market, and which usually pay regular dividends. At least 65% of the LARGE CAP
VALUE FUND'S investments will consist of equity securities. The LARGE CAP VALUE
FUND has established minimum investment standards with respect to its
investments in common stocks which are identical to those established by ICM,
the Fund's sub-advisor, with respect to the management of large capitalization
value portfolios for its private advisory clients. These standards include
utilization of a proprietary database consisting of 800 of the largest companies
in the United States, each of which is required to have 10 years of financial
history in order to be included in the database. The database relates the
current price of each stock to each company's historical record and ranks the
800 stocks based on the best relative value. The top 250 stocks are then
subjected to fundamental investment analysis, based on which a purchase list of
100 stocks is created, from which investments are selected. When market,
business or economic conditions warrant, in the judgment of the Advisor and ICM,
that temporary defensive measures should be employed, all or part of the assets
of the Fund may be invested temporarily in other securities, including high
quality corporate preferred stocks, bonds, debentures or other evidences of
indebtedness, and in obligations issued or guaranteed by the United States or
any instrumentality thereof, or held in cash.
Up to 10% of the LARGE CAP VALUE FUND'S total assets, measured at the time of
purchase, may be invested directly in foreign securities and unsponsored
American Depository Receipts ("ADRs"). Up to 25% of the LARGE CAP VALUE FUND'S
total assets, measured at the time of purchase, may be invested in securities of
Canadian issuers and sponsored ADRs.
FLEX FUND. The investment objective of the FLEX FUND is to achieve a high
total return on investment through capital appreciation and current income,
without regard to federal income tax considerations. The FLEX FUND invests in a
combination of equity securities and fixed and variable income securities. It is
possible that the ability of the Fund to achieve its objective of high total
return could be diminished by its restriction on the use of non-investment grade
corporate obligations in the income securities portion of its portfolio.
Typically, a minimum of 20% of the total assets of the FLEX FUND will be
invested in equity securities and a minimum of 20% of total assets will be
invested in fixed and variable income securities. The remaining 60% of its
portfolio will vary in asset allocation according to ICM's assessment of
business, economic, and market conditions. ICM's analytical processes associated
with making allocation decisions are based upon a combination of historical
financial results and current prices for stocks and the current yield to
maturity available in the market for bonds. The premium return available from
one category relative to the other determines the actual asset deployment. ICM's
asset allocation processes are systematic and are based on current information
rather than forecasted change. The FLEX FUND seeks reasonably consistent returns
over a variety of market cycles.
The equity securities acquired by the FLEX FUND are subject to the same
standards as those equity securities acquired by the LARGE CAP VALUE FUND. The
fixed income securities in which FLEX FUND will invest will consist of those
fixed income obligations which ICM, the Fund's sub-advisor, believes are of a
higher quality than has been generally recognized by the marketplace. If ICM's
analysis is correct in these cases, the value of these obligations should
increase as the marketplace recognizes the higher quality of the obligations.
ICM intends to identify investments which it believes to be undervalued (and
therefore higher yielding) in light of, among other things, historic and current
financial condition of the issuer, current and anticipated cash flow and
borrowing requirements, strength of management, responsiveness to business
conditions, credit standing and historic and current results of operations.
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<PAGE> 17
Fixed-income securities in which the FLEX FUND invests consist primarily of
U.S. government obligations and carefully selected fixed income corporate
obligations which ICM considers to be of investment grade quality. The FLEX FUND
invests only in those corporate obligations which in ICM's opinion have the
investment characteristics described by Moody's in rating corporate obligations
within its four highest ratings of Aaa, Aa, A and Baa and by S&P in rating
corporate obligations within its four highest ratings of AAA, AA, A and BBB. It
is possible that the ability of the Fund to achieve its objective of high total
return could be diminished by its restriction on the use of non-investment grade
corporate obligations. For a description of these ratings, see the Appendix to
the Statement of Additional Information. Investments in government obligations
will include direct obligations of the U.S. government, such as U.S. Treasury
Bills, Notes and Bonds, obligations guaranteed by the U.S. government, such as
Government National Mortgage Association obligations, and obligations of U.S.
government authorities, agencies and instrumentalities, such as Fannie Mae
(formerly, the Federal National Mortgage Association), Federal Home Loan Bank,
Federal Financing Bank and Federal Farm Credit Bank obligations.
The FLEX FUND may invest in mortgage-backed securities, including mortgage
pass-through securities and collateralized mortgage obligations ("CMOs"), which
carry a guarantee from an agency of the U.S. government or a private issuer of
the timely payment of principal and interest or, in the case of unrated
securities, are considered by the sub-advisor to be investment grade quality.
For a description of the risks associated with these securities, see "Additional
Risk Factors and Policies Relevant to the Funds - Mortgage-Related Securities"
below and "Mortgage-Related Securities" in the Statement of Additional
Information.
The FLEX FUND does not require that its investments in corporate obligations
actually be rated by Moody's or S&P, and it may acquire such unrated obligations
which in the opinion of ICM are of a quality at least equal to a rating of Baa
by Moody's or BBB by S&P. With respect to investments in unrated obligations,
the Fund will be more reliant on ICM's judgment and experience than would be the
case if the FLEX FUND invested solely in rated obligations. Obligations rated
Baa by Moody's or BBB by S&P may have speculative characteristics. A rating of
Baa by Moody's indicates that the obligation is of "medium grade," neither
highly protected nor poorly secured. Interest payments and principal security
appear adequate for the present, but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. A rating
of BBB by S&P indicates that the obligation is in the lowest "investment grade"
security rating. Obligations rated BBB are regarded as having an adequate
capacity to pay principal and interest. Although such obligations normally
exhibit adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay principal
and interest than obligations in the top three "investment grade" categories.
Investors should note that investments in fixed income obligations will
generally be subject to both credit risk and market risk. Credit risk relates to
the ability of the issuer to meet interest or principal payments, or both, as
they come due. Market risk relates to the fact that the market values of fixed
income obligations in which the Fund invests generally will be affected by
changes in the level of interest rates. An increase in interest rates will
generally reduce the value of portfolio investments, and a decline in interest
rates will generally increase the value of portfolio investments. Both credit
and market risks as described above are increased by investing in fixed income
obligations rated Baa by Moody's and BBB by S&P. For a more detailed description
of these ratings, see the Appendix to the Statement of Additional Information.
ICM will attempt to limit fluctuations in the market value of the FLEX FUND by
adopting a more defensive posture during periods of economic difficulty. During
such periods the FLEX FUND may acquire high quality short-term money market
instruments rated Prime-1 by Moody's or A or better by S&P or, if unrated, of
comparable quality as determined by ICM, at such times, and in such amounts, as
in the opinion of ICM seems appropriate. Short-term money market instruments
will include, among others, Treasury Bills, bankers' acceptances, certificates
of deposit, time deposits, and commercial paper. For a description of these
instruments, see the Appendix to the Statement of Additional Information.
Up to 10% of the FLEX FUND'S total assets, measured at the time of purchase,
may be invested directly in foreign securities and unsponsored ADRs. Up to 25%
of the FLEX FUND'S total assets, measured at the time of purchase, may be
invested in securities of Canadian issuers and sponsored ADRs.
MULTIFLEX FUND. The investment objective of the MULTIFLEX FUND is to achieve a
high total return on investment through capital appreciation and current income,
without regard to federal income tax considerations. The Fund seeks to achieve
its objective by investing in a combination of equity securities (consisting of
common stocks and, to a lesser degree, preferred stocks and securities
convertible into common stock) and fixed-income securities, through allocation
of its assets among the following five asset classes: stocks of large
capitalization companies ("large cap stocks"), stocks of small capitalization
companies ("small cap stocks"), fixed-income securities, real estate securities
(primarily securities of real estate investment trusts ("REITs")), and foreign
securities (primarily ADRs). Allocating assets among different types of
securities allows the Fund to take advantage of performance opportunities in
various sectors of the capital market, while simultaneously providing
diversification to reduce the risks of each investment.
The Fund may invest up to 40% of its assets in each asset class; however, the
Fund will normally invest approximately 20% of its assets in each of the five
asset classes, which represents the expected allocation when projected returns
for the five classes are all normal relative to one another. If the anticipated
return for a particular asset class is higher than normal relative to the others
on an historical basis, it will be weighted more heavily than it would under
"normal" conditions. Conversely, if the anticipated return for a particular
asset class is lower than normal relative to the other classes on an historical
basis, a smaller percentage of assets (i.e., less than 20%) would be invested in
that class. Each asset class is briefly described below:
Large Cap Stocks. The MULTIFLEX FUND may invest in equity securities of large
companies, defined as companies with market capitalizations among the largest
800 publicly traded U.S. corporations at the time of initial purchase. These
securities are traded
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<PAGE> 18
principally on national securities exchanges in the United States, but also may
be traded on regional stock exchanges or in the over-the-counter market. Such
stocks are more likely to pay regular dividends than the stocks of smaller
companies.
Small Cap Stocks. The MULTIFLEX FUND may invest in small cap securities (i.e.,
those issued by companies having smaller market capitalizations than the largest
1,000 publicly traded U.S. corporations). These securities typically pay no or
minimal dividends, possess higher rates of return on invested capital, and are
subject to greater risk than securities of larger companies, such as large price
fluctuations which could increase the potential for short term gains and losses.
Fixed Income Securities. The fixed income securities in which the MULTIFLEX
FUND may invest consist of securities issued by the U.S. government, its
agencies and instrumentalities, corporate securities, mortgage- and asset-backed
securities, zero coupon bonds, municipal obligations and foreign currency
denominated securities. The MULTIFLEX FUND may invest up to 5% of its assets in
corporate bonds rated below Baa by Moody's or BBB by S&P but rated at least Ba
by Moody's or BB by S&P at the time of purchase. Investments in corporate bonds
rated below "investment grade," i.e., rated below Baa by Moody's or BBB by S&P,
are described as "speculative" by both Moody's and S&P. Such securities are
sometimes referred to as "junk bonds," and may be subject to greater market
fluctuations, less liquidity, and greater risk than higher-rated bonds. For a
further discussion of the special risks associated with investments in lower
rated securities, see "Additional Risk Factors and Policies Relevant to the
Funds -- High Yield/High Risk Securities." The average maturity of the MULTIFLEX
FUND'S investments in fixed income securities will vary depending upon economic
and market conditions. During normal market conditions, the MULTIFLEX FUND'S
overall maturity will be in the 3.5 to 6.5 year range and is expected to average
approximately 5 years over a market cycle. The sub-advisor will seek to adjust
the portfolio of fixed income securities held by the Fund to maximize current
income consistent with liquidity and the preservation of principal.
Real Estate Securities. The MULTIFLEX FUND may invest in common stocks of real
estate companies, real estate investment trusts ("REITs"), and other real estate
related securities. REITs are trusts which sell shares to investors and use the
proceeds to invest in real estate or interests therein. A REIT may focus on
particular projects, such as apartment complexes, or geographic regions, such as
the Southeastern United States, or both. Health care REITs invest primarily in
hospitals, nursing homes, and similar facilities, and are usually nationwide in
scope. By investing in REITs indirectly through the Fund, a shareholder will
bear not only his proportionate share of the expenses of the Fund, but also,
indirectly, similar expenses of the REIT.
Foreign Securities. The MULTIFLEX FUND may invest in foreign securities
directly or by means of sponsored or unsponsored ADRs. Up to 40% of total
assets, measured at the time of purchase, may be invested directly in foreign
securities or unsponsored ADRs. Securities of Canadian issuers and securities
purchased by means of sponsored ADRs are not subject to this 40% limitation. See
"Additional Risk Factors and Policies Relevant to the Funds -- Foreign
Securities."
IMR, the Fund's sub-advisor, regularly monitors the Fund's investment
allocations, and may vary the amount invested in each class depending upon its
assessment of business, economic and market conditions. The investment results
of the Fund depend upon the sub-advisor's ability to determine correctly the
relative attractiveness of various asset classes on a consistent basis. However,
market valuations change not only in response to economic factors but to
psychological and emotional factors as well. These factors are difficult to
interpret and quantify. It is therefore possible that the Fund may have a
minimum allocation in stocks during a significant advance in overall stock
prices. Similarly, it is possible that the Fund may have a minimum allocation in
bonds during a significant advance in overall bond prices.
There may be temporary periods during which the allocation of assets to each
asset class deviates from the specified percentage allocation because of inflows
or outflows of cash from the Fund. This is most likely to occur when the
sub-advisor has positioned the portfolio assets close to a minimum or maximum
constraint for one or more asset classes and the Fund's cash position is altered
as a result of purchases and/or redemptions of the Fund's shares. In such cases,
IMR will deploy cash or reallocate portfolio assets in a timely fashion (not to
exceed seven days) to bring portfolio composition within the specified asset
allocation.
In periods of uncertain economic and market conditions, as determined by the
sub-advisor, the Fund may depart from its basic investment objective and assume
a temporary defensive position, with a portion of its assets invested in cash or
cash equivalents and, within the fixed income asset class, U.S. government and
agency securities and investment grade corporate bonds. Cash may be held for
defensive purposes up to a maximum of 30% of the Fund's total assets. While the
Fund is in a defensive position, the opportunity to achieve capital growth will
be limited; however, the ability to maintain a defensive position enables the
Fund to seek to minimize capital losses during market downturns. Under normal
market conditions, the Fund does not intend to invest a significant portion of
its assets in cash or cash equivalents.
In managing the equity portion of the portfolio, IMR will apply a combination
of quantitative strategies and traditional stock selection methods to a very
broad universe of stocks in order to uncover the best possible values.
Typically, stocks will be examined quantitatively for their exposure to certain
factors which the sub-advisor has identified as helpful in selecting equities
which can be expected to have superior future performance. These factors may
include earnings-to-price and book value-to-price ratios, earnings estimate
revision momentum, relative market strength compared to competitors,
inventory/sales trend, and financial leverage. A stock's expected return is
estimated based upon its exposure to these and other factors, and when combined
with proprietary estimates of trading costs, a risk-controlled optimal portfolio
is generated. Once an initial suggested portfolio has been generated through the
computer optimization process, traditional fundamental analysis is utilized to
provide a final review before stocks are selected for purchase by the Fund.
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<PAGE> 19
REAL ESTATE FUND. The investment objective of the REAL ESTATE FUND is to
achieve a high total return on investment through capital appreciation and
current income, without regard to federal income tax considerations. The Fund
seeks to achieve its objective by investing primarily in publicly traded
securities of companies related to the real estate industry. The Fund will not
invest directly in private real estate assets.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of companies which are principally engaged in the
real estate industry and are listed on U.S. securities exchanges or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
Companies listed on NASDAQ are generally smaller-capitalization companies whose
securities may be subject to large price fluctuations which could increase the
potential for short-term gains or losses. A company is "principally engaged in
the real estate industry" if at least 50% of its assets, gross income or net
profits are attributable to ownership, construction, management, or sale of
residential, commercial or industrial real estate, including listed equity REITs
which own properties, and listed mortgage REITs which make short-term
construction and development mortgage loans or which invest in long-term
mortgages or mortgage pools. By investing in REITs indirectly through the Fund,
a shareholder will bear not only his proportionate share of the expenses of the
Fund, but also, indirectly, similar expenses of the REIT. See "Additional Risk
Factors and Policies Relevant to the Funds -- Real Estate Industry Securities."
The Fund may also invest up to 35% of its total assets in equity, debt, or
convertible securities of companies whose products and services are related to
the real estate industry, such as manufacturers and distributors of building
supplies and financial institutions which issue or service mortgages. The Fund
also may invest up to 35% of its total assets in securities of companies
unrelated to the real estate industry which are believed by the sub-advisor to
be undervalued and to have capital appreciation potential. Moreover, consistent
with its objective of current income, the Fund may invest all or part of its
assets in debt securities of companies related to the real estate industry. Debt
securities purchased by the Fund will be limited to those rated at the time of
the investment as investment grade by Moody's or S&P or, if unrated, determined
by the sub-advisor to be of comparable quality. For a description of these
ratings and a discussion of factors relevant to a determination that an unrated
security is of comparable quality, see the Appendix to the Statement of
Additional Information. Up to 10% of the REAL ESTATE FUND'S total assets, may be
invested directly in foreign securities and unsponsored ADRs. The Fund may also
invest in sponsored ADRs.
IRAI, the Fund's sub-advisor, utilizes both fundamental real estate analysis
and quantitative securities analysis to select investments for the Fund. The
fundamental real estate characteristics of securities included in the qualifying
universe are determined by analysis of a company's management and strategic
focus and an evaluation of the location, physical attributes and cash flow
generating capacity of a company's properties. Each component of the analysis is
assigned a weight and each company is systematically ranked to determine which
company's securities are to be emphasized in the selection of Fund investments.
IRAI's quantitative analysis applies a proprietary database and multi-factor
regression model to rank individual securities in the qualifying universe from
highest to lowest expected returns. Investment consideration is limited to those
actively traded securities which are expected to outperform the NAREIT Equity
Index over the subsequent three-month period. The NAREIT Equity Index is
composed of common stocks of all tax-qualified equity REITs listed on the New
York Stock Exchange, American Stock Exchange and the NASDAQ National Market
System.
After ranking each security fundamentally and quantitatively, a diversified
portfolio is created through a statistical optimization process. This technique
incorporates such factors as expected return, volatility, correlation to other
stocks already held in the portfolio, and turnover costs.
If, in the opinion of the sub-advisor, market conditions warrant a temporary
defensive investment strategy, the Fund's assets may be invested in money market
instruments and U.S. government securities, or held in cash or equivalents. The
Fund may purchase and write put and call options on securities and securities
indices. See "Additional Risk Factors and Policies Relevant to the Funds."
For taxable clients, a portion of the dividends paid by a REIT may be
considered return on capital and would not currently be regarded as taxable
income. Therefore, depending upon an individual's tax bracket, the dividend
yield may have a higher tax effective yield.
INTERNATIONAL VALUE FUND. The investment objective of the INTERNATIONAL VALUE
FUND is to achieve a high total return on investment through capital
appreciation and current income, without regard to U.S. or foreign tax
considerations. The Fund seeks to achieve its objective by investing at least
65% of its total assets in a diversified portfolio of foreign equity securities,
consisting of common stocks, preferred stocks, warrants, and securities
convertible into common stock. The sub-advisor intends to hold securities in its
portfolio of companies domiciled in at least four countries. Moreover,
consistent with its objective of current income, the Fund may invest up to 35%
of its total assets in debt securities rated at the time of investment as
investment grade or, if unrated, determined by the sub-advisor to be of
comparable quality. For a description of these ratings and a discussion of
factors relevant to a determination that an unrated security is of comparable
quality, see the Appendix to the Statement of Additional Information.
Although the Fund intends to invest principally in securities of companies in
developed nations, including Europe and the Pacific Rim, it may also invest up
to 20% of its total assets in equity securities of companies domiciled in
emerging market countries. See "Additional Risk Factors and Policies Relevant to
the Funds -- Foreign Securities" and "-- Emerging Markets" below for a
discussion of the risks associated with such investments.
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<PAGE> 20
IGAM has access to the data and research of the Global Asset Allocation
Committee of its parent company, AMVESCAP PLC (formerly INVESCO PLC). See
"Management." This worldwide data and research from the parent company, together
with the sub-
advisor's proprietary database consisting primarily of large and medium
capitalization non-U.S. companies, provide investment research and information
which aid IGAM in determining which stocks are selected for the Fund.
Stocks within the sub-advisor's database are subjected to proprietary computer
analytical systems designed to compare the price of each stock to various
factors which include shareholders' equity per share, historic return on equity,
and the company's ability to reinvest earnings for future growth or to pay
earnings in the form of dividends. The results of this analysis are then used to
assist IGAM in determining the relative value of each stock. Each stock's final
selection is based primarily upon IGAM's opinion of the relative value of the
stock and takes into account the company's historic and current operating
results combined with an analysis of the likelihood of favorable operating
results being extended into future years. The final selection of a stock for the
Fund may also take into account the sub-advisor's opinion of the attractiveness
of the stock to the Fund as a whole based on diversification and risk
considerations.
IGAM does not make country or industry allocation decisions based on worldwide
market or industry forecasts. Consequently, the industry and country weightings
in the Fund tend to be a by-product of the stock selection process and Fund
construction. Given the difficulty of profitably applying aggressive currency
management over long periods of time, IGAM tends to incorporate currency hedging
strategies only at the extremes of relative valuation ranges.
When, in the judgment of the sub-advisor, market, business or economic
conditions warrant employing temporary defensive measures, the sub-advisor may
invest all or part of the assets of the Fund temporarily in securities of U.S.
issuers and may, for temporary defensive purposes, invest without limit in (i)
money market securities denominated in dollars or in the currency of any foreign
country and issued by entities organized in the U.S. or any foreign country,
such as short-term (less than 12 months to maturity) and medium-term (not
greater than five years to maturity) obligations issued or guaranteed by the
U.S. government or the government of a foreign country, their agencies or
instrumentalities, (ii) finance company and corporate commercial paper and other
short-term corporate obligations, in each case rated Prime-1 by Moody's or A or
better by S&P or, if unrated, of comparable quality as determined by the
sub-advisor, and (iii) repurchase agreements with banks and broker-dealers with
respect to such securities.
Although the Fund invests principally in common stocks, it may also enter into
transactions in options on securities, securities indices and currencies,
forward currency contracts, futures contracts and related options, and swap
agreements. See "Additional Risk Factors and Policies Relevant to the Funds."
- --------------------------------------------------------------------------------
ADDITIONAL RISK FACTORS AND POLICIES RELEVANT TO THE FUNDS
REPURCHASE AGREEMENTS. Each of the Funds may engage in repurchase agreements.
A repurchase agreement, which may be considered a "loan" under the Investment
Company Act of 1940, as amended (the "1940 Act"), is a transaction in which a
fund purchases a security and simultaneously commits to sell the security to the
seller at an agreed-upon price and date (usually not more than seven days) after
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon market rate of interest which is unrelated to the coupon rate or
maturity of the purchased security. A Fund's risk is limited to the ability of
the seller to pay the agreed-upon amount on the delivery date. In the opinion of
management this risk is not material; if the seller defaults, the underlying
security constitutes collateral for the seller's obligations to pay. This
collateral, equal to or in excess of 100% of the repurchase agreement, will be
held by the custodian for the particular Fund's assets. Repurchase agreements
carry certain risks not associated with direct investments in securities,
including a possible decline in the market value of the underlying securities
and delays and costs to the Funds if the other party to the repurchase agreement
becomes insolvent. To the extent that the proceeds from a sale upon a default in
the obligation to repurchase are less than the repurchase price, the particular
Fund would suffer a loss. It is intended (but not required) that at no time will
the market value of any of the Fund's securities subject to repurchase
agreements exceed 50% of the total assets of such Fund entering into such
agreements. It is intended for these Funds to enter into repurchase agreements
with commercial banks and securities dealers. The Board of Directors will
monitor the creditworthiness of such entities.
FOREIGN SECURITIES. All of the Funds may invest directly in foreign securities
and ADRs. The MULTIFLEX FUND, INTERNATIONAL VALUE FUND and REAL ESTATE FUND may
also invest in foreign currency-denominated fixed income securities. Foreign
securities are securities issued by companies whose principal business
activities are outside the United States. These foreign securities may be
registered and traded in U.S. markets, traded in foreign markets or evidenced by
ADRs. Securities of Canadian issuers and sponsored ADRs are not included within
the limitations applicable to foreign securities. Investing in foreign
securities may involve significant risks not present in domestic investments.
For example, there is generally less publicly available information about
foreign companies, particularly those not subject to the disclosure and
reporting requirements of the U.S. securities laws. Foreign issuers are
generally not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitations on the removal of cash or
other assets of a Fund, political or financial instability, or diplomatic and
other developments which could affect such investments. Further, economies of
particular countries or areas of the world may differ favorably or unfavorably
from the economy of the United States. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may exhibit greater
price volatility. Additional costs associated with an
16
<PAGE> 21
investment in foreign securities may include higher custodial fees than apply to
domestic custodial arrangements, and transaction costs of foreign currency
conversions.
ADRs provide a method whereby the Funds may invest in securities issued by
companies whose principal business activities are outside the United States.
These securities will not be denominated in the same currency as the securities
into which they may be converted. Generally, ADRs, in registered form, are
designed for use in U.S. securities markets.
ADRs are receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying securities, and may be issued as sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements to
have its securities trade in the form of ADRs. In unsponsored programs, the
issuer may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, in some cases it may be easier to obtain financial
information from an issuer that has participated in the creation of a sponsored
program. The LARGE CAP VALUE FUND and FLEX FUND intend to invest only in
sponsored ADRs. The MULTIFLEX FUND, INTERNATIONAL VALUE FUND and REAL ESTATE
FUND may invest in both sponsored and unsponsored ADRs.
Since certain Funds are authorized to invest in securities denominated or
quoted in currencies other than the U.S. dollar, as well as ADRs with respect to
such securities, changes in foreign currency exchange rates relative to the U.S.
dollar will affect the value of such ADRs and securities in the Funds and the
unrealized appreciation or depreciation of such investments. Changes in foreign
currency exchange rates relative to the U.S. dollar will also affect a Fund's
yield on assets denominated in currencies other than the U.S. dollar and ADRs.
EMERGING MARKETS. The INTERNATIONAL VALUE FUND may invest in securities of
companies domiciled in emerging market countries. Investment in emerging market
countries presents risks greater in degree than, and in addition to, those
presented by investment in foreign issuers in general. A number of emerging
market countries restrict, to varying degrees, foreign investment in stocks.
Repatriation of investment income, capital, and the proceeds of sales by foreign
investors may require governmental registration and/or approval in some emerging
market countries. A number of the currencies of developing countries have
experienced significant declines against the U.S. dollar in recent years, and
devaluation may occur subsequent to investments in these currencies by the
INTERNATIONAL VALUE FUND. Inflation and rapid fluctuations in inflation rates
have had and may continue to have negative effects on the economies and
securities markets of certain emerging market countries. Many of the emerging
securities markets are relatively small, have low trading volumes, suffer
periods of relative illiquidity, and are characterized by significant price
volatility. There is a risk in emerging market countries that a future economic
or political crisis could lead to price controls, forced mergers of companies,
expropriation or confiscatory taxation, seizure, nationalization, or creation of
government monopolies, any of which may have a detrimental effect on the Fund's
investments.
OPTIONS. Each Fund may purchase and write put and call options on securities.
The purpose of engaging in put and call transactions is to hedge against changes
in the market value of the Fund's portfolio securities caused by fluctuating
interest rates, fluctuating currency exchange rates and changing market
conditions, and to close out or offset existing positions in such options or
futures contracts as described below. The Funds will not engage in such
transactions for speculative purposes.
A Fund may write a call or put option only if the option is "covered" by the
Fund holding a position in the underlying securities or by other means which
would permit immediate satisfaction of the Fund's obligation as writer of the
option. The purchase and writing of options involve certain risks. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its obligation
as a writer continues, has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price. If a
put or call option purchased by a Fund is not sold when it has remaining value,
and if the market price of the underlying security, in the case of a put,
remains equal to or greater than the exercise price or, in the case of a call,
remains less than or equal to the exercise price, the Fund will lose its entire
investment in the option. Also, where a put or call option on a particular
security is purchased to hedge against price movements in a related security,
the price of the put or call option may move more or less than the price of the
related security. There can be no assurance that a liquid market will exist when
a Fund seeks to close out an option position. Furthermore, if trading
restrictions or suspensions are imposed on the options markets, a Fund may be
unable to close out a position.
Each Fund may also buy or sell put and call options on foreign securities and
foreign currencies. Currency options traded on U.S. or other exchanges may be
subject to position limits which may limit the ability of the Funds to reduce
foreign currency risk using such options. Over-the-counter options differ from
traded options in that they are two-party contracts with price and other terms
negotiated between buyer and seller and generally do not have as much market
liquidity as exchange-traded options.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Each Fund may enter into
contracts for the future delivery of fixed income securities commonly referred
to as "interest rate futures contracts." These futures contracts will not be
used for speculation but only as a hedge against anticipated interest rate
changes. A Fund also may use options to purchase or sell covered interest rate
futures contracts or debt securities and may write covered call options and cash
secured puts. Covered call options and cash secured puts will not exceed 25% of
total assets. Each Fund may invest in commodity futures contracts and options,
foreign currency futures contracts and options, and stock index futures
contracts and options thereon. Such contracts may not be entered into for
speculative
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<PAGE> 22
purposes. When a Fund purchases a futures contract, an amount of liquid assets
equal to the fair market value less initial and variation margin of the futures
contract will be segregated with an approved custodian to collateralize the
position and thereby ensure that such futures contract is "covered."
The Funds are subject to certain restrictions on their use of financial
futures contracts and options. A Fund will not enter into financial futures
contracts or purchase options on financial futures contracts if, after such a
transaction, the sum of initial margin deposits on the open financial futures
contracts and of premiums paid on open options on financial futures contracts
would exceed 5% of the Fund's total assets. Subject to the provisions of the
Company's fundamental investment policies, a Fund will not enter into financial
futures contracts or write options (except to close out open positions) if,
after such a transaction, the aggregate principal amount of all open financial
futures contracts and all options under which the Fund is obligated would exceed
100% of the Fund's total assets. A Fund will not purchase put and call options
on debt securities if, after such a transaction, the sum invested for premiums
in such options exceeds 2% of the Fund's total assets.
There are several risks associated with the use of futures and futures
options. The value of a futures contract may decline. With respect to
transactions for hedging, there can be no guarantee that there will be a
correlation between price movements in the hedging vehicle and in the portfolio
securities being hedged. An incorrect correlation could result in a loss on both
the hedged securities in a Fund and the hedging vehicle so that the portfolio
return might have been greater had hedging not been attempted. There can be no
assurance that a liquid market will exist at a time when a Fund seeks to close
out a futures contract or a futures option position. Most futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single day; once the daily limit has been reached on a
particular contract, no trades may be made that day at a price beyond that
limit. In addition, certain of these instruments are relatively new and without
a significant trading history. As a result, there is no assurance that an active
secondary market will develop or continue to exist. Lack of a liquid market for
any reason may prevent a Fund from liquidating an unfavorable position and the
Fund would remain obligated to meet margin requirements until the position is
closed.
The Funds will only enter into futures contracts or futures options which are
standardized and traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system. A Fund will use
financial futures contracts and related options only for "bona fide hedging"
purposes, as such term is defined in applicable regulations of the Commodity
Futures Trading Commission, or, with respect to positions in financial futures
and related options that do not qualify as "bona fide hedging" positions, will
enter into such non-hedging positions only to the extent that aggregate initial
margin deposits plus premiums paid by it for open futures option positions, less
the amount by which any such positions are "in-the-money," would not exceed 5%
of the Fund's total assets.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each Fund may enter into forward
foreign currency exchange contracts ("forward contracts") to attempt to minimize
the risk to the Fund from adverse changes in the relationship between the U.S.
dollar and foreign currencies. A forward contract is an obligation to purchase
or sell a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers. Such contracts may not be entered into for speculative purposes. A
Fund will not enter into forward contracts if, as a result, more than 10% of the
value of its total assets would be committed to the consummation of such
contracts, and will segregate assets or "cover" its positions consistent with
requirements under the 1940 Act to avoid any potential leveraging of the Fund.
MORTGAGE-RELATED SECURITIES. As described under "Investment Objectives and
Policies," the FLEX FUND may invest in mortgage pass-through securities and
CMOs, and the MULTIFLEX FUND and REAL ESTATE FUND may invest in mortgage-related
securities, including CMOs and mortgage-backed bonds, and asset-backed
securities.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgage loans in which payments of both interest and principal on
the securities are generally made monthly, in effect "passing through" monthly
payments made by the individual borrowers on the mortgage loans which underlie
the securities (net of fees paid to the issuer or guarantor of the securities).
Payment of principal and interest on some mortgage pass-through securities may
be guaranteed as to principal and interest (but not as to market value) by the
full faith and credit of the U.S. government (in the case of securities
guaranteed by the Government National Mortgage Association ("GNMA")); or
guaranteed by agencies or instrumentalities of the U.S. government (in the case
of securities guaranteed by Fannie Mae or the Federal Home Loan Mortgage
Corporation ("FHLMC"), which, while not supported by the full faith and credit
of the U.S. government, are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations). For more information on GNMA
certificates and FNMA and FHLMC mortgage-backed obligations, see
"Mortgage-Related Securities" in the Statement of Additional Information.
CMOs -- are securities which are typically collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FNMA, or FHLMC. Similar to
a bond, interest and pre-paid principal on a CMO are paid, in most cases,
semiannually. CMOs are structured into multiple classes, with each class bearing
a different stated maturity. Monthly payments of principal, including
prepayments, are first returned to investors holding the shortest maturity
class; investors holding the longer maturity classes will receive principal only
after the first class has been retired. CMOs that are issued or guaranteed by
the U.S. government or by any of its agencies or instrumentalities will be
considered U.S. government securities by the Portfolios, while other CMOs, even
if collateralized by U.S. government securities, will have the same status as
other privately issued securities for purposes of applying a Portfolio's
diversification tests.
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<PAGE> 23
Mortgage-backed bonds -- are general obligations of the issuer fully
collateralized directly or indirectly by a pool of mortgages. The mortgages
serve as collateral for the issuer's payment obligations on the bonds but
interest and principal payments on the mortgages are not passed through either
directly (as with GNMA certificates and Fannie Mae and FHLMC pass-through
securities) or on a modified basis (as with CMOs). Accordingly, a change in the
rate of prepayments on the pool of mortgages could change the effective maturity
of a CMO but not that of a mortgage-backed bond (although, like many bonds,
mortgage-backed bonds can provide that they are callable by the issuer prior to
maturity).
Asset-backed securities -- are securities representing interests in other
types of financial assets, such as automobile-finance receivables or credit-card
receivables. Such securities are subject to many of the same risks as are
mortgage-backed securities, including prepayment risks and risks of foreclosure.
They may or may not be secured by the receivables themselves or may be unsecured
obligations of their issuers. For further information on these securities, see
the Statement of Additional Information.
RISKS OF MORTGAGE-RELATED SECURITIES. Investment in mortgage-backed securities
poses several risks, including prepayment, market, and credit risk. Prepayment
risk reflects the risk that borrowers may prepay their mortgages faster than
expected, thereby affecting the investment's average life and perhaps its yield.
Whether or not a mortgage loan is prepaid is almost entirely controlled by the
borrower. Borrowers are most likely to exercise prepayment options at the time
when it is least advantageous to investors, generally prepaying mortgages as
interest rates fall, and slowing payments as interest rates rise. Besides the
effect of prevailing interest rates, the rate of prepayment and refinancing of
mortgages may also be affected by home value appreciation, ease of the
refinancing process and local economic conditions.
Market risk reflects the risk that the price of the security may fluctuate
over time. The price of mortgage-backed securities may be particularly sensitive
to prevailing interest rates, the length of time the security is expected to be
outstanding, and the liquidity of the issue. In a period of unstable interest
rates, there may be decreased demand for certain types of mortgage-backed
securities, and a Portfolio invested in such securities wishing to sell them may
find it difficult to find a buyer, which may in turn decrease the price at which
they may be sold.
Credit risk reflects the risk that a Fund may not receive all or part of its
principal because the issuer or credit enhancer has defaulted on its
obligations. Obligations issued by U.S. government-related entities are
guaranteed as to the payment of principal and interest, but are not backed by
the full faith and credit of the U.S. government. The performance of private
label mortgage-backed securities, issued by private institutions, is based on
the financial health of those institutions. With respect to GNMA certificates,
although GNMA guarantees timely payment even if homeowners delay or default,
tracking the "pass-through" payments may, at times, be difficult.
For further information, see the Statement of Additional Information.
ZERO COUPON OBLIGATIONS. The MULTIFLEX FUND may invest in zero coupon
obligations, which are fixed-income securities that do not make regular interest
payments. Instead, zero coupon obligations are sold at substantial discounts
from their face value. The Fund accrues income on these investments for tax and
accounting purposes, which is distributable to shareholders and which, because
no cash is received at the time of accrual, may require the liquidation of other
portfolio securities to satisfy distribution obligations, in which case the Fund
will forego the purchase of additional income-producing assets with these funds.
The difference between a zero coupon obligation's issue or purchase price and
its face value represents the imputed interest an investor will earn if the
obligation is held until maturity. Zero coupon obligations may offer investors
the opportunity to earn higher yields than those available on ordinary
interest-paying obligations of similar credit quality and maturity. However,
zero coupon obligation prices may also exhibit greater price volatility than
ordinary fixed-income securities because of the manner in which their principal
and interest are returned to the investor.
REAL ESTATE INDUSTRY SECURITIES. Because each of the MULTIFLEX FUND and REAL
ESTATE FUND invests in securities of companies engaged in the real estate
industry, it could conceivably own real estate directly as a result of a default
on debt securities it owns. The Fund, therefore, may be subject to certain risks
associated with the direct ownership of real estate, including difficulties in
valuing and trading real estate, declines in the value of real estate, risks
related to general and local economic conditions, adverse changes in the climate
for real estate, increases in property taxes and operating expenses, changes in
zoning laws, casualty or condemnation losses, limitations on rents, changes in
neighborhood values, the appeal of properties to tenants, and increases in
interest rates.
In addition to the risks described above, equity REITs may be affected by any
changes in the value of the underlying property owned by the trusts, while
mortgage REITs may be affected by the quality of any credit extended. Equity and
mortgage REITs are dependent upon management skill, are not diversified, and are
therefore subject to the risk of financing single or a limited number of
projects. Such trusts are also subject to heavy cash flow dependency, defaults
by borrowers, self-liquidation, and the possibility of failing to qualify for
tax-free pass-through of income under the Internal Revenue Code and of failing
to maintain exemption from the 1940 Act. Changes in interest rates may also
affect the value of debt securities held by the Fund. By investing in REITs
indirectly through the Fund, a shareholder will bear not only his proportionate
share of the expenses of the Fund, but also, indirectly, similar expenses of the
REITs.
HIGH YIELD/HIGH RISK SECURITIES. The MULTIFLEX FUND may invest up to 5% of
assets in securities rated lower than Baa by Moody's or BBB by S&P, but rated at
least Ba by Moody's or BB by S&P or, if unrated, determined by the Fund's
sub-advisor to be of comparable quality. Securities rated lower than Baa by
Moody's or lower than BBB by S&P are sometimes referred to as "high yield,"
"high risk," or "junk" bonds. In addition, securities rated Baa are considered
by Moody's to have some speculative characteristics.
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<PAGE> 24
Investing in high yield securities involves special risks in addition to the
risks associated with investments in higher rated debt securities. High yield
securities may be regarded as predominately speculative with respect to the
issuer's continuing ability to meet principal and interest payments. Analysis of
the creditworthiness of issuers of high yield securities may be more complex
than for issuers of higher quality debt securities, and the ability of a Fund to
achieve its investment objective may, to the extent of its investments in high
yield securities, be more dependent upon such creditworthiness analysis than
would be the case if the Fund were investing in higher quality securities.
High yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than higher grade securities. The
prices of high yield securities have been found to be less sensitive to interest
rate changes than more highly rated investments, but more sensitive to economic
downturns or individual corporate developments. A projection of an economic
downturn or of a period of rising interest rates, for example, could cause a
decline in high yield security prices because the advent of a recession could
lessen the ability of a highly leveraged company to make principal and interest
payments on its debt securities. If the issuer of high yield securities
defaults, a Fund may incur additional expenses to seek recovery. In the case of
high yield securities structured as zero coupon securities or payment-in-kind
securities (which pay interest in the form of additional securities), the market
prices of such securities are affected to a greater extent by interest rate
changes, and therefore tend to be more volatile than securities which pay
interest periodically and in cash. Moreover, a Fund records the interest on
these securities as income even though it receives no cash interest until the
security's maturity or payment date. A Fund will be required to distribute all
or substantially all such amounts annually and may have to obtain the cash to do
so by selling securities which otherwise would continue to be held. Shareholders
will be taxed on these distributions.
The secondary markets on which high yield securities are traded may be less
liquid than the market for higher grade securities. Less liquidity in the
secondary trading markets could adversely affect and cause large fluctuations in
the daily net asset value of a Fund's shares. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high yield securities, especially in a thinly traded
market.
The use of credit ratings as the sole method of evaluating high yield
securities can involve certain risks. For example, credit rating agencies
evaluate the safety of principal and interest payments, not the market value
risk of high yield securities. Also, credit rating agencies may fail to change
credit ratings in a timely fashion to reflect events since the security was last
rated. The sub-advisor does not rely solely on credit ratings when selecting
securities for the Funds, and develops its own independent analysis of issuer
credit quality. If a credit rating agency changes the rating of a portfolio
security held by the Fund, the Fund may retain the security if the sub-advisor
deems it in the best interest of the shareholders.
DELAYED DELIVERY TRANSACTIONS ("FORWARD COMMITMENTS"). The MULTIFLEX FUND,
REAL ESTATE FUND and INTERNATIONAL VALUE FUND may purchase or sell securities on
a when-issued or delayed delivery basis. These transactions involve a commitment
by the Fund to purchase or sell securities for a predetermined price or yield,
with payment and delivery taking place more than three days in the future, or
after a period longer than the customary settlement period for that type of
security. When delayed delivery purchases are outstanding, the Fund will
segregate liquid assets in an amount sufficient to meet the purchase price.
Typically, no income accrues on securities purchased on a delayed delivery basis
prior to the time delivery of the securities is made, although a Fund may earn
income on securities it has segregated. When purchasing a security on a delayed
delivery basis, a Fund assumes the rights and risks of ownership of the
security, including the risk of price and yield fluctuations, and takes such
fluctuations into account when determining its net asset value. Because a Fund
is not required to pay for the security until the delivery date, these risks are
in addition to the risks associated with the Fund's other investments. If a Fund
remains substantially fully invested at a time when delayed delivery purchases
are outstanding, the delayed delivery purchases may result in a form of
leverage. When a Fund has sold a security on a delayed delivery basis, the Fund
does not participate in future gains or losses with respect to the security. If
the other party to a delayed delivery transaction fails to deliver or pay for
the securities, the Fund could miss a favorable price or yield opportunity or
could suffer a loss. A Fund may dispose of or renegotiate a delayed delivery
transaction after it is entered into, and may sell when-issued securities before
they are delivered, which may result in a capital gain or loss.
FUND SECURITIES LOANS. Each of the Funds may lend limited amounts of portfolio
securities (not to exceed 10% of total assets) to broker-dealers or other
institutional investors. (See the Statement of Additional Information.)
PORTFOLIO TURNOVER. Generally, the rate of portfolio turnover will not be a
limiting factor when the Funds deem changes appropriate; however, it is
anticipated that no Fund's annual portfolio turnover rate generally will exceed
100%. In any particular year, however, market conditions could result in
portfolio activity at a greater rate than anticipated. Fund turnover rate, along
with the Company's brokerage allocation policies, are discussed in the Statement
of Additional Information.
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INVESTMENT RESTRICTIONS
The Directors of the Company, on behalf of the Funds, have adopted certain
investment restrictions which are fundamental policies and may not be changed as
to any Fund without the approval of the holders of a majority of such Fund's
outstanding voting securities (which in this Prospectus means, as to each Fund,
the vote of the lesser of (i) 67% or more of the voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or (ii) more than 50% of the outstanding
voting securities). The Statement of Additional Information contains, under the
heading "Investment Restric-
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<PAGE> 25
tions," specific enumerated investment restrictions which govern the investments
of each Fund. The Company's investment restrictions include, among others,
limitations with respect to the percentage of the value of any Fund's total
assets that may be invested in any one company or any one industry.
All of the Funds are "diversified" for purposes of the 1940 Act. It is a
fundamental restriction applicable to the MULTIFLEX FUND, REAL ESTATE FUND and
INTERNATIONAL VALUE FUND that, with respect to 75% of each Fund's assets, the
Fund will not purchase a security (other than a security issued or guaranteed by
the U.S. government, its agencies or instrumentalities) if, as a result, more
than 5% of the assets of the Fund would be invested in the securities of the
issuer. With respect to the LARGE CAP VALUE FUND and FLEX FUND, these
diversification requirements are applied to 100% of the Fund's total assets.
Except for the Funds' investment objectives and those investment policies of a
Fund specifically identified as fundamental, all investment policies and
practices described in this Prospectus and in the Statement of Additional
Information are not fundamental and, therefore, may be changed by the Board of
Directors without shareholder approval. Such changes may result in a Fund having
investment policies different from the investment policies which the shareholder
considered appropriate at the time of investment in the Fund. For a description
of each Fund's fundamental and non-fundamental investment policies, see
"Investment Restrictions" in the Statement of Additional Information.
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MANAGEMENT
The overall management of the business and affairs of the Funds is vested in
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Company, on behalf of one or more of the
Funds, and persons or companies furnishing services to the Funds, including the
investment advisory agreement with AIM, the agreements with AIM Distributors
regarding distribution of each Fund's shares and the agreements with State
Street Bank and Trust Company as the custodian. The day-to-day operations of
each Fund are delegated to the officers of the Company and to AIM, subject
always to the objective and policies of the applicable Fund and to the general
supervision of the Board of Directors. Certain directors and officers of the
Company are affiliated with AIM and A I M Management Group Inc. ("AIM
Management"), the parent corporation of AIM. Information concerning the Board of
Directors may be found in the Statement of Additional Information. For a
discussion of AIM Management and its subsidiaries' Year 2000 Compliance Project,
see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as investment advisor to each of the Funds. AIM has
been engaged in the investment advisory business since 1976, and is an indirect
wholly owned subsidiary of AMVESCAP PLC, which with its subsidiaries is an
independent management investment group engaged in institutional investment
management and retail market fund businesses in the United States, Europe and
the Pacific region.
SUB-ADVISORS. The sub-advisor to the LARGE CAP VALUE FUND and FLEX FUND is
INVESCO Capital Management, Inc., a Delaware corporation having its principal
office at 1315 Peachtree Street, N.E., Atlanta, Georgia 30309. ICM also has an
advisory office in Miami, Florida, and a marketing office in San Francisco,
California and has been engaged in the investment advisory business since 1979.
ICM believes it has one of the nation's largest discretionary portfolios of
tax-exempt accounts (such as pension and profit sharing funds for corporations
and state and local governments). Funds are supervised by investment managers
who utilize ICM's facilities for investment research and analysis, review of
current economic conditions and trends, and consideration of long-range
investment policy matters.
The sub-advisor to the MULTIFLEX FUND is INVESCO Management & Research, Inc.,
a Massachusetts corporation having its principal office at 101 Federal Street,
Boston, Massachusetts 02110. IMR has been engaged in the investment advisory
business since 1969. IMR currently manages predominately pension and endowment
accounts. IMR currently sponsors one investment company, The Commonwealth
Investment Trust, which consists of one portfolio.
The sub-advisor to the REAL ESTATE FUND is INVESCO Realty Advisors, Inc., a
Texas corporation having its principal office at One Lincoln Centre, Suite 1200,
5400 LBJ Freeway/LB-2, Dallas, Texas 75240. IRAI has been a registered
investment advisor and qualified professional asset manager since 1983. As of
December 31, 1997, IRAI's portfolio contained 124 properties totalling over 35.5
million square feet of commercial real estate and 14,340 apartment units. IRAI
currently advises one other mutual fund, INVESCO Realty Fund.
The sub-advisor to INTERNATIONAL VALUE FUND is INVESCO Global Asset Management
Limited, a Bermuda corporation having its principal office at Cedar House, 41
Cedar Avenue, Hamilton, HM 12 Bermuda. IGAM is registered as an investment
advisor under the Investment Advisors Act of 1940. IGAM's responsibilities
include analyzing global economic trends and establishing AMVESCAP PLC's global
investment asset allocations for AMVESCAP PLC affiliates.
AIM and ICM provide general investment advice and portfolio management to the
LARGE CAP VALUE FUND and FLEX FUND. AIM and IMR provide general investment
advice and portfolio management to the MULTIFLEX FUND. AIM and IGAM provide
general investment advice and portfolio management to INTERNATIONAL VALUE FUND.
AIM and IRAI provide general investment advice and portfolio management to the
REAL ESTATE FUND. AIM, ICM, IGAM, IRAI and IMR are indirect wholly owned
subsidiaries of AMVESCAP PLC, for-
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<PAGE> 26
merly AMVESCO PLC. AMVESCAP PLC is a publicly-traded holding company that,
through its subsidiaries, is one of the largest independent investment
management businesses in the world.
Effective August 4, 1997, AIM became the investment advisor for the Funds
pursuant to an investment advisory agreement with terms substantially identical
to those of the company's prior investment advisory contracts with INVESCO
Services, Inc. ("ISI"). The sub-advisors did not change other than the
substitution of IGAM for ICM as sub-advisor to INTERNATIONAL VALUE FUND.
Under the respective Investment Advisory and Sub-Advisory Agreements (the
"Advisory Agreements") with the Company, AIM, subject to the supervision of the
Directors, and the sub-advisors, subject to the supervision of AIM and the
Directors (see the Statement of Additional Information under "Officers and
Directors"), and in conformance with each Fund's stated policies, manage the
Funds' investment operations. In this regard, it will be the responsibility of
the respective sub-advisor (subject to the supervision of the Advisor) not only
to make investment decisions for the Funds, but also to place purchase and sale
orders for the portfolio transactions of the Funds. The Advisor and sub-advisors
may follow a policy of considering sales of shares of the Company as a factor in
the selection of broker-dealers to execute portfolio transactions. See the
Statement of Additional Information under "Brokerage and Portfolio
Transactions." In fulfilling its responsibilities, the Advisor may engage the
services of other investment managers with respect to one or more of the Funds,
subject to approval of the Board of Directors.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the Board of Directors,
AIM may take into account sales of shares of the Funds and other funds advised
by AIM in selecting broker-dealers to effect portfolio transactions on behalf of
the Funds.
PORTFOLIO MANAGERS. Information about the individual portfolio managers
responsible for management of the Funds, including their business experience for
the past five years, is provided below.
LARGE CAP VALUE FUND
Michael C. Harhai, C.F.A.
Portfolio Manager Portfolio Manager, ICM (March 1993 to present);
Senior Vice President and Manager, Sovran Capital
Management Corp. (Jan. 1992 to March 1993); Senior
Vice President and Portfolio Manager, C&S/Sovran
Capital Management (July 1991 to Jan. 1992).
Chartered Financial Analyst. Trustee, Atlanta Society
of Financial Analysts. Mr. Harhai has managed the
LARGE CAP VALUE FUND since July 1993.
R. Terrence Irrgang, C.F.A.
Assistant Portfolio
Manager Portfolio Manager, ICM (April 1992 to present);
Consultant, Towers, Perrin, Forster & Crosby (Oct.
1988 to April 1992). Chartered Financial Analyst.
Atlanta Society of Financial Analysts. Mr. Irrgang
has assisted in managing the LARGE CAP VALUE FUND
since July 1993.
FLEX FUND
Edward C. Mitchell, Jr.,
C.F.A.
Portfolio Manager Chairman and Director, ICM (March 1997 to present);
President and Director, ICM (Jan. 1992 to March
1997); Vice President and Director, ICM (Jan. 1979 to
Dec. 1991). Chartered Financial Analyst. Chartered
Investment Counselor. Past President, Atlanta Society
of Financial Analysts. Mr. Mitchell has managed the
FLEX FUND since its commencement of operations in
February 1988.
Margaret (Peg) W. Durkes,
CFA
Assistant Portfolio
Manager Portfolio Manager, ICM (July 1993-Present); Vice
President and Portfolio Manager, Sovran Capital
Management (July 1991-July 1993). Chartered Financial
Analyst. Atlanta Society of Financial Analysts. Ms.
Durkes has assisted in managing the FLEX FUND since
August 1997.
David S. Griffin, C.F.A.
Assistant Portfolio
Manager Portfolio Manager, ICM (March 1991 to present).
Chartered Financial Analyst. Atlanta Society of
Financial Analysts. Mr. Griffin has assisted in
managing the FLEX FUND since July 1993.
MULTIFLEX FUND
Robert S. Slotpole
Portfolio Manager Senior Vice President, Director of Equities and
Portfolio Manager, IMR (June 1993 to present);
Portfolio Manager, Hamilton Partners (February 1992
to June 1993); Vice President and Portfolio Manager,
The First Boston Corporation (May 1985 to February
1992). Mr. Slotpole is responsible for the asset
allocation decisions regarding the Fund's investments
in its five asset classes. Mr. Slotpole is assisted
by a team of portfolio managers, each of whom
specializes in one of the asset classes in which the
Fund may invest. Each portfolio manager is also
responsible for the security selection in his asset
class within the overall
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<PAGE> 27
asset allocation parameters and security selection
methodologies established by IMR. Mr. Slotpole has
managed the MULTIFLEX FUND since July 1, 1994.
Daniel A. Kostyk
Assistant Portfolio
Manager Portfolio Manager and Quantitative Analyst, IMR (June
1995 to present); Engineering Economic Analyst, Fluor
Daniel Inc. (October 1984 to May 1995). Mr. Kostyk
has assisted in managing the MULTIFLEX FUND since
June 1995.
REAL ESTATE FUND
Joe V. Rodriguez, Jr.
Portfolio Manager Director of Real Estate Securities and Portfolio
Manager, IRAI (1990 to present). Certified Financial
Planner. Mr. Rodriguez is assisted by a team of
portfolio managers, each of whom specializes in
different REIT sectors. He has managed the REAL
ESTATE FUND since its commencement of operations on
May 1, 1995.
Todd A. Johnston
Portfolio Manager Portfolio Manager, IRAI (1995 to present), formerly
portfolio manager with IMR (1986 to 1995). Mr.
Johnston has assisted in managing the REAL ESTATE
FUND since its commencement of operations on May 1,
1995.
James W. Trowbridge
Portfolio Manager Portfolio Manager, IRAI (1989 to present). Mr.
Trowbridge has assisted in managing the Real Estate
fund since its commencement of operations on May 1,
1995.
INTERNATIONAL VALUE FUND
W. Lindsay Davidson
Portfolio Manager Portfolio Manager, IGAM (August 4, 1997 to present);
Portfolio Manager, ICM (April 1993 to August 4,
1997); Portfolio Manager, INVESCO Asset Management
Limited (May 1984 to March 1993). Mr. Davidson has
managed the INTERNATIONAL VALUE FUND since its
commencement of operations in May 1995.
Erik B. Granade, C.F.A.
Assistant Portfolio
Manager Portfolio Manager, IGAM (August 1997 to present);
Portfolio Manager, ICM (April 1996 to present);
Partner and Portfolio Manager, Cashman Farrell &
Associates (June 1994 to March 1996); Portfolio
Manager, Provident Capital Management (October 1990
to May 1994). Chartered Financial Analyst. Chartered
Investment Counselor. Mr. Granade has assisted in
managing the INTERNATIONAL VALUE FUND since 1997.
ADVISORY FEES. For the services to be rendered and the expenses to be assumed by
the Advisor under the Investment Advisory Agreement, each of the Funds pays to
the Advisor an advisory fee which is computed daily and paid as of the last day
of each month on the basis of each Fund's daily net asset value, using for each
daily calculation the most recently determined net asset value of the Fund. See
"Determination of Net Asset Value."
On an annual basis, the advisory fee is equal to 0.75% of the average net
asset value of each of the LARGE CAP VALUE FUND and FLEX FUND; 0.90% of the
average net asset value of the REAL ESTATE FUND; and 1.00% of the average net
asset value of each of the MULTIFLEX FUND and INTERNATIONAL VALUE FUND. For the
period August 4, 1997 through December 31, 1997, AIM received total advisory
fees which represented 0.75% of the LARGE CAP VALUE FUND, 0.75% of the FLEX
FUND, 1.00% of the MULTIFLEX FUND, 0.90% of the REAL ESTATE FUND and 1.00%
of the INTERNATIONAL VALUE FUND, (annualized), respectively, of each Fund's
average daily net assets.
For services rendered to the LARGE CAP VALUE FUND and FLEX FUND, by ICM under
those Funds' Sub-Advisory Agreement, AIM pays to ICM a sub-advisory fee which is
computed daily and paid as of the last day of each month on the basis of each
Fund's daily net asset value using for each daily calculation the most recently
determined net asset value of the Fund. See "Determination of Net Asset Value."
For the fiscal year ended December 31, 1997, the sub-advisory fee paid to ICM
was equal to 0.20% and 0.20% of the average net asset value of the Fund for
each of the LARGE CAP VALUE FUND and FLEX FUND.
For services rendered to the MULTIFLEX FUND by IMR under that Fund's
Sub-Advisory Agreement, AIM pays to IMR a sub-advisory fee which is computed
daily and paid as of the last day of each month on the basis of the Portfolio's
daily net asset value using for each daily calculation the most recently
determined net asset value of the Fund. See "Determination of Net Asset Value."
For the fiscal year ended December 31, 1997, the sub-advisory fee paid to IMR
was equal to 0.35% of average net assets of the Fund.
For services rendered to the REAL ESTATE FUND by IRAI under that Fund's
Sub-Advisory Agreement, AIM pays to IRAI a sub-advisory fee which is computed
daily and paid as of the last day of each month on the basis of the Fund's daily
net asset value using for each daily calculation the most recently determined
net asset value of the Fund. See "Determination of Net Asset Value." For the
fiscal year ended December 31, 1997, the sub-advisory fee paid to IRAI was equal
to 0.35% of average net assets of the Fund.
23
<PAGE> 28
For services rendered to the INTERNATIONAL VALUE FUND by IGAM under that
Fund's Sub-Advisory Agreement, AIM pays to IGAM a sub-advisory fee which is
computed daily and paid as of the last day of each month on the basis of the
Fund's daily net asset value using for each daily calculation the most recently
determined net asset value of the Fund. See "Determination of Net Asset Value."
On an annual basis, the sub-advisory fee is equal to 0.35% of average net assets
up to $50 million; 0.30% on average net assets over $50 million up to $100
million; and 0.25% on average net assets in excess of $100 million. For the
period August 4, 1997 through December 31, 1997, IGAM received total
sub-advisory fees which represented 0.33% (annualized) of the Fund's average
daily net assets.
As manager to the Company, AIM also provides operating services pursuant to an
Operating Services Agreement with the Company. Under the Operating Services
Agreement, each Fund pays to AIM an annual fee of 0.45% of daily net assets of
the Fund for providing or arranging to provide accounting, legal (except
litigation), dividend disbursing, transfer agent, registrar, custodial,
shareholder reporting, sub-accounting and recordkeeping services and functions.
The agreement provides that the Manager pays all fees and expenses associated
with these and other functions, including, but not limited to, registration
fees, shareholder meeting fees, and proxy statement and shareholder report
expenses.
The combined effect of the Advisory Agreements, Operating Services Agreement,
and Plan of Distribution of the Company (see "Distribution Plan" below) is to
place a cap or ceiling on the total expenses of each Fund, other than brokerage
commissions, interest, taxes, litigation, directors' fees and expenses, and
other extraordinary expenses. AIM has voluntarily agreed to adhere to maximum
expense ratios for the Class A and Class C shares of the Funds for a period of
three years beginning August 4, 1997, provided that expense ratios might change
within this period in the event one or more Funds were reorganized or merged
with another fund. Any such reorganization or merger would require approval by
shareholders of the affected Fund(s). To the extent that expenses exceed the
amounts listed below, AIM will waive its fees or reimburse the Fund to assure
that expenses do not exceed the designated maximum amounts as qualified above.
The expense ceilings include reductions at larger asset sizes to reflect
anticipated economies of scale as the Funds grow in size.
If, in any calendar quarter, the average net assets of each of the LARGE CAP
VALUE FUND or FLEX FUND are less than $500 million, each Fund's expenses shall
not exceed 1.55% for Class A and 2.20% for Class C; on the next $500 million of
net assets, expenses shall not exceed 1.50% for Class A and 2.15% for Class C;
on the next $1 billion of net assets, expenses shall not exceed 1.45% for Class
A and 2.10% for Class C; and on all assets over $2 billion, expenses shall not
exceed 1.40% for Class A and 2.05% for Class C. If, in any calendar quarter, the
average net assets of the MULTIFLEX FUND or INTERNATIONAL VALUE FUND are less
than $100 million, expenses shall not exceed 1.80% for Class A and 2.45% for
Class C; on the next $400 million of net assets, expenses shall not exceed 1.75%
for Class A and 2.40% for Class C; on the next $500 million, expenses shall not
exceed 1.70% for Class A and 2.35% for Class C; on the next $1 billion of net
assets, expenses shall not exceed 1.65% for Class A and 2.30% for Class C; and
on all assets over $2 billion, expenses shall not exceed 1.60% for Class A and
2.25% for Class C. If, in any calendar quarter, the average net assets of the
REAL ESTATE FUND are less than $500 million, expenses shall not exceed 1.70% for
Class A and 2.35% for Class C; on the next $500 million, expenses shall not
exceed 1.65% for Class A and 2.30% for Class C; and on all assets over $1
billion, expenses shall not exceed 1.60% for Class A and 2.25% for Class C.
The Advisor and Sub-Advisors permit investment and other personnel to purchase
and sell securities for their own accounts, subject to a compliance policy
governing personal investing. This policy requires the Advisor's and
Sub-Advisors' personnel to conduct their personal investment activities in a
manner that the Advisor and Sub-Advisors believe is not detrimental to the Funds
or the Advisor's and Sub-Advisors' other advisory clients. See the Statement of
Additional Information for more detailed information.
DISTRIBUTOR. A I M Distributors, Inc., the Funds' distributor, a wholly owned
subsidiary of AIM, is the principal underwriter of the Company under a separate
Distribution Agreement (the "Distribution Agreement"). AIM Distributors is also
the principal underwriter for other investment companies and acts as agent upon
the receipt of orders from investors. AIM Distributors' principal office is
located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
AIM Distributors will be reimbursed for distribution-related expenses by each
of the Funds pursuant to the plans of distribution promulgated pursuant to Rule
12b-1 under the 1940 Act, as described under "Distribution Plan" herein and in
the Statement of Additional Information under "Distribution of Shares."
DISTRIBUTION PLAN. Rule 12b-1 under the 1940 Act ("Rule 12b-1") permits
investment companies to use their assets to bear expenses of distributing their
shares if they comply with various conditions. Pursuant to Rule 12b-1, each Fund
has adopted plans of distribution for each Class.
Class A and Class C Distribution Plan. The Class A and Class C Distribution
Plan (the "Class A and Class C Plan") provides that each Fund may make payments
to AIM Distributors which may not exceed a maximum annual rate of 0.35% of the
average daily net assets of the Funds attributable to Class A shares, to cover
certain distribution and shareholder service expenses. The Class A and Class C
Plan provides that each Fund may make payments to AIM Distributors which may
not exceed a maximum daily rate of 1.00% of the Funds' average daily net assets
attributable to their respective Class C shares, to cover certain distribution
and shareholder service expenses.
24
<PAGE> 29
In general, these amounts up to a maximum annual rate of 0.25% are used for
the payment to broker-dealers (including, for this purpose, certain other
qualifying financial institutions) as a "service fee" for providing account
maintenance or personal service to existing shareholders.
The Directors are authorized to reduce the amount of payments or to suspend
the Class A and Class C Plan for such periods as they may determine.
Class B Distribution Plan. The Class B Distribution Plan (the "Class B Plan")
provides that each Fund may make payments to AIM Distributors which may not
exceed a maximum daily rate of 1.00% of the Funds' average daily net assets
attributable to their respective Class B shares, to cover certain distribution
and shareholder service expenses. This expense includes payment calculated at an
annual rate of 0.25% of average annual net assets to broker-dealers as a
"service fee" for providing account maintenance or personal service to existing
shareholders.
Both Plans. Activities that may be financed under the Class A Plan, Class B
Plan and Class C Plan (collectively, the "Plans") include, but are not limited
to: 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, supplemental payments
to dealers and other institutions such as asset-based sales charges or as
payments of service fees under shareholder service arrangements, and the cost of
administering the Plans. These amounts payable by a Fund under the Plans need
not be directly related to the expenses actually incurred by AIM Distributors on
behalf of each Fund. Thus, even if AIM Distributors' actual expenses exceed the
fee payable to AIM Distributors thereunder at any given time, the Company will
not be obligated to pay more than that fee, and if AIM Distributors' expenses
are less than the fee it receives, AIM Distributors will retain the full amount
of the fee. Payments pursuant to the Plans are subject to any applicable
limitations imposed by the rules of the National Association of Securities
Dealers, Inc. ("NASD").
Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Certain financial institutions which have entered into service agreements and
which sell shares of the Fund on an agency basis may receive payments from the
Funds pursuant to the respective Plans. AIM Distributors does not act as
principal, but rather as agent, for the Funds in making such payments. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
GENERAL. AIM Distributors may suspend or modify the payments made to dealers
or other qualifying financial institutions under the Plans described above, and
such payments are subject to the continuation of the Distribution Plans by the
Directors, the terms of selling or shareholder servicing agreements between
dealers and AIM Distributors, and any applicable limits imposed by the NASD. For
additional information concerning the Fund's plans of distribution, see the
Statement of Additional Information under "Distribution of Shares."
- --------------------------------------------------------------------------------
CAPITALIZATION
The authorized capital stock of the Company consists of 10,075,000,000 shares
of common stock having a par value of $0.001 per share. The authorized capital
stock of the Company has been classified as 300,000,000 shares of each of the
Funds. Authorized shares of each Fund are divided among Class A, Class B and
Class C shares, as follows:
<TABLE>
<CAPTION>
FUND NAME CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------- -------------- -------------- --------------
<S> <C> <C> <C>
LARGE CAP VALUE FUND...................................... 100,000,000 100,000,000 100,000,000
FLEX FUND................................................. 100,000,000 100,000,000 100,000,000
MULTIFLEX FUND............................................ 100,000,000 100,000,000 100,000,000
INTERNATIONAL VALUE FUND.................................. 100,000,000 100,000,000 100,000,000
REAL ESTATE FUND.......................................... 100,000,000 100,000,000 100,000,000
</TABLE>
The Company's Articles of Incorporation provide that the obligations and
liabilities of each Fund or class, as applicable, are restricted to the assets
of the particular Fund or class, as applicable, and generally do not extend to
the assets of the other Funds or classes of the Company.
There are no conversion or preemptive rights in connection with any shares of
the Company, nor are there cumulative voting rights with respect to the shares
of the Company. Each of the Funds' shares has equal voting rights, except that
only shares of the respective Fund or class are entitled to vote on matters
concerning only that Fund or class. (See, also, "Miscellaneous," below.) Each
class of shares is entitled to participate in dividends and distributions
declared by the respective Funds and in net assets of such Funds upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities applicable to each class, including distribution and shareholder
servicing charges.
25
<PAGE> 30
All issued and outstanding shares of the Company will be fully paid and
nonassessable and will be redeemable at the net asset value per share (subject
to any applicable contingent deferred sales charge). Unless specifically
requested in writing by a shareholder, the interests of shareholders in the
Company will not be evidenced by a certificate or certificates representing
shares of the Company.
As of February 2, 1998, Merrill Lynch Pierce Fenner & Smith was the owner of
record of 60.18% of the outstanding Class A shares of FLEX FUND, and 53.95% of
the outstanding Class C shares of INTERNATIONAL VALUE FUND.
- --------------------------------------------------------------------------------
SHAREHOLDER REPORTS
Each Fund will issue to each of its shareholders semiannual and annual reports
containing each Fund's financial statements, including selected financial
highlights and a schedule of each Fund's portfolio securities. The federal
income tax status of shareholder distributions will also be reported to
shareholders after the end of each year.
Shareholders having any questions concerning any of the Funds may call AIM
Distributors. The toll-free telephone number is (800) 347-4246.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
From time to time the Fund may provide yield and total return figures for the
Funds and their classes in advertisements and in reports and other
communications to shareholders.
"Average annual total return" and "total return" figures represent the
increase (or decrease) in the value of an investment in the particular Fund and
class over a specified period. Both calculations assume that all income
dividends and capital gain distributions during the period are reinvested at net
asset value in additional shares of the class. Quotations of average annual
total return represent an average annual compounded rate of return on a
hypothetical investment in the Fund and class over a period of 1, 5, and 10
years ending on the most recent calendar quarter close. Quotations of total
return, which are not annualized, reflect actual earnings and asset value
fluctuations for the periods indicated. Both types of return are based on past
experience and do not guarantee future results.
Funds may provide quotations of "yield," "dividend yield," and "distribution
yield" for each class. Quotations of yield for these Funds will be based on all
investment income per share earned during a given 30-day period (including
dividends and interest), less expenses of the class accrued during the period
("net investment income"), and will be computed by dividing net investment
income by the maximum public offering price per share on the last day of the
period.
Dividend yield is a measure of investment return during a specified period
based on dividends actually paid by a class during that period. Dividend yield
is calculated by totaling the dividends paid by a class during the specified
period and dividing that sum by the net asset value per share of the class on
the last day of the period. Where the dividend yield is calculated for a period
of less than a year, results may be annualized. Distribution yield is computed
in the same way, but includes distributions paid from capital gains realized by
the class, as well as dividends from its net investment income.
Performance information for a Fund may be compared in advertisements, sales
literature, and reports to shareholders to: (i) unmanaged indices, such as the
S&P's 500 Stock Index, the Salomon Brothers Broad Investment Grade Bond Index,
the Morgan Stanley Capital International indices, the Dow Jones Industrial
Average, the Merrill Lynch 1 to 3 Year Treasury Index, the Salomon Brothers
World Government Benchmark Bond Index, the Lehman Brothers Municipal Bond Index,
the Lehman Brothers Aggregate Bond Index, the Lehman Brothers Government
Corporate Index and the NAREIT Equity Index; (ii) other groups of mutual funds
tracked by Lipper Analytical Services, a widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, or tracked by other services, companies, publications or persons who
rank mutual funds on overall performance or other criteria; and (iii) the
Consumer Price Index (measure for inflation) and other measures of the
performance of the economy to assess the real rate of return from an investment
in the Fund. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses.
Additional performance information is contained in the Statement of Additional
Information and in the Company's Annual Report to Shareholders, both of which
are available upon request without charge.
FEE WAIVERS. In order to increase the yield to investors, AIM or its
affiliates may from time to time voluntarily waive or reduce advisory or
distribution fees, while retaining the ability to be reimbursed for such fees
prior to the end of each fiscal year. Fee waivers or reductions, other than
those which may be set forth in the Advisory Agreement, may be rescinded at any
time without notice to investors; provided, however, that the Board of Directors
of the Company will be notified of the discontinuance of each fee waiver or
reduction.
26
<PAGE> 31
- --------------------------------------------------------------------------------
MISCELLANEOUS
As stated above, the Funds are series of the Company. The Company, as a
Maryland corporation, is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as electing or
removing directors, changing fundamental policies or approving an advisory
contract, or as may be required by applicable law or the Company's Articles of
Incorporation or By-Laws. Meetings of shareholders will be called upon written
request of shareholders holding in the aggregate at least 10% of the Company's
outstanding shares. The Directors will provide appropriate assistance to
shareholders, in compliance with provisions of the 1940 Act, if such a request
for a meeting is received. Each shareholder receives one vote for each share
owned (with proportionate voting for fractional shares), except that only shares
of the respective Fund or class are entitled to vote on matters concerning only
that Fund or class and each Fund and class shall have separate voting rights on
matters as to which the interests of the Fund or class differ from the interests
of any other Fund or class, to the extent required by applicable law, regulation
and regulatory interpretation.
27
<PAGE> 32
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(*)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(*)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match
Plans for Employee IRA ("SIMPLE IRA") accounts, 403(b) plans or 457 (state
deferred compensation) plans (except that the minimum initial investment for
salary deferrals for such plans is $25), or for investment of dividends and
distributions of any of the AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
AAA 03/03
A-1
<PAGE> 33
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for detail.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
AAA 03/03
A-2
<PAGE> 34
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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<PAGE> 35
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
AAA 03/03
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<PAGE> 36
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
AAA 03/03
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<PAGE> 37
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by vir-
AAA 03/03
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<PAGE> 38
tue of the foregoing definition, to the reduced sales charge. No person or
entity may distribute shares of the AIM Funds without payment of the applicable
sales charge other than to persons or entities who qualify for a reduction in
the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends,
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<PAGE> 39
Distributions and Tax Matters"); (b) exchanges of shares of certain other funds
(see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to
Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a
fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; and (i) employees of
Triformis Inc.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
AAA 03/03
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FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
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<PAGE> 41
Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
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<PAGE> 43
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds..........
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds.......... acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C shares of
another Multiple Class Fund; (b) the dollar amount of the exchange must be at
least equal to the minimum investment applicable to the shares of the fund
acquired through such exchange; (c) the shares of the fund acquired through
exchange must be qualified for sale in the state in which the shareholder
resides; (d) the exchange must be made between accounts having identical
registrations and addresses; (e) the full amount of the purchase price for the
shares being exchanged must have already been received by the fund; (f) the
account from which shares have been exchanged must be coded as having a
certified taxpayer identification number on file or, in the alternative, an
appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign
status) or Form W-9 (certifying exempt status) must have been received by the
fund; (g) newly acquired shares (through either an initial or subsequent
investment) are held in an account for at least ten business days, and all other
shares are held in an account for at least one day, prior to the exchange; and
(h) certificates representing shares must be returned before shares can be
exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
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<PAGE> 44
after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
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<PAGE> 45
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund to liquidate a shareholder's account if the aggregate net
asset value of shares held in the account is less than the designated minimum
account size described in the prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70-1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
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CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of the Code, or Plans created
under Section 403(b) of the Code and sponsored by nonprofit organizations as
defined under Section 501(c)(3) of the Code, where shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a
letter of intent to invest at least $1,000,000 in one or more of the AIM Funds,
or (c) the shares being redeemed were purchased by an employer-sponsored Plan
with at least 100 eligible employees; provided, however, that Plans created
under Section 403(b) of the Code which are sponsored by public educational
institutions shall qualify under (a), (b) or (c) above on the basis of the value
of each Plan participant's aggregate investment in the AIM Funds, and not on the
aggregate investment made by the Plan or on the number of eligible employees;
(2) redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information; and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be gen-
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uine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner; (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions; and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed
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the surety coverage amount indicated on the medallion. For information regarding
whether a particular institution or organization qualifies as an "eligible
guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
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- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
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payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish between the year 2000 from the year 1900.
This defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers provide the AIM Funds
and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
AAA 03/03
A-20
<PAGE> 52
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
AAA 03/03
A-21
<PAGE> 53
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give Social Security GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-AAF-02/98
B-1
<PAGE> 54
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-AAF-02/98
B-2
<PAGE> 55
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisors
INVESCO Capital Management, Inc.
1315 Peachtree Street, N.E.
Atlanta, GA 30309
INVESCO Management & Research, Inc.
101 Federal Street
Boston, MA 02110
INVESCO Realty Advisors, Inc.
One Lincoln Centre, Suite 1200
5400 LBJ Freeway/LB-2
Dallas, TX 75240
INVESCO Global Asset Management Limited
Cedar House
41 Cedar Avenue
Hamilton, HM12 Bermuda
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
Price Waterhouse LLP
950 Seventeenth Street, Suite 2500
Denver, Colorado 80202
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or
send money.
<PAGE> 56
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor any
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information does not constitute a
prospectus.
Subject to Completion. Dated March 3, 1998
STATEMENT OF
ADDITIONAL INFORMATION
AIM ADVISOR FLEX FUND
AIM ADVISOR INTERNATIONAL VALUE FUND
AIM ADVISOR LARGE CAP VALUE FUND
AIM ADVISOR MULTIFLEX FUND
AIM ADVISOR REAL ESTATE FUND
(SERIES PORTFOLIOS OF AIM ADVISOR FUNDS, INC.)
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(713) 626-1919
__________________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED
FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TX 77210-4739
OR BY CALLING (800) 347-4246
_____________________________
Statement of Additional Information Dated: March 3, 1998
Relating to the Prospectus Dated: March 3, 1998
<PAGE> 57
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Options on Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risks as to Futures Contracts and Related Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Securities Issued on a When-Issued or Delayed Delivery Basis . . . . . . . . . . . . . . . . . . . . . . . . . 5
Swap Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Mortgage-Related Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PORTFOLIO SECURITIES LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
MANAGEMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 17
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
THE ADVISORY AND SUB-ADVISORY AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
OPERATING SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
DISTRIBUTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Class A and C Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class B Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
DISTRIBUTIONS AND TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Options, Futures and Foreign Currency Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Swap Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Currency Fluctuations -- "Section 988" Gains or Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Investment in Passive Foreign Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Debt Securities Acquired at a Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
i
<PAGE> 58
<TABLE>
<S> <C>
Disposition of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Backup Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Other Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
BROKERAGE AND PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Computation of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
The Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 59
INTRODUCTION
AIM Advisor Funds, Inc. (INVESCO Advisor Funds, Inc. prior to August
4, 1997) (the "Company") is a series mutual fund. The rules and regulations of
the United States Securities and Exchange Commission (the "SEC") require all
mutual funds to furnish prospective investors certain information concerning
the activities of the fund being considered for investment. This information,
which relates to the following portfolios of the Company: AIM ADVISOR FLEX
FUND (formerly, INVESCO Advisor Flex Portfolio), AIM ADVISOR INTERNATIONAL
VALUE FUND (formerly, INVESCO Advisor International Value Portfolio), AIM
ADVISOR LARGE CAP VALUE FUND (formerly, INVESCO Advisor Equity Portfolio), AIM
ADVISOR MULTIFLEX FUND (formerly, INVESCO Advisor MultiFlex Portfolio), and AIM
ADVISOR REAL ESTATE FUND (formerly, INVESCO Advisor Real Estate Portfolio)
(individually, a "Fund" and collectively, the "Funds"), is included in a
Prospectus, dated March 3, 1998 (the "Prospectus"). Copies of the Prospectus
and additional copies of this Statement of Additional Information may be
obtained without charge by writing the principal distributor of the Company's
shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston,
Texas 77210-4739, or by calling (800) 347-4246. Investors must receive a
Prospectus before they invest in the Funds.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some
of the information required to be in this Statement of Additional Information
is also included in the Funds' current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Company's Registration Statement filed
with the SEC. Copies of the Registration Statement, including items omitted
from the Prospectus and this Statement of Additional Information, may be
obtained from the SEC by paying the charges prescribed under its rules and
regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1989 as a Maryland corporation, and is
registered with the SEC as an open-end, series, management investment company.
The Company currently consists of five separate portfolios: AIM ADVISOR FLEX
FUND (the "Flex Fund"), AIM ADVISOR INTERNATIONAL VALUE FUND (the
"International Value Fund"), AIM ADVISOR LARGE CAP VALUE FUND (the "Large Cap
Value Fund") and AIM ADVISOR MULTIFLEX FUND (the "MultiFlex Fund") and AIM
ADVISOR REAL ESTATE FUND (the "Real Estate Fund"). Each portfolio of the
Company offers Class A, Class B and Class C shares. This Statement of
Additional Information and the associated Prospectus relate solely to the
Funds.
Effective August 4, 1997, A I M Advisors, Inc. ("AIM" or "Advisor")
became the investment advisor for the Funds pursuant to an investment advisory
agreement with terms substantially identical to those of the company's prior
investment advisory contracts with INVESCO Services, Inc. ("ISI"). The
sub-advisors did not change other than the substitution of INVESCO Global Asset
Management Limited for INVESCO Capital Management, Inc. as sub-advisor to
INTERNATIONAL VALUE FUND.
As used in the Prospectus, the term "majority of the outstanding
shares" of the Company, of a particular Fund or of a class of a Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Company, such Fund or such class present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Company, such Fund or such class.
<PAGE> 60
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to the class of such Fund and, upon liquidation 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 of the Fund allocable
to such class. Fractional shares have proportionately the same rights,
including voting rights, as are provided for full shares.
INVESTMENT OBJECTIVES AND POLICIES
The following discussion elaborates on the disclosure of the Funds'
investment policies contained in the Prospectus.
CONVERTIBLE SECURITIES
Although the equity investments of the INTERNATIONAL VALUE FUND
consist primarily of common and preferred stocks, the Fund may buy securities
convertible into common stock if, for example, the sub-adviser believes that a
company's convertible securities are undervalued in the market. Convertible
securities eligible for purchase by the Fund include convertible bonds,
convertible preferred stocks, and warrants. A warrant is an instrument issued
by a corporation which gives the holder the right to subscribe to a specific
amount of the corporation's capital stock at a set price for a specified period
of time. Warrants do not represent ownership of the securities, but only the
right to buy the securities. The prices of warrants do not necessarily move
parallel to the prices of underlying securities. Warrants may be considered
speculative in that they have no voting rights, pay no dividends, and have no
rights with respect to the assets of a corporation issuing them. Warrant
positions will not be used to increase the leverage of the Fund; consequently,
warrant positions are generally accompanied by cash positions equivalent to the
required exercise amount.
OPTIONS
Each of the Funds is authorized to write (sell) covered call options
on the securities in which it may invest and to enter into closing purchase
transactions with respect to such options. Writing a call option obligates a
Fund to sell or deliver the option's underlying security, in return for the
strike price, upon exercise of the option. By writing a call option, the Fund
receives an option premium from the purchaser of the call option. Writing
covered call options is generally a profitable strategy if prices remain the
same or fall. Through receipt of the option premium, the Fund would seek to
mitigate the effects of a price decline. By writing covered call options,
however, the Fund gives up the opportunity, while the option is in effect, to
profit from any price increase in the underlying security above the option
exercise price. In addition, the Fund's ability to sell the underlying
security will be limited while the option is in effect unless the Fund effects
a closing purchase transaction.
Each Fund may purchase put options. A put purchased by the Fund
constitutes a hedge against a decline in the price of a security owned by the
Fund. It may be sold at a profit or loss depending upon changes in the price
of the underlying security. It may be exercised at a profit provided that the
amount of the decline in the price of the underlying security below the
exercise price during the option period exceeds the option premium, or it may
expire without value. A call constitutes a hedge against an increase in the
price of a security which the Fund has sold short. It may be sold at a profit
or loss depending upon changes in the price of the underlying security, it may
be exercised at a profit provided that the amount of the increase in the price
of the underlying security over the exercise price during the option period
exceeds the option premium, or it may expire without value. The maximum loss
exposure involved in the purchase of an option is the cost of the option
contract. A Fund may engage in strategies employing combinations of covered
put and call options.
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COMBINED OPTION POSITIONS
Each Fund, for hedging purposes, may purchase and write options in
combination with each other to adjust the risk and return characteristics of
the Fund's overall position. For example, the Fund may purchase a put option
and write a covered call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics are similar
to selling a futures contract. This technique, called a "straddle," enables
the Fund to offset the cost of purchasing a put option with the premium
received from writing the call option. However, by selling the call option,
the Fund gives up the ability for potentially unlimited profit from the put
option. Another possible combined position would involve writing a covered
call option at one strike price and buying a call option at a lower price, in
order to reduce the risk of the written covered call option in the event of a
substantial price increase. Because combined options positions involve
multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
FUTURES CONTRACTS
Each of the Funds may purchase and sell futures contracts in order to
hedge the value of its portfolio against changes in market conditions. In cases
of purchases of futures contracts, an amount of liquid assets, equal to the
cost of the futures contracts (less any related margin deposits), will be
segregated with the Funds' custodian to collateralize the position and ensure
that the use of such futures contracts is unleveraged. Unlike when a Fund
purchases or sells a security, no price is paid or received by a Fund upon the
purchase or sale of a futures contract. Initially, a Fund will be required to
deposit with its custodian for the account of the broker a stated amount, as
called for by the particular contract, of cash or U.S. Treasury bills. This
amount is known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in securities transactions in
that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
"variation margin," to and from the broker will be made on a daily basis as the
price of the futures contract fluctuates making the long and short positions in
the futures contract more or less valuable, a process known as
"marking-to-market." For example, when a Fund has purchased a stock index
futures contract and the price of the underlying stock index has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment with respect to that increase in value. Conversely,
where a Fund has purchased a stock index futures contract and the price of the
underlying stock index has declined, that position would be less valuable and
the Fund would be required to make a variation margin payment to the broker.
Variation margin payments would be made in a similar fashion when a Fund has
purchased an interest rate futures contract. At any time prior to expiration of
the futures contract, a Fund may elect to close the position by taking an
opposite position which will operate to terminate the Fund's position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund and the Fund
realizes a loss or gain.
A description of the various types of futures contracts that may be
utilized by the Funds is as follows:
Stock Index Futures Contracts
A stock index assigns relative values to the common stocks included in
the index and the index fluctuates with changes in the market values of the
common stocks so included. A stock index futures contract is an agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the stock
index value at the close of the last trading day of the contract and the price
at which the futures contract is originally struck. No physical delivery of the
underlying stocks in the index is made. Currently, stock index futures
contracts can be purchased or sold
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primarily with respect to broad based stock indices such as the Standard &
Poor's 500 Stock Index, the New York Stock Exchange Composite Index, the
American Stock Exchange Major Market Index, the NASDAQ -- 100 Stock Index and
the Value Line Stock Index. The stock indices listed above consist of a
spectrum of stocks not limited to any one industry. The Funds will only enter
into stock index futures contracts in order to hedge the value of its portfolio
against changes in market conditions. When a Fund anticipates a significant
market or market sector advance, the purchase of a stock index futures contract
affords a hedge against not participating in such advance. Conversely, in
anticipation of or in a general market or market sector decline that adversely
affects the market values of a Fund's portfolio of securities, the Fund may
sell stock index futures contracts.
Foreign Currency Futures Contracts
A Fund may also use futures contracts to hedge the risk of changes in
the exchange rate of foreign currencies. A foreign currency futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a foreign currency at a specified price and time.
OPTIONS ON FUTURES CONTRACTS
Each Fund may purchase options on futures contracts. An option on a
futures contract gives the purchaser the right, in return for the premium paid,
to assume a position in a futures contract (a long position if the option is a
call and a short position if the option is a put) at a specified exercise price
at any time during the option exercise period. The writer of the option is
required upon exercise to assume an offsetting futures position (a short
position if the option is a call and a long position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery of the
accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract. If an option on
a futures contract is exercised on the last trading date prior to the
expiration date of the option, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the
closing price of the futures contract on the expiration date.
A Fund will purchase put options on futures contracts to hedge against
the risk of falling prices for their respective portfolio securities. A Fund
will purchase call options on futures contracts as a hedge against a rise in
the price of securities which it intends to purchase. Options on futures
contracts may also be used to hedge the risks of changes in the exchange rate
of foreign currencies. The purchase of a put option on a futures contract is
similar to the purchase of protective put options on a portfolio security or a
foreign currency. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security or a foreign currency. Depending on the pricing of the option compared
to either the price of the futures contract upon which it is based or the price
of the underlying securities or currency, it may or may not be less risky than
ownership of the futures contract or underlying securities or currency.
RISKS AS TO FUTURES CONTRACTS AND RELATED OPTIONS
There are several risks in connection with the use of futures
contracts and related options as hedging devices. One risk arises because of
the imperfect correlation between movements in the price of hedging instruments
and movements in the price of the stock, debt security or foreign currency
which are the subject of the hedge. If the price of a hedging instrument moves
less than the price of the stock, debt security or foreign currency which is
the subject of the hedge, the hedge will not be fully effective. If the price
of a hedging instrument moves more than the price of the stock, debt security
or foreign currency, a Fund will experience either a loss or gain on the
hedging instrument which will not be completely offset by movements in the
price
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of the stock, debt security or foreign currency which is the subject of the
hedge. The use of options on futures contracts involves the additional risk
that changes in the value of the underlying futures contract will not be fully
reflected in the value of the option.
Successful use of hedging instruments by the Funds is also subject to
AIM's ability to predict correctly movements in the direction of the stock
market, of interest rates or of foreign exchange rates. Because of possible
price distortions in the futures and options markets and because of the
imperfect correlation between movements in the prices of hedging instruments
and the investments being hedged, even a correct forecast by AIM of general
market trends may not result in a completely successful hedging transaction.
It is also possible that where a Fund has sold futures contracts to
hedge its portfolio against a decline in the market, the market may advance and
the value of stocks or debt securities held in its portfolio may decline. If
this occurred, a Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities. Similar risks
exist with respect to foreign currency hedges.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Funds intend to
purchase or sell futures contracts there is no assurance that a liquid market
on an exchange or a board of trade will exist for any particular contract at
any particular time. If there is not a liquid market, it may not be possible to
close a futures position or purchase an option at such time. In the event of
adverse price movements under those circumstances, the Fund would continue to
be required to make daily cash payments of maintenance margin on its futures
positions. The extent to which a Fund may engage in futures contracts or
related options, will be limited by Internal Revenue Code requirements for
qualification as a regulated investment company and a Fund's intent to continue
to qualify as such. The result of a hedging program cannot be foreseen and may
cause a Fund to suffer losses which it would not otherwise sustain.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
Investment in securities on a when-issued or delayed delivery basis
may increase a Fund's exposure to market fluctuation and may increase the
possibility that the Fund will incur short-term gains subject to federal
taxation or short-term losses if the Fund must engage in portfolio transactions
in order to honor a when-issued or delayed delivery commitment. In a delayed
delivery transaction, the Fund relies on the other party to complete the
transaction. If the transaction is not completed, the Fund may miss a price or
yield considered to be advantageous. A Fund will employ techniques designed to
reduce such risks. If a Fund purchases a when-issued security, the Fund's
custodian bank will segregate liquid assets in an amount equal to the
when-issued commitment. If the market value of such securities declines,
additional liquid assets will be segregated on a daily basis so that the market
value of the segregated assets will equal the amount of the Fund's when-issued
commitments. To the extent liquid assets are segregated, they will not be
available for new investments or to meet redemptions. Securities purchased on
a delayed delivery basis may require a similar segregation of liquid assets.
SWAP AGREEMENTS
Each Fund may enter into interest rate, index and currency exchange
rate swap agreements for purposes of attempting to obtain a particular desired
return at a lower cost to the Fund than if it had invested directly in an
instrument that yielded that desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, two
parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments. The
gross returns to be exchanged or "swapped" between the parties are calculated
with respect to a "notional amount," i.e., the return on or increase in value
of a particular dollar amount invested at a particular interest rate, in a
particular foreign
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currency, or in a "basket" of securities representing a particular index.
Commonly used swap agreements include interest rate caps, under which, in
return for a premium, one party agrees to make payments to the other to the
extent that interest rates exceed a specified rate, or "cap"; interest rate
floors, under which, in return for a premium, one party agrees to make payments
to the other to the extent that interest rates fall below a specified level, or
"floor"; and interest rate collars, under which a party sells a cap and
purchases a floor or vice versa in an attempt to protect itself against
interest rate movements exceeding given minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictive basis on
which to calculate the obligations which the parties to a swap agreement have
agreed to exchange. Most swap agreements entered into by a Fund would
calculate the obligations of the parties to the agreement on a "net basis."
Consequently, a Fund's obligations (or rights) under a swap agreement will
generally be equal only to the net amount to be paid or received under the
agreement based on the relative values of the positions held by each party to
the agreement (the "net amount"). Obligations under a swap agreement will be
accrued daily (offset against amounts owing to the Fund) and any accrued but
unpaid net amounts owed to a swap counterparty will be covered by segregating
liquid assets, to avoid any potential leveraging of the Fund. A Portfolio will
not enter into a swap agreement with any single party if the net amount owed or
to be received under existing contracts with that party would exceed 5% of the
Fund's total assets. For a discussion of the tax considerations relating to
swap agreements, see "Distributions and Tax Information."
MORTGAGE-RELATED SECURITIES
Mortgage-related securities are interests in pools of mortgage loans
made to residential home buyers, including mortgage loans made by savings and
loan institutions, mortgage bankers, commercial banks and others. Pools of
mortgage loans are assembled as securities for sale to investors by various
governmental, government-related and private organizations (see "Mortgage
Pass-Through Securities" below). The Funds may also invest in debt securities
which are secured with collateral consisting of mortgage-related securities
(see "Collateralized Mortgage Obligations"), and in other types of
mortgage-related securities.
MORTGAGE PASS-THROUGH SECURITIES. Interests in pools of
mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their residential or
commercial mortgage loans, net of any fees paid to the issuer or guarantor of
such securities. Additional payments are caused by repayments of principal
resulting from the sale of the underlying property, refinancing or foreclosure,
net of fees or costs which may be incurred. Some mortgage-related securities
(such as securities issued by the Government National Mortgage Association
("GNMA")) are described as "modified pass-through." These securities entitle
the holder to receive all interest and principal payments owed on the mortgage
pool, net of certain fees, at the scheduled payment dates regardless of whether
or not the mortgagor actually makes the payment.
GNMA is the principal governmental guarantor of mortgage-related
securities. GNMA is a wholly owned U.S. government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the U.S. government, the timely payment of
principal and interest on securities issued by institutions approved by GNMA
(such as savings and loan institutions, commercial banks and mortgage bankers)
and backed by pools of FHA-insured or VA-guaranteed mortgages.
Government-related guarantors (i.e., not backed by the full faith and
credit of the U.S. government) include the Fannie Mae (formerly, the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC")). Fannie Mae is a government-sponsored corporation
owned entirely by private stockholders. It is subject to general regulation by
the Secretary of Housing and Urban
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Development. Fannie Mae purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Pass-through securities issued by Fannie Mae are
guaranteed as to timely payment of principal and interest by Fannie Mae but are
not backed by the full faith and credit of the U.S. government.
FHLMC was created by Congress in 1970 for the purpose of increasing
the availability of mortgage credit for residential housing. It is a
government-sponsored corporation formerly owned by the 12 Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues
Participation Certificates ("PCs") which represent interests in conventional
mortgages from FHLMC's national portfolio. FHLMC guarantees the timely payment
of interest and ultimate collection of principal, but PCs are not backed by the
full faith and credit of the U.S. government.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of conventional residential mortgage loans. Such
issuers may, in addition, be the originators and/or servicers of the underlying
mortgage loans as well as the guarantors of the mortgage-related securities.
Pools created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments in the former
pools. However, timely payment of interest and principal of these pools may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit. The insurance
and guarantees are issued by governmental entities, private insurers and the
mortgage poolers. Such insurance and guarantees and the creditworthiness of
the issuers thereof will be considered in determining whether a
mortgage-related security meets a Fund's investment quality standards. There
can be no assurance that the private insurers or guarantors can meet their
obligations under the insurance policies or guarantee arrangements. Although
the market for such securities is becoming increasingly liquid, securities
issued by certain private organizations may not be readily marketable. A Fund
will not purchase mortgage-related securities or other assets which in the
sub-adviser's opinion are illiquid if, as a result, more than 15% of the value
of the Fund's total assets will be illiquid.
Mortgage-backed securities that are issued or guaranteed by the U.S.
government, its agencies or instrumentalities, are not subject to a Fund's
industry concentration restrictions, by virtue of the exclusion from that test
available to all U.S. Government securities. In the case of privately issued
mortgage-related securities, the Funds take the position that mortgage-related
securities do not represent interests in any particular "industry" or group of
industries. The assets underlying such securities may be represented by a
portfolio of first lien residential mortgages (including both whole mortgage
loans and mortgage participation interests) or portfolios of mortgage pass-
through securities issued or guaranteed by GNMA, Fannie Mae or FHLMC. Mortgage
loans underlying a mortgage-related security may in turn be insured or
guaranteed by the Federal Housing Administration or the Department of Veterans
Affairs. In the case of private issue mortgage-related securities whose
underlying assets are neither U.S. government securities nor U.S.
government-insured mortgages, to the extent that real properties securing such
assets may be located in the same geographical region, the security may be
subject to a greater risk of default than other comparable securities in the
event of adverse economic, political or business developments that may affect
such region and, ultimately, the ability of residential homeowners to make
payments of principal and interest on the underlying mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). A CMO is a hybrid
between a mortgage-backed bond and a mortgage pass-through security. Similar
to a bond, interest and prepaid principal is paid, in most cases, semiannually.
CMOs may be collateralized by whole mortgage loans, but are more typically
collateralized by portfolios of mortgage pass- through securities guaranteed by
GNMA, FHLMC, or FNMA, and their income streams.
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CMOs are structured into multiple classes, each bearing a different
stated maturity. Actual maturity and average life will depend upon the
prepayment experience of the collateral. CMOs provide for a modified form of
call protection through a de facto breakdown of the underlying pool of
mortgages according to how quickly the loans are repaid. Monthly payment of
principal received from the pool of underlying mortgages, including
prepayments, is first returned to investors holding the shortest maturity
class. Investors holding the longer maturity classes receive principal only
after the first class has been retired. An investor is partially guarded
against a sooner than desired return of principal because of the sequential
payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple
series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond
offering are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security
for the Bonds. Principal and interest payments from the Collateral are used to
pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C
Bonds all bear current interest. Interest on the Series Z Bond is accrued and
added to principal and a like amount is paid as principal on the Series A, B,
or C Bond currently being paid off. When the Series A, B, and C Bonds are paid
in full, interest and principal on the Series Z Bond begins to be paid
currently. With some CMOs, the issuer serves as a conduit to allow loan
originators (primarily builders or savings and loan associations) to borrow
against their loan portfolios.
FHLMC CMOS. FHLMC CMOs are debt obligations of FHLMC issued in
multiple classes having different maturity dates which are secured by the
pledge of a pool of conventional mortgage loans purchased by FHLMC. Unlike
FHLMC PCs, payments of principal and interest on the CMOs are made
semiannually, as opposed to monthly. The amount of principal payable on each
semiannual payment date is determined in accordance with FHLMC's mandatory
sinking fund schedule, which, in turn, is equal to approximately 100% of FHA
prepayment experience applied to the mortgage collateral pool. All sinking
fund payments in the CMOs are allocated to the retirement of the individual
classes of bonds in the order of their stated maturities. Payment of principal
on the mortgage loans in the collateral pool in excess of the amount of FHLMC's
minimum sinking fund obligation for any payment date are paid to the holders of
the CMOs as additional sinking fund payments. Because of the "pass-through"
nature of all principal payments received on the collateral pool in excess of
FHLMC's minimum sinking fund requirement, the rate at which principal of the
CMOs is actually repaid is likely to be such that each class of bonds will be
retired in advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage
loans during any semiannual payment period is not sufficient to meet FHLMC's
minimum sinking fund obligation on the next sinking fund payment date, FHLMC
agrees to make up the deficiency from its general funds.
Criteria for the mortgage loans in the pool backing the FHLMC CMOs are
identical to those of FHLMC PCs. FHLMC has the right to substitute collateral
in the event of delinquencies and/or defaults.
INVESTMENT RESTRICTIONS
The Directors of the Company, on behalf of the Funds, have adopted the
following investment restrictions, all of which are fundamental policies and
may not be changed as to any Fund without the approval of the holders of a
majority of such Fund's outstanding voting securities. The Funds may not:
(1) Invest in the securities of issuers conducting their principal
business activity in the same industry, if immediately after such investment
the value of a Fund's investments in such industry would exceed 25% of the
value of such Fund's total assets; provided, however, that this limitation does
not apply to a Fund's investments in obligations issued or guaranteed by the
U.S. government, its agencies, authorities or instrumentalities.
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(2) For the MULTIFLEX FUND, REAL ESTATE FUND AND INTERNATIONAL
VALUE FUND, with respect to 75% of the Fund's assets, invest in the securities
of any one issuer, other than obligations of, or guaranteed by, the U.S.
government, its agencies, authorities or instrumentalities, if immediately
after such investment more than 5% of the value of the Fund's total assets,
taken at market value, would be invested in such issuer or more than 10% of
such issuer's outstanding voting securities would be owned by such Fund. For
the LARGE CAP VALUE FUND and FLEX FUND, with respect to 100% of the Fund's
assets, invest in the securities of any one issuer, other than obligations of,
or guaranteed by, the U.S. government, its agencies, authorities or
instrumentalities, if immediately after such investment more than 5% of the
value of the Fund's total assets, taken at market value, would be invested in
such issuer or more than 10% of such issuer's outstanding voting securities
would be owned by such Fund.
(3) Underwrite securities of other issuers, except insofar as it
may technically be deemed an "underwriter" under the Securities Act of 1933, as
amended, in connection with the disposition of a Fund's portfolio securities.
(4) Invest in companies for the purpose of exercising control or
management.
(5) Issue any class of senior securities or borrow money, except
borrowings from banks for temporary or emergency purposes not in excess of 5%
of the value of a Fund's total assets at the time the borrowing is made.
(6) Mortgage, pledge, hypothecate or in any manner transfer as
security for indebtedness any securities owned or held except to an extent not
greater than 5% of the value of a Fund's total assets.
(7) Make short sales of securities or maintain a short position.
All Funds may, however, purchase or sell options on futures and write, purchase
and sell puts and calls.
(8) Purchase securities on margin, except that a Fund may obtain
such short-term credit as may be necessary for the clearance of purchases and
sales of portfolio securities.
(9) Purchase or sell real estate or interests in real estate. A
Fund may invest in securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts, which invest in
real estate or interests therein.
(10) Purchase or sell commodities or commodity contracts, except as
set forth in the Prospectus and in this Statement of Additional Information for
purchases and sales of options and futures, and options or futures on
underlying financial instruments.
(11) Make loans to other persons, provided that a Portfolio may
purchase debt obligations consistent with its investment objectives and
policies and may lend limited amounts (not to exceed 10% of total assets) of
its portfolio securities to broker-dealers or other institutional investors.
(12) Purchase securities of other investment companies except (a)
in connection with a merger, consolidation, acquisition or reorganization; or
(b) by purchase in the open market of securities of other investment companies
involving only customary brokers' commissions and only if immediately
thereafter (i) no more than 3% of the voting securities of any one investment
company are owned by the Fund, (ii) no more than 5% of the value of the total
assets of a Fund would be invested in any one investment company, and (iii) no
more than 10% of the value of the total assets of a Fund would be invested in
the securities of such investment companies. A portion of a Fund's cash may be
invested from time to time in investment companies to which the Advisor or
sub-advisor serves as investment advisor; provided that no management or
distribution fee will be charged by the Advisor or sub-advisor with respect to
any such assets so invested
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and provided further that at no time will more than 3% of the Fund's assets be
so invested. Should a Fund purchase securities of other investment companies,
shareholders may incur additional management, advisory and distribution fees.
(13) Invest in securities for which there are legal or contractual
restrictions on resale, if more than 2% of the value of a Fund's total assets
would be invested in such securities, or invest in securities for which there
is no readily available market, if more than 5% of the value of a Fund's total
assets would be invested in such securities. In determining securities subject
to this 5% restriction, the Funds will include repurchase agreements maturing
in more than seven days.
Additional investment restrictions adopted by the Directors on behalf
of the Funds, which may be changed by the Directors at their discretion,
provide that the Funds may not:
(1) For the LARGE CAP VALUE FUND, FLEX FUND and REAL ESTATE FUND,
invest more than 10% of the value of the applicable Fund's total assets
directly in foreign securities, including unsponsored ADRs. Up to 25% of the
total assets of the LARGE CAP VALUE FUND and FLEX FUND may be invested in
securities of Canadian issuers and sponsored ADRs. The MULTIFLEX FUND may
invest up to 40% of total assets in securities of foreign issuers. Securities
of Canadian issuers and securities purchased by means of sponsored ADRs are not
subject to this 40% limitation. The INTERNATIONAL VALUE FUND may invest up to
100% of its total assets in securities of foreign issuers.
(2) Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except as set forth in the Prospectus and this Statement
of Additional Information for transactions in options, futures, and options on
futures and transactions arising under swap agreements. Options on interest
rate futures contracts and investments in initial margins will not exceed 5% of
the applicable Fund's total assets. Covered call options and cash secured puts
will not exceed 25% of the applicable Fund's total assets. For a detailed
discussion on these types of instruments, see the Prospectus.
(3) Engage in arbitrage transactions.
PORTFOLIO SECURITIES LOANS
Each of the Funds may lend limited amounts of Fund securities (not to
exceed 10% of total assets) to broker-dealers or other institutional investors.
The sub-advisors will monitor the creditworthiness of such broker-dealers in
accordance with procedures adopted by the Directors. Fund Management
understands that it is the current view of the staff of the SEC that the Funds
are permitted to engage in loan transactions only if the following conditions
are met: (1) the applicable Fund must receive 100% collateral in the form of
cash or U.S. government securities, e.g., U.S. Treasury bills or notes, from
the borrower; (2) the borrower must increase the collateral whenever the market
value of the borrowed securities (determined on a daily basis) rises above the
level of the collateral; (3) the applicable Fund must be able to terminate the
loan after notice; (4) the applicable Fund must receive reasonable interest on
the loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest or other distributions on the securities loaned and any
increase in market value; (5) the applicable Fund may pay only reasonable
custodian fees in connection with the loan; and (6) voting rights on the
securities loaned may pass to the borrower; however, if a material event
affecting the investment occurs, the Fund must be able to terminate the loan
and vote proxies or enter into an alternative arrangement with the borrower to
enable the Fund to vote proxies. Excluding items (1) and (2), these practices
may be amended from time to time as regulatory provisions permit.
While there may be delays in recovery of loaned securities or even a
loss of rights in collateral supplied should the borrower fail financially,
loans will be made only to firms deemed by the sub-advisers to
10
<PAGE> 69
be of good standing and will not be made unless, in the judgment of the
respective sub-adviser, the consideration to be earned from such loans would
justify the risk.
It is expected that each of the Funds will use the cash portions of
loan collateral to invest in short-term income producing securities for such
Fund's account and that such Fund may share some of the income from these
investments with the borrower.
MANAGEMENT OF THE COMPANY
Directors and Officers
The directors and officers of the Company and their principal
occupations during the last five years are set forth below. Unless otherwise
indicated, the address of each director and officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
Positions Held Principal Occupation During, At Least, the
Name, Address and Age with Registrant Past 5 Years
--------------------- --------------- ------------
<S> <C> <C>
*CHARLES T. BAUER (78) Director and Chairman of the Board of Directors,
Chairman A I M Management Group Inc., 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;
and Vice Chairman and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief
McLean, VA 22102 Executive Officer, COMSAT Corporation and
Chairman, Board of Governors of INTELSAT
(international communications company.)
- -----------------------------------------------------------------------------------------------------------------------------
OWEN DALY II (73) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
__________________________________
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
11
<PAGE> 70
<TABLE>
<CAPTION>
Positions Held Principal Occupation During, At Least, the
Name, Address and Age with Registrant Past 5 Years
--------------------- --------------- ------------
<S> <C> <C>
JACK FIELDS (45) Director Chief Executive Officer, Texana Global, Inc.
Jetero Plaza, Suite E Formerly, Member of the U. S. House of
8810 Will Clayton Parkway Representatives.
Humble, TX 77338
- -----------------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Director Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm). Director, ERD Waste, Inc. (waste
New York, NY 10022 management company), Aegis Consumer Finance
(auto leasing company) and Lazard Funds, Inc.
(investment companies). Formerly, Partner,
Reid & Priest (law firm); and, prior thereto,
Partner, Spengler Carlson Gubar Brodsky &
Frischling (law firm).
- -----------------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Director and Director, President and Chief Executive
President Officer, A I M Management Group Inc.;
Director and President, A I M Advisors, 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;
Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
__________________________________
** A director who is an "interested person" of the Company as defined in
the 1940 Act.
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
12
<PAGE> 71
<TABLE>
<CAPTION>
Positions Held Principal Occupation During, At Least, the
Name, Address and Age with Registrant Past 5 Years
--------------------- --------------- ------------
<S> <C> <C>
JOHN F. KROEGER (73) Director Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund,
Morristown, NJ 07960 Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Equity Partners Fund,
Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund,
Inc., Managed Municipal Fund, Inc., Flag
Investors Value Builder Fund, Inc., Flag
Investors Maryland Intermediate Tax-Free
Income Fund, Inc., Flag Investors Real Estate
Securities Fund, Inc., Alex. Brown Cash
Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment
companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
- -----------------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (55) Director Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (74) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
- -----------------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (58) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (real estate development).
Houston, TX 77056
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 72
<TABLE>
<CAPTION>
Positions Held Principal Occupation During, At Least, the
Name, Address and Age with Registrant Past 5 Years
--------------------- --------------- ------------
<S> <C> <C>
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and
President and Treasurer, A I M Advisors, Inc.; and Vice
Treasurer President and Treasurer, A I M Management
Group Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital
President Management, Inc.; Director and Senior Vice
President, A I M Management Group Inc. and
A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President, General
President and Counsel and Secretary, A I M Advisors, Inc.;
Secretary Vice President, General Counsel and
Secretary, A I M Management Group Inc.;
Director, Vice President and General Counsel,
Fund Management Company; General Counsel and
Vice President, A I M Fund Services, Inc.;
and Vice President, A I M Capital Management,
Inc. and A I M Distributors, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller,
and Assistant A I M Advisors, Inc.; and Assistant Vice
Treasurer President and Assistant Treasurer, Fund
Management Company.
- -----------------------------------------------------------------------------------------------------------------------------
ROBERT G. ALLEY (49) Vice President Senior Vice President, A I M Capital
Management, Inc.; and Vice President,
A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
__________________________________
*** Mr. Arthur and Ms. Relihan are married to each other.
14
<PAGE> 73
<TABLE>
<CAPTION>
Positions Held Principal Occupation During, At Least, the
Name, Address and Age with Registrant Past 5 Years
--------------------- --------------- ------------
<S> <C> <C>
STUART W. COCO (42) Vice President Senior Vice President, A I M Capital
Management, Inc.; and Vice President,
A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (54) Vice President Vice President and Chief 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.
- -----------------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (37) Vice President Senior Vice President, A I M Capital
Management, Inc.; and Vice President,
A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
JONATHAN C. SCHOOLAR (36) Vice President Senior Vice President, A I M Capital
Management, Inc.; and Vice President,
A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. The Audit
Committee is responsible for meeting with the Company's auditors to review
audit procedures and results and to consider any matters arising from an audit
to be brought to the attention of the directors as a whole with respect to the
Company's fund accounting or its internal accounting controls, and for
considering such matters as may from time to time be set forth in a charter
adopted by the Board of Directors and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Fields, Kroeger, Pennock (Chairman), Robinson and Sklar. The
Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as directors who are not
interested persons as long as the Company maintains a distribution plan
pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the
compensation payable to the disinterested directors, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
15
<PAGE> 74
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who
is not also an officer of the Company is compensated for his services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other mutual funds advised by AIM as well as
a director of the Funds (collectively, the "AIM Funds"). Each such director
receives a fee, allocated among the AIM Funds for which he 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 of the Company:
<TABLE>
<CAPTION>
TOTAL
RETIREMENT COMPENSATION
Estimated BENEFITS FROM ALL
COMPENSATION ACCRUED BY ALL AIM
Director FROM COMPANY(1) AIM FUNDS(2) FUNDS(3)
-------- --------------- -------------------------- -----------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
Bruce L. Crockett 3,736 67,774 84,000
Owen Daly II 3,736 103,542 84,000
Jack Fields 3,736 0 71,000
Carl Frischling(4) 3,736 96,520 84,000
Robert H. Graham 0 0 0
John F. Kroeger 3,607 94,132 82,500
Lewis F. Pennock 3,736 55,777 84,000
Ian W. Robinson 3,736 85,912 84,000
Louis S. Sklar 3,693 84,370 83,500
</TABLE>
________________
(1) The total amount of compensation deferred by all directors of the
Company during the period August 4, 1997, to December 31, 1997, including
interest earned thereon, was $14,712.
(2) During the period August 4, 1997, to December 31, 1997, the total
amount of expenses allocated to the Company in respect of such retirement
benefits was $9,486. Data reflects compensation for the calendar year ended
December 31, 1997.
(3) Each Director serves as director or trustee of the eleven registered
investments companies advised by AIM (comprised of over 45 portfolios). Data
reflect total compensation earned during the calendar year ended December 31,
1997. Does not include accrued retirement benefits or earnings on deferred
compensation.
16
<PAGE> 75
(4) The Company paid the law firm of Kramer, Levin, Naftalis & Frankel
$3,259 in legal fees for services provided to the Funds, during the period
August 4, 1997, to December 31, 1997. Mr. Frischling is a partner in such
firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director 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 benefit
from the Applicable AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
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) for 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 any benefits under the Plan
commences, 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 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, Fields, Frischling, Kroeger, Pennock,
Robinson and Sklar are 10, 11, 0, 20, 20, 16, 10 and 8 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
Number of Years of Service Annual Retainer
with the AIM Funds Paid by all
AIM Funds
<S> <C>
$80,000
10 $60,000
9 $54,000
8 $48,000
7 $42,000
6 $36,000
5 $30,000
</TABLE>
17
<PAGE> 76
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, 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' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of
five (5) or ten (10) years (depending on the Agreement) beginning on the date
the deferring director's retirement benefits commence under the Plan. The
Company's Board of Directors, 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 Company. 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 Company and of each other AIM Fund from which
they are deferring compensation.
THE ADVISORY AND SUB-ADVISORY AGREEMENTS
The investment advisor to the Company is A I M Advisors, Inc., which
has its principal office at 11 Greenway Plaza, Suite 100, Houston, Texas
77046. AIM is a direct wholly owned subsidiary of A I M Management Group Inc.
("AIM Management") and is the sole shareholder of the Company's principal
underwriter, A I M Distributors, Inc. AIM Management is an indirect wholly
owned subsidiary of AMVESCAP PLC, ("AMVESCAP") 11 Devonshire Square, London
EC2M 4YR, United Kingdom.
The sub-advisor to the LARGE CAP VALUE FUND and FLEX FUND is INVESCO
Capital Management, Inc., a Delaware corporation ("ICM"), which has its
principal office at 1315 Peachtree Street, N. E., Atlanta, Georgia 30309. ICM
also has an advisory office in Miami, Florida and a marketing and client
service office in San Francisco, California.
The sub-advisor to the MULTIFLEX FUND is INVESCO Management and
Research, Inc., of Boston, Massachusetts ("IMR"), a Massachusetts corporation
which has its principal office at 101 Federal Street, Boston, MA 02110. IMR
manages predominantly pension and endowment accounts.
The sub-advisor to the REAL ESTATE FUND is INVESCO Realty Advisors,
Inc., a Texas corporation based in Dallas ("IRAI"), which has its principal
office at One Lincoln Centre, Suite 1200, 5400 LBJ Freeway/LB 2, Dallas, Texas
75240. IRAI is responsible for providing advisory services in the U.S. real
estate markets for AMVESCAP's clients worldwide. IRAI was established in 1983
as a registered investment adviser and qualified professional asset manager.
As of December 31, 1997, IRAI's portfolio contained 124 properties totaling
over 35.5 million square feet of commercial real estate and 14,340 apartment
units. Clients include corporate plans and public pension funds as well as
endowment and foundation accounts.
The sub-advisor to INTERNATIONAL VALUE FUND is INVESCO Global Asset
Management Limited ("IGAM"), which has its principal office at Cedar House, 41
Cedar Avenue, Hamilton, HM 12 Bermuda. IGAM's responsibilities include
analyzing global economic trends and establishing AMVESCAP PLC's global
investment asset allocation for AMVESCAP PLC affiliates.
ICM, IMR, IRAI and IGAM are indirect wholly owned subsidiaries of
AMVESCAP (formerly, AMVESCO PLC and INVESCO PLC). AMVESCAP, a publicly-traded
holding company that, through its subsidiaries, engages in the business of
investment management on an international basis, is one of the largest
independent investment management businesses in the world.
18
<PAGE> 77
Under their Investment Advisory and Sub-Advisory Agreements (the
"Agreements") with the respective Funds, the Advisor and sub-advisors will,
subject to the supervision of the Directors of the Company and in conformance
with the stated policies of the Funds, manage the investment operations of the
Funds. In this regard, it will be the responsibility of the Advisor and
sub-advisors not only to make investment decisions for the Funds, but also to
place the purchase and sale orders for the portfolio transactions of the Funds.
(See "Brokerage and Portfolio Transactions.") The Investment Advisory Agreement
provides that, in fulfilling its responsibilities, the Advisor may engage the
services of other investment managers with respect to one or more of the Funds.
The Advisor is also responsible for furnishing to the Funds, at the
Advisor's expense, the services of persons believed to be competent to perform
all supervisory and administrative services required by the Funds, in the
judgment of the Directors, to conduct their respective businesses effectively,
as well as the offices, equipment and other facilities necessary for their
operations. Such functions include the maintenance of each Fund's accounts and
records, and the preparation of all requisite corporate documents such as tax
returns and reports to the SEC and shareholders. Operational services which
are necessary for the day-to-day operations of the Funds are provided under a
separate Operating Services Agreement between the Company and AIM (See
"Operating Services Agreement").
Rule 18f-3 under the 1940 Act ("Rule 18f-3") permits a fund to use a
multiclass system including separate class arrangements for distribution of
shares and related exchange privileges applicable to the classes. The Company
has adopted a multiple class plan pursuant to Rule 18f-3, which provides that
advisory and operating services fees (see "Operating Services Agreement") are
expenses of a particular Fund and are not attributable to a particular class of
the Fund ("Fund Expenses") and, therefore, shall be allocated to each class on
the basis of its net asset value relative to the net asset value of the Fund.
(See "Computation of Net Asset Value").
Except as discussed below (see "Operating Services Agreement"), each
of the Funds is responsible for the payment of its own expenses. Interest,
taxes, distribution expenses, directors' fees and expenses and extraordinary
items such as litigation costs will be borne by the Company or particular Fund,
as applicable. Expenditures, including costs incurred in connection with the
purchase or sale of Fund securities, which are capitalized in accordance with
generally accepted accounting principles applicable to investment companies,
are accounted for as capital items and not as expenses.
For the services to be rendered and the expenses to be assumed by the
Advisor under the Investment Advisory Agreements, each Fund will pay to the
Advisor an advisory fee which will be computed daily and paid as of the last
day of each month on the basis of the Fund's daily net asset value, using for
each daily calculation the most recently determined net asset value of the
Fund. On an annual basis, the advisory fee is equal to 0.75% of the average
net asset value of net assets of the Fund for each of the LARGE CAP VALUE FUND
and FLEX FUND, 0.90% of the average net asset value of the REAL ESTATE FUND and
1.00% of the average net asset value of each of the MULTIFLEX FUND and
INTERNATIONAL VALUE FUND. Those fees which equal 0.75% of average annual net
assets are higher than those generally charged by investment advisors to
similar funds for advisory services. However, the Advisor also provides
certain supervisory and administrative services to the Funds pursuant to the
Investment Advisory Agreements.
For the services to be rendered and the expenses to be assumed by ICM,
IGAM, IMR and IRAI under their respective Sub-Advisory Agreements, the Advisor
will pay to each sub-advisor a fee which will be computed daily and paid as of
the last day of each month on the basis of each Fund's daily net asset value,
using for each daily calculation the most recently determined net asset value
of the Fund. (See "Computation of Net Asset Value"). On an annual basis, the
sub-advisory fee is equal to 0.20% of the average net asset value of the Fund
for each of the LARGE CAP VALUE FUND and FLEX FUND; 0.35% of the average net
asset value of the REAL ESTATE FUND on assets up to $100 million and 0.25% on
assets in excess of $100 million; 0.35% of the average net asset value of the
MULTIFLEX FUND on assets up to $500 million and 0.25% on assets in excess of
$500 million; and the following for the INTERNATIONAL VALUE FUND: 0.35% on net
assets
19
<PAGE> 78
up to $50 million, 0.30% on net assets over $50 million and up to $100 million,
and 0.25% on net assets over $100 million.
The current Investment Advisory and Sub-Advisory Agreements were
approved by the shareholders of each of the Funds on July 9, 1997, effective as
of August 4, 1997, for an initial two-year period. Thereafter, the Agreements
will each continue in effect from year to year provided such continuance is
specifically approved at least annually by (i) the vote of a majority of each
applicable Fund's outstanding voting securities (see "General Information About
the Company") or by the Directors, and (ii) the vote of a majority of the
Directors, who are not "interested persons" (as such term is defined in the
1940 Act) of the Funds or the Advisor or the respective sub-advisor. The
Agreements are terminable on 60 days' written notice by either party thereto
and will terminate automatically if assigned.
For the fiscal years ended December 31, 1997, 1996 and 1995, the
aggregate amounts of the advisory fees paid to AIM (or INVESCO Services, Inc.,
the prior advisor) by the Funds, were as follows:
<TABLE>
<CAPTION>
Aug. 4 Jan. 1
to Dec. 31 to Aug. 3
Fund 1997* 1997 1996 1995
---- ------- -------- ---- ----
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND . . . . . $ 698,693 $ 486,185 $ 946,203 $ 725,315
FLEX FUND . . . . . . . . . . . 2,511,884 1,732,896 3,351,899 2,387,908
MULTIFLEX FUND . . . . . . . . 2,126,222 1,153,820 2,164,778 1,424,150
REAL ESTATE FUND . . . . . . . 229,632 90,122 102,386 13,012
INTERNATIONAL VALUE FUND . . . 536,578 272,940 314,843 24,906
</TABLE>
*Effective August 4, 1997, AIM became advisor to the Funds.
The investment advisory services of the Advisor to the Funds are not
exclusive and the Advisor is free to render investment advisory services to
others, including other investment companies. See "Operating Services
Agreement" below regarding expense limitations.
OPERATING SERVICES AGREEMENT
AIM, as manager of the Funds, also provides operating services
pursuant to an Operating Services Agreement with the Fund. Under the Operating
Services Agreement, each Fund pays to AIM an annual fee of 0.45% of daily net
assets of the Fund for providing or arranging to provide accounting, legal
(except litigation), dividend disbursing, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. These
agreements provide that AIM pays all fees and expenses associated with these
and other functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
The combined effect of the Advisory Agreements and Operating Services
Agreement, and the Distribution Plans of each of the Funds (see "Distribution
of Shares"), is to place a cap or ceiling on the total expenses of each Fund,
other than brokerage commissions, interest, taxes, litigation, directors' fees
and expenses, and other extraordinary expenses. AIM has voluntarily agreed to
adhere to maximum expense ratios for the Funds. To the extent that a Fund's
expenses exceed the amounts listed below, AIM will waive its fees or reimburse
the Fund to assure that each Fund's expenses do not exceed the designated
maximum amounts except for those items specifically identified above. The
expense ceilings include reductions at larger asset sizes to reflect
anticipated economies of scale as the Funds grow in size.
If, in any calendar quarter, the average net assets of each of the
LARGE CAP VALUE FUND or FLEX FUND are less than $500 million, each Fund's
expenses shall not exceed 1.55% for Class A and 2.20% for Class C; on the next
$500 million of net assets, expenses shall not exceed 1.50% for Class A and
2.15% for Class C; on the next $1 billion of net assets, expenses shall not
exceed 1.45% for Class A and 2.10% for
20
<PAGE> 79
Class C; and on all assets over $2 billion, expenses shall not exceed 1.40% for
Class A and 2.05% for Class C. If, in any calendar quarter, the average net
assets of the MULTIFLEX FUND or INTERNATIONAL VALUE FUND are less than $100
million, expenses shall not exceed 1.80% for Class A and 2.45% for Class C; on
the next $400 million of net assets, expenses shall not exceed 1.75% for Class
A and 2.40% for Class C; on the next $500 million, expenses shall not exceed
1.70% for Class A and 2.35% for Class C; on the next $1 billion of net assets,
expenses shall not exceed 1.65% for Class A and 2.30% for Class C; and on all
assets over $2 billion, expenses shall not exceed 1.60% for Class A and 2.25%
for Class C. If, in any calendar quarter, the average net assets of the REAL
ESTATE FUND are less than $500 million, expenses shall not exceed 1.70% for
Class A and 2.35% for Class C; on the next $500 million, expenses shall not
exceed 1.65% for Class A and 2.30% for Class C; and on all assets over $1
billion, expenses shall not exceed 1.60% for Class A and 2.25% for Class C.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the heading "How to
Purchase Shares" and "Terms and Conditions of Purchases" of the AIM Funds. AIM
Distributors, the Company's distributor, is the principal underwriter of the
Company under a separate Distribution Agreement (the "Distribution Agreement").
The Distributor's office is located at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1143. The Distributor will receive payments from each Fund
pursuant to the provisions of the Company's plans of distribution described
under "Distribution of Shares." Prior to August 4, 1997, INVESCO Services,
Inc. (the "Prior Distributor") was the principal underwriter of the Company.
The following chart reflects the total sales charges paid in
connection with the sale of shares of each Fund and the amount retained by AIM
Distributors for the period August 4, 1997 to December 31, 1997, and the amount
retained by the Prior Distributor for the period January 1, 1997 to August 3,
1997:
<TABLE>
<CAPTION>
JANUARY 1, 1997 AUGUST 4, 1997
TO TO
AUGUST 3, 1997 DECEMBER 31, 1997
-------------- -----------------
AMOUNT SALES AMOUNT
RETAINED CHARGES RETAINED
-------- ------- --------
<S> <C> <C> <C>
LARGE CAP VALUE FUND . . . . . . . . . $ 999 $ 50,144 $ 7,461
FLEX FUND . . . . . . . . . . . . . . . 6,860 80,657 11,729
MULTIFLEX FUND . . . . . . . . . . . . 7,203 200,181 30,382
REAL ESTATE FUND . . . . . . . . . . . 1,424 356,286 54,138
INTERNATIONAL VALUE FUND . . . . . . . 8,333 113,771 16,464
</TABLE>
DISTRIBUTION OF SHARES
Rule 12b-1 under the 1940 Act ("Rule 12b-1") permits a fund to use its
assets to bear expenses of distributing its shares if it complies with various
conditions, including adoption of a plan of distribution containing certain
provisions set forth in the Rule. The plans described below were approved with
respect to each Fund by the directors of the Fund, including a majority of the
directors who are not "interested persons" of the Funds as defined in the 1940
Act ("Independent Directors") and the directors who have no direct or indirect
financial interest in the plan or any agreement related thereto (the "Rule
12b-1 Directors"). The directors determined that, in their judgment, there was
a reasonable likelihood that the plans will benefit each Fund and its
shareholders by, among other things, providing broker-dealers with an incentive
to sell additional shares of the Company, thereby helping to satisfy the
Company's liquidity needs and helping to increase the Company's investment
flexibility. Continuation of the plans is approved annually. On June 8, 1993,
the Plan and Agreement of Distribution ("Distribution Plan") applicable to
Class C shares was approved by shareholders of the LARGE CAP VALUE FUND and
FLEX FUND. On November 8, 1993, the Distribution Plan
21
<PAGE> 80
applicable to Class C shares was approved by the sole shareholder of the
MULTIFLEX FUND. On April 10, 1995, the Distribution Plan applicable to Class C
shares was approved by the sole shareholder of each of the REAL ESTATE FUND and
INTERNATIONAL VALUE FUND. The Distribution Plan for Class A shares was
approved by the board of directors of the Company at its August 13, 1996 Board
meeting, and by the initial shareholder(s) of Class A shares of each Fund prior
to their public offering. On February 4, 1997, the board of directors approved
amending the Distribution Plan for Class A shares, effective January 1, 1997,
to convert the Distribution Plan to a compensation type Rule 12b-1 plan. This
amendment of the Distribution Plan did not result in increasing the amount of
any Fund's payments thereunder. The Master Distribution Plan for Class B
shares was approved by the board of directors of the Company at its September
20, 1997 Board meeting.
CLASS A AND CLASS C DISTRIBUTION PLAN. The Company has adopted a Plan and
Agreement of Distribution pursuant to Rule 12b-1 under the 1940 Act relating to
the Class A and Class C shares of the Funds (the "Class A and C Plan''). The
Class A and C Plan provides that each Fund may incur certain distribution and
maintenance fees which may not exceed a maximum annual rate of 0.35% of the
average net assets of the Funds attributable to Class A shares and 1.00% of the
average net assets attributable to Class C Shares. For Class A shares, this
expense includes the payment to broker-dealers and other qualifying financial
institutions of a "service fee" for providing account maintenance or personal
service to existing shareholders. For Class C shares, this expense includes the
payment of 0.25% of average annual net assets to broker-dealers as a "service
fee" for providing account maintenance or personal service to existing
shareholders.
Under the Class A and C Plan, broker-dealers selling Company shares may
be paid fees for selling shares and maintaining Company assets. For Class A
shares, of such fees .25% of average net assets may be paid as a "service fee."
The service fee, computed on the basis of the average net asset value of Class A
shares sold by broker-dealers which are outstanding on the books of such Funds
for each month, will be made at least quarterly to the selling broker-dealer.
For Class C shares, generally, an asset-based fee for selling shares and
providing services to shareholders will be paid out of Rule 12b-1 plan payments
by the Distributor as follows: payments not exceeding 1.00% per annum, which
amount includes the 0.25% "service fee," of the average net asset value of Class
C shares sold by broker-dealers, which are outstanding on the books of such
Funds for each month, will be made at least quarterly to the selling
broker-dealer. Additionally, the plan authorizes each applicable Fund, subject
to the annual limitations described above, to pay the Distributor (or other
broker-dealers): (1) the costs and expenses incurred in preparation, printing
and distribution of the Company's sales literature and prospectuses and
statements of additional information for prospective investors; (2) amounts from
time to time to support marketing shares of the Company through programs with
broker-dealers selling Company shares; and (3) overhead expenses which include
the costs of the Distributor's personnel whose primary responsibilities involve
marketing the Company. In addition, the plan provides that the Company may pay,
subject to the annual limitations, such other distribution costs and expenses as
the Directors may from time to time specify.
CLASS B DISTRIBUTION PLAN. The Company has also adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of
the Funds. Under the Class B Plan, the Funds pay compensation to AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class B shares. Of such amount, the Funds pay a service fee of
0.25% of the average daily net assets attributable to Class B shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to their customers who purchase and own Class B shares.
Amounts paid in accordance with the Class B Plan may be used to finance any
activity primarily intended to result in the sale of Class B shares, including,
but not limited to, 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 Class B Plan. AIM Distributors may transfer and sell its
right under the Class B Plan in order to finance distribution expenditures in
respect of Class B shares.
22
<PAGE> 81
(1) the costs and expenses incurred in preparation, printing and distribution
of the Company's prospectuses and statements of additional information for
prospective investors, and sales literature; (2) amounts from time to time to
support marketing shares of the Company through programs with broker-dealers
selling Company shares; and (3) overhead expenses which include the costs of
the Distributor's personnel whose primary responsibilities involve marketing
the Company. In addition, the plan provides that the Company may pay, subject
to the annual limitations, such other distribution costs and expenses as the
Directors may from time to time specify.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Funds' 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 shares of the
Funds. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Funds; 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 Fund's shares; 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 the Fund's shares; and providing such other
information and services as the Funds or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding the Funds
and the Company; performing sub-accounting; establishing and maintaining
shareholder accounts and records; processing customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other transactions
and balances in the shareholder's other accounts serviced by the bank;
forwarding applicable prospectuses, proxy statements, reports and notices to
bank clients who hold shares of the Funds; and such other administrative
services as the Funds reasonably may request, to the extent permitted by
applicable statute, rule or regulation. Similar agreements may be permitted
under the Plans for institutions which provide recordkeeping for and
administrative services to 401(k) plans.
The Company may also enter into Variable Group Annuity Contractholder
Service Agreements ("Variable Contract Agreements") on behalf of the Funds
authorizing payments to selected insurance companies offering variable annuity
contracts to employers as funding vehicles for retirement plans qualified under
Section 401(a) of the Internal Revenue Code. Services provided pursuant to such
Variable Contract Agreements may include some or all of the following:
answering inquiries regarding the Fund and the Company; performing
sub-accounting; establishing and maintaining Contractholder accounts and
records; processing and bunching purchase and redemption transactions;
providing periodic statements of contract account balances; forwarding such
reports and notices to Contractholders relative to the Fund as deemed
necessary; generally, facilitating communications with Contractholders
concerning investments in a Fund on behalf of Plan participants; and performing
such other administrative services as deemed to be necessary or desirable, to
the extent permitted by applicable statute, rule or regulation to provide such
services.
Financial intermediaries and any other person entitled to receive
compensation for selling shares of the Funds may receive different compensation
for selling shares of one particular class over another.
Under a Shareholder Service Agreement, the Funds agree to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment
period for each business day of the Funds during such period at the annual rate
of 0.25% of the average daily net asset value of the Funds' shares purchased or
acquired through exchange. Fees calculated in this manner shall be paid only to
those selected dealers or other institutions who are dealers or institutions of
record at the close of
23
<PAGE> 82
business on the last business day of the applicable payment period for the
account in which the Funds' shares are held.
The Plans are subject to any applicable limitations imposed from time
to time by rules of the National Association of Securities Dealers, Inc.
AIM Distributors does not act as principal, but rather as agent for
the Funds, in making dealer incentive and shareholder servicing payments under
the Plans. These payments are an obligation of the Funds and not of AIM
Distributors.
GENERAL. The Plans may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors or by vote of a majority of the outstanding voting
securities of the applicable class of the Fund. Any change in a Plan that
would materially increase the distribution expenses of a class of the Fund
provided for in the Plans requires shareholder approval; otherwise, the Plans
may be amended by a majority of the Directors, including a majority of the Rule
12b-1 Directors.
For so long as the Plans are in effect, the Funds will be required to
commit the selection and nomination of candidates for Independent Directors to
the discretion of the Independent Directors.
The total amounts paid by each Fund under the foregoing arrangements
for any year may not exceed the maximum plan limit specified above, and the
amounts and purposes of expenditures under the Plans must be reported to the
Rule 12b-1 Directors quarterly. The Rule 12b-1 Directors may require or
approve changes in the implementation or operation of the Plans and may also
require that total expenditures by each applicable class of a Fund under the
Plans be kept within limits lower than the maximum amount permitted by the
Plans as stated above.
The Distributor may pay additional amounts from its own resources to
dealers or others who meet designated eligibility criteria relating to sales of
Company shares, or who provide administrative or informational assistance to
shareholders.
24
<PAGE> 83
An estimate by category of actual fees paid by each of the Funds under
the Plan for Class A shares for the period August 4, 1997 through December 31,
1997, were allocated as follows:
<TABLE>
<CAPTION>
LARGE CAP MULTIFLEX REAL INTERNATIONAL
VALUE FUND FLEX FUND FUND ESTATE FUND VALUE FUND
---------- --------- ---- ----------- -------------
<S> <C> <C> <C> <C> <C>
CLASS A
Advertising . . . . . $ 20 $ 247 $ 41 $ 5 $ 439
Printing and mailing
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders) . . . . . 2 16 3 1 21
Seminars . . . . . . . 0 44 0 1 0
Compensation to
Underwriters to partially
offset other marketing
expenses . . . . . . . 0 0 0 0 0
Compensation to
Dealers including
finder's fees . . . . . 3,047 19,474 5,696 7,460 6,070
Compensation to
Sales Personnel . . . . 0 0 0 0 0
Annual Report Total . . 3,069 19,781 5,740 7,467 6,530
</TABLE>
25
<PAGE> 84
An estimate by category of actual fees paid by each of the Funds under the
Plan for Class C shares for the period August 4, 1997 through December 31,
1997, were allocated as follows:
<TABLE>
<CAPTION>
LARGE CAP MULTIFLEX REAL INTERNATIONAL
VALUE FUND FLEX FUND FUND ESTATE FUND VALUE FUND
---------- --------- ---- ----------- -------------
<S> <C> <C> <C> <C> <C>
CLASS C
Advertising . . . . . $58,378 $318,080 $292,003 $32,622 $76,215
Printing and mailing
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders) . . . . . 5,076 26,952 24,521 2,727 6,555
Seminars . . . . . . . 9,401 52,080 44,073 5,050 9,932
Compensation to
Underwriters to partially
offset other marketing
expenses . . . . . . . 512,760 1,822,551 1,112,232 121,193 278,104
Compensation to
Dealers including
finder's fees . . . . . 98,064 210,405 10,147 0 0
Compensation to
Sales Personnel . . . . 0 0 0 0 0
Annual Report Total . . 683,679 2,430,068 1,482,976 161,592 370,806
</TABLE>
For the fiscal year ended December 31, 1997, each Fund paid the Prior
Distributor and AIM Distributors the following amounts with respect to each
class of shares under the Distribution Plans:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
----------------------------------------- -----------------------------------
PRIOR AIM PRIOR AIM
DISTRIBUTOR(1) DISTRIBUTORS(2) DISTRIBUTOR(1) DISTRIBUTORS(2)
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND . . . . . . . $ 823 $ 3,069 $ 880,591 $ 683,679
FLEX FUND . . . . . . . . . . . . . 5,072 19,781 3,130,225 2,430,068
MULTIFLEX FUND . . . . . . . . . . 2,066 5,740 1,766,758 1,482,976
REAL ESTATE FUND . . . . . . . . . 1,145 7,467 159,285 161,592
INTERNATIONAL VALUE FUND . . . . . 1,276 6,530 407,798 370,806
</TABLE>
(1) For the period January 1, 1997 to August 3, 1997
(2) For the period August 4, 1997 to December 31, 1997
Class B shares had not commenced operation as of December 31, 1997.
DISTRIBUTIONS AND TAX INFORMATION
DISTRIBUTIONS
It is the intention of each of the Funds to distribute to its
respective shareholders all of the applicable Fund's net investment income and
net realized capital gains, if any. The per share dividends and distribution on
each class of shares of a Fund will be reduced as a result of any service fees
applicable to that class. The gross income, realized and unrealized capital
gains and losses and expenses (other than Class Expenses, as defined below) of
each Fund shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Fund. Expenses to be so allocated
include expenses of the Company that are allocated
26
<PAGE> 85
to a Fund and are not attributable to a particular Fund or class of a Fund
("Company Expenses") and expenses of the particular Fund that are not
attributable to a particular class of the Fund ("Fund Expenses"). Company
Expenses include, but are not limited to, directors' fees. Fund Expenses
include advisory fees and operating service fees. Expenses attributable to a
particular class ("Class Expenses") include distribution plan expenses, which
must be allocated to the class for which they are incurred. Other expenses may
be allocated as Class Expenses, but only if the Company's President and
Treasurer have determined, subject to Board approval, that such category of
expense will be treated as Class Expenses, consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986, as amended
("Code").
The LARGE CAP VALUE FUND, FLEX FUND, MULTIFLEX FUND, and REAL ESTATE
FUND make periodic distributions of their net investment income (including any
net short-term capital gain) during the months of March, June, September and
December and distribute any realized net capital gains at least annually,
during the month of December. The INTERNATIONAL VALUE FUND makes semiannual
distributions of net investment income (including any net short-term capital
gain) during the months of June and December and distributes any realized net
capital gain at least annually, during the month of December.
All such distributions will be reinvested automatically in additional
shares (or fractions thereof) of each applicable Fund and class pursuant to
each Fund's Automatic Dividend Reinvestment Plan unless a shareholder has
elected not to participate in this plan or has elected to terminate his
participation in the plan and to receive his distributions in excess of ten
dollars in cash. (See "Special Plans- Automatic Dividend Investment Plan" in
the Prospectus.)
FEDERAL TAXES
Each Fund of the Company intends to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Accordingly, a Fund generally must, among other things, (a)
derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies; and (b) diversify its holdings so that, at the end of
each fiscal quarter, (i) at least 50% of the market value of the Fund's assets
is represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of the Fund's total assets and 10% of the outstanding voting securities
of such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. Government
securities and the securities of other regulated investment companies), or in
two or more issuers which the Fund controls and which are engaged in the same
or similar trades or businesses.
As a regulated investment company, a Fund generally will not be
subject to U.S. federal income tax on income and gains that it distributes to
shareholders, if at least 90% of each Fund's investment company taxable income
(which includes, among other items, dividends, interest and the excess of any
short-term capital gains over long-term capital losses) for the taxable year is
distributed. The Funds intend to distribute substantially all of such income.
Amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4% excise
tax at the Fund level. To avoid the tax, each Fund must distribute during each
calendar year, (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for a one-year period generally ending on October 31 of the calendar
year (or, at the election of a regulated investment company having a taxable
year ending November 30 or December 31, for its taxable year (a" taxable year
election")), and (3) all ordinary income and capital gains for previous years
that were not distributed during such years. For purposes of excise tax, a
fund (1) shall offset a net ordinary loss (but not below the net capital gain)
for any calendar year in determining its capital gain net income for the
one-year period ending on October 31 of such calendar year and (2) exclude
foreign currency gains and losses incurred after October 31 of any year in
determining the amount of ordinary taxable income for the current calendar year
(and instead, to include gains and losses in the succeeding year). To avoid
application of the
27
<PAGE> 86
excise tax, each Fund intends to make distributions in accordance with the
calendar year distribution requirements. A distribution will be treated as
paid on December 31 of the current calendar year if it is declared by the Fund
in October, November or December of the year with a record date in such a month
and paid by the Fund during January of the following year. Such distributions
will be taxable to shareholders in the calendar year the distributions are
declared, rather than the calendar year in which the distributions are
received.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
Some of the options, futures and foreign currency forward contracts in
which a Fund may invest may be "Section 1256 contracts." Gains (or losses) on
these contracts generally are considered to be 60% long-term (taxable at 20%)
and 40% short-term capital gains or losses; however foreign currency gains or
losses arising from certain Section 1256 contracts are ordinary in character.
Also, Section 1256 contracts held by a Fund at the end of each taxable year
(and on certain other dates prescribed in the Code) are "marked to market" with
the result that unrealized gains or losses are treated as though they were
realized.
The transactions in options, futures and forward contracts undertaken
by a Fund may result in "straddles" for federal income tax purposes. The
straddle rules may affect the character of gains or losses realized by a Fund.
In addition, losses realized by a Fund on positions that are part of a straddle
may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the consequences of such transactions to a Fund are not
entirely clear. The straddle rules may increase the amount of short-term
capital gain realized by a Fund, which is taxed as ordinary income when
distributed to shareholders.
A Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Transactions that may be engaged in by certain of the Funds (such as
short sales "against the box", offsetting notional principal contracts or
futures or forward contracts) may be treated as "constructive sales" which
would require the Fund to recognize gain on any "appreciated financial
position" as if they were sold, assigned, or otherwise terminated at their fair
market value on the date of such transactions sale (and to take into account
any gain in the taxable year which includes such date).
Because application of any of the foregoing rules governing Section
1256 contracts, constructive sales and straddles may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected investment or straddle positions, the amount which
must be distributed to shareholders as ordinary income or long-term capital
gain may be increased or decreased substantially as compared to a fund that did
not engage in such transactions.
SWAP AGREEMENTS
Each Fund may enter into swap agreements. The rules governing the tax
aspects of swap agreements are in a developing stage and are not entirely clear
in certain respects. Accordingly, while a Fund intends to account for such
transactions in a manner deemed to be appropriate, the Internal Revenue Service
( the "IRS") might not accept such treatment. If it did not, the status of the
Company as a regulated investment company might be affected. The Company
intends to monitor developments in this area. Certain requirements that must
be met under the Code in order for the Company to qualify as a regulated
investment company may limit the extent to which the Fund will be able to
engage in swap agreements.
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES
Gains or losses attributable to fluctuations in exchange rates which
occur between the time a Fund accrues income or other receivables or accrues
expenses or other liabilities denominated in a foreign currency
28
<PAGE> 87
and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of some investments, including debt securities
denominated in a foreign currency and certain forward contracts, gains or
losses attributable to fluctuations in the value of the foreign currency
between the date of acquisition of the security and the date of disposition
also are treated as ordinary gain or loss. These gains and losses, referred to
under the Code as "Section 988" gains or losses, increase or decrease the
amount of a Fund's investment company taxable income available to be
distributed to its shareholders as ordinary income. If Section 988 losses
exceed other investment company taxable income during a taxable year, the Fund
may not be able to make any ordinary dividend distributions, and distributions
made before the losses were realized may be recharacterized as a return of
capital to shareholders, rather than as an ordinary dividend, reducing each
shareholder's basis in his or her Fund shares.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
A Fund may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFICs").
In general, a foreign corporation is classified as a PFIC if at least one-half
of its assets constitute investment-type assets, or 75% or more of its gross
income is investment-type income. If a Fund receives a so-called "excess
distribution" with respect to PFIC stock, the Fund itself may be subject to a
tax on a portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. In general, under the PFIC
rules, an excess distribution is treated as having been realized ratably over
the period during which the Fund held the PFIC shares. The Fund itself will be
subject to tax on the portion, if any, of an excess distribution that is so
allocated to prior Fund taxable years and an interest factor will be added to
the tax, as if the tax had been payable in such prior taxable years. Certain
distributions from a PFIC as well as gain from the sale of PFIC shares are
treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
excess distributions might have been classified as capital gain.
A Fund may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under one such election (the "QEF Election") the Fund
generally would be required to include in its gross income its share of the
earnings of a PFIC on a current basis, regardless of whether distributions are
received from the PFIC in a given year. For taxable years beginning after
December 31, 1997, each Fund will alternatively be able to make an election to
mark any shares of PFIC stock that it holds to market (the "Section 1296
Election"). If the Section 1296 Election is made with respect to any PFIC
stock, a Fund will recognize ordinary income to the extent that the fair market
value of such PFIC stock at the close of any taxable year exceeds its adjusted
basis and will also recognize ordinary income in the event that it disposes of
any shares of such PFIC stock at a gain. In each case, such ordinary income
will be treated as dividend income for purposes of the Income Requirement. A
Fund making the Section 1296 Election with respect to any PFIC stock will
similarly recognize a deductible ordinary loss to the extent that the adjusted
basis of such PFIC stock exceeds its fair market value at the close of any
taxable year and will also recognize a deductible ordinary loss in the event
that it disposes of such PFIC stock at a loss. However, the amount of any
ordinary loss recognized by a Fund making a Section 1296 Election with respect
to any PFIC stock may not exceed the amount of ordinary income previously
recognized by such Fund by reason of marking such PFIC stock to market. If
either the QEF Election or the Section 1296 Election is made, the special
rules, discussed above, relating to the taxation of excess distributions, would
not apply. A Fund's intention to qualify annually as a regulated investment
company may limit its ability to invest and hold PFIC shares.
29
<PAGE> 88
Because the application of the PFIC rules may affect, among other
things, the character of gains, the amount of gain or loss and the timing of
the recognition of income with respect to PFIC shares, as well as subject a
Fund itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC shares.
DEBT SECURITIES ACQUIRED AT A DISCOUNT
Some of the debt securities (with a fixed maturity date of more than
one year from the date of issuance) that may be acquired by a Fund may be
treated as debt securities that are issued originally at a discount.
Generally, the amount of the original issue discount ("OID") is treated as
interest income and is included in income over the term of the debt security,
even though payment of that amount is not received until a later time, usually
when the debt security matures.
Some of the debt securities (with a fixed maturity date of more than
one year from the date of issuance) that may be acquired by a Fund in the
secondary market may be treated as having market discount. Generally, gain
recognized on the disposition of, and any partial payment of principal on, a
debt security having market discount is treated as ordinary income to the
extent the gain, or principal payment, does not exceed the "accrued market
discount" on such debt security. In addition, the deduction of any interest
expenses attributable to debt securities having market discount may be
deferred. Market discount generally accrues in equal daily installments. A
Fund may make one or more of the elections applicable to debt securities having
market discount, which could affect the amount, character and timing of
recognition of income.
Some debt securities (with a fixed maturity date of one year or less
from the date of issuance) that may be acquired by a Fund may be treated as
having acquisition discount, or OID in the case of certain types of debt
securities. Generally, a Fund will be required to include the acquisition
discount, or OID, in income over the term of the debt security, even though
payment of that amount is not received until a later time, usually when the
debt security matures. A Fund may make one or more of the elections applicable
to debt securities having acquisition discount, or OID, which could affect the
character and timing of recognition of income.
A Fund generally will be required to distribute dividends to
shareholders representing discount on debt securities that is currently
includable in income, even though cash representing such income may not have
been received by the Fund. Cash to pay such dividends may be obtained from
sales proceeds of securities held by the Fund or by borrowing.
DISTRIBUTIONS
With respect to tax-exempt shareholders, distributions from the Funds
will not be subject to federal income taxation to the extent permitted under
the applicable tax-exemption. With respect to shareholders that are not exempt
from federal taxation, distributions of investment company taxable income are
taxable to a U.S. shareholder as ordinary income, whether paid in cash or
shares. Dividends paid by a Fund to a corporate shareholder, to the extent
such dividends are attributable to dividends received from U.S. corporations,
may qualify for the dividends received deduction. However, the alternative
minimum tax applicable to corporations may reduce the value of the dividends
received deduction. Distributions of net capital gains (the excess of net
long-term capital gains over net short-term capital losses), if any, designated
by a Fund as capital gain dividends, are taxable as long-term capital gains,
whether paid in cash or in shares, regardless of how long the shareholder has
held the Fund's shares and are not eligible for the dividends received
deduction. Shareholders will be notified annually as to the U.S. federal tax
status of distributions in accordance with the guidance that has been provided
by the IRS.
If the net asset value of shares is reduced below a shareholder's cost
as a result of a distribution by a Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Investors
should be careful to consider the tax implications of buying shares of a Fund
just prior to a distribution. The price of shares purchased at this time may
reflect the amount of the forthcoming distribution. Those purchasing just
prior to a distribution will receive a distribution which generally will be
taxable to them.
30
<PAGE> 89
DISPOSITION OF SHARES
With respect to tax-exempt shareholders, a redemption, sale or
exchange of shares of a Portfolio will not be subject to federal income
taxation to the extent permitted under the applicable tax-exemption. Upon a
redemption, sale or exchange of his or her shares of a Fund, a shareholder that
is not exempt from federal income taxation will realize a taxable gain or loss
depending upon his or her basis in the shares. A gain or loss will be treated
as capital gain or loss if the shares are capital assets in the shareholder's
hands and generally will be long-term or short-term, depending upon the
shareholder's holding period for the shares. Except to the extent otherwise
provided in future Treasury regulations, any long-term capital gain recognized
by a non-corporate shareholder will be subject to tax at a maximum rate of 20%
if the shares sold or redeemed were held for more than 18 months. Any loss
realized on a redemption, sale or exchange will be disallowed to the extent the
shares disposed of are replaced (including through reinvestment of dividends)
within a period of 61 days beginning 30 days before and ending 30 days after
the shares are disposed of. In such a case, the basis of the shares acquired
will be adjusted to reflect the disallowed loss. Any loss realized by a
shareholder on the sale of a Fund's shares held by the shareholder for six
months or less will be treated for tax purposes as a long-term capital loss to
the extent of any distributions of capital gain dividends received or treated
as having been received by the shareholder with respect to such shares.
If a shareholder (a) incurs a sales load in acquiring shares of a
Fund, (b) disposes of such shares less than 91 days after they are acquired,
and (c) subsequently acquires shares of the Fund or another Fund at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired
in connection with the acquisition of the shares disposed of, then the sales
load on the shares disposed of (to the extent of the reduction in the sales
load on the shares subsequently acquired) shall not be taken into account in
determining gain or loss on the shares disposed of, but shall be treated as
incurred on the acquisition of the shares subsequently acquired.
BACKUP WITHHOLDING
Each Fund will be required to report to the IRS all distributions and
will also be required to report gross proceeds from the redemption of the
Fund's shares, except in the case of certain exempt shareholders. All
distributions and proceeds from the redemption of Fund shares will be subject
to withholding of federal income tax at a rate of 31% ("backup withholding") in
the case of non-exempt shareholders if (1) the shareholder fails to furnish the
Fund with and to certify the shareholder's correct taxpayer identification
number or social security number or (2) when required to do so, the shareholder
fails to certify that he or she is not subject to backup withholding.
Additionally, all dividend distributions will be subject to withholding of
federal income tax at a rate of 31% ("backup withholding") in the case of
non-exempt shareholders if the IRS notifies the shareholder or the Fund that
the shareholder has failed to report properly certain interest and dividend
income to the IRS and to respond to notices to that effect. If the withholding
provisions are applicable, any such distributions or proceeds, whether
reinvested in additional shares or taken in cash, will be reduced by the
amounts required to be withheld.
OTHER TAXATION
Distributions may also be subject to additional state, local and
foreign taxes depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above. This discussion does not purport to deal with all of
the tax consequences applicable to the Funds or shareholders. Shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in a Fund.
31
<PAGE> 90
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
The Advisor or sub-advisor make decisions to buy and sell securities for
each Fund, selects broker-dealers, effects the Funds' investment portfolio
transactions, allocates brokerage fees in such transactions, and where
applicable, negotiates commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction is to obtain the most
favorable execution of the order, which includes the best price on the security
and a low commission rate. While AIM seeks reasonably competitive commission
rates, the Funds may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas
stock markets have adopted a system of negotiated rates, a number of markets
maintain an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Funds and of the other AIM Funds. In connection with
(3) above, the Funds' trades may be executed directly by dealers that sell
shares of the AIM Funds or by other broker-dealers with which such dealers have
clearing arrangements. AIM will not use a specific formula in connection with
any of these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Fund
any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which AIM can recapture are
the soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of a Fund, provided the conditions of an exemptive order received by
the Funds from the SEC are met. In addition, a Fund may purchase or sell a
security from or to another AIM Fund provided the Funds follow procedures
adopted by the Board of Directors/Trustees of the various AIM Funds, including
the Company. These intra-fund transactions do not generate brokerage
commissions but may result in custodial fees or taxes or other related
expenses.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by
its cash position. If the purchase or sale of securities is consistent with
the investment policies of the Fund(s) and one or more of these accounts, and
is considered at or about the same time, AIM will fairly allocate transactions
in such securities among the Fund(s) and these accounts. AIM may combine such
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among
the various investment accounts advised by AIM could have an adverse effect on
the price or amount of securities available to a Fund. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
32
<PAGE> 91
SECTION 28(E) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a
good faith determination that the commissions paid are "reasonable in relation
to the value of the brokerage and research services provided ... viewed in
terms of either that particular transaction or AIM's overall responsibilities
with respect to the accounts as to which it exercises investment discretion."
The services provided by the broker also must lawfully and appropriately assist
AIM in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, a Fund may pay
a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Company's directors with respect to
the performance, investment activities, and fees and expenses of other mutual
funds. Broker-dealers may communicate such information electronically, orally
or in written form. Research services may also include the providing of
custody services, as well as the providing of equipment used to communicate
research information, the providing of specialized consultations with AIM
personnel with respect to computerized systems and data furnished to AIM as a
component of other research services, the arranging of meetings with management
of companies, and the providing of access to consultants who supply research
information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services
provided to AIM by broker-dealers are available for the benefit of all accounts
managed or advised by AIM or by its affiliates. Some broker-dealers may
indicate that the provision of research services is dependent upon the
generation of certain specified levels of commissions and underwriting
concessions by AIM's clients, including the Funds. However, the Funds are not
under any obligation to deal with any broker-dealer in the execution of
transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research
services had they not been provided by broker-dealers, the expenses to AIM
could be considered to have been reduced accordingly.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended December 31, 1997, 1996 and 1995, the LARGE
CAP VALUE FUND paid total brokerage commissions of $139,516, $75,469 and
$86,189, respectively. For the fiscal years ended December 31, 1997,1996 and
1995, the FLEX FUND paid total brokerage commissions of $166,653, $193,286 and
$116,550, respectively. For the fiscal years ended December 31, 1997, 1996 and
1995, the MULTIFLEX FUND paid total brokerage commissions of $455,949, $400,646
and $247,023, respectively. For the fiscal year ended December 31, 1997, and
the period ended December 31, 1996, the REAL ESTATE FUND paid total brokerage
commissions of $115,951 and $40,353, respectively. For the fiscal year ended
December 31, 1997, and the period ended December 31, 1996, the INTERNATIONAL
VALUE FUND paid total brokerage commissions of $44,731 and $21,872,
respectively. The REAL ESTATE FUND and INTERNATIONAL VALUE FUND commenced
33
<PAGE> 92
operations on May 1, 1995. There were no brokerage commissions paid to
affiliated broker-dealers during the fiscal years ended December 31, 1997, 1996
and 1995, by any of the Funds.
At December 31, 1997, certain of the Funds held securities of the
Company's regular brokers or dealers, or their parents, as follows:
<TABLE>
<CAPTION>
Value of Securities
Fund Broker or Dealer at December 31, 1997
- ---- ---------------- --------------------
<S> <C> <C>
INTERNATIONAL VALUE FUND HSBC Securities, Inc. $ 2,465,067
Deutsche Bank Capital Corp. 2,472,130
Smith Barney Inc. 2,527,605
LARGE CAP VALUE FUND Dean Witter Reynolds 3,609,581
Smith Barney Inc. 4,839,870
FLEX FUND Dean Witter Reynolds 10,731,188
Smith Barney Inc. 3,519,858
MULTIFLEX FUND Bear Stearns & Co. Inc. 999,900
HSBC Securities, Inc. 1,972,054
Dean Witter Reynolds 878,006
Deutsche Bank Capital Corp. 2,118,969
Lehman Brothers Inc. 1,000,260
Smith Barney Inc. 17,376,851
REAL ESTATE FUND Smith Barney Inc. 3,915,909
</TABLE>
During the fiscal years ended December 31, 1997, 1996 and 1995, the
LARGE CAP VALUE FUND'S portfolio turnover rates were 34%, 19% and 17%,
respectively; the FLEX FUND'S portfolio turnover rates were 17%, 26%, and 5%,
respectively; and the MULTIFLEX FUND'S portfolio turnover rates were 62%, 62%
and 50%, respectively. For the fiscal years ended December 31, 1997 and 1996,
and the period ended December 31, 1995, the REAL ESTATE FUND'S portfolio
turnover rates were 57%, 25% and 7%, respectively. For the fiscal years ended
December 31, 1997 and 1996, and the period ended December 31, 1995, the
INTERNATIONAL VALUE FUND'S portfolio turnover rates were 9%, 5% and 2%,
respectively. The REAL ESTATE FUND and INTERNATIONAL VALUE FUND commenced
operations on May 1, 1995.
REDEMPTIONS
It is possible that in the future conditions may exist which would, in
the opinion of the Directors, make it undesirable for a Fund to pay for
redeemed shares in cash. In such cases, the Directors may authorize payment to
be made in Fund securities or other property of the applicable Fund. However,
each Fund has made an election under Rule 18f-1 under the 1940 Act, which
obligates the Fund to redeem for cash all shares presented to such Fund for
redemption by any one shareholder up to $250,000 (or 1% of the applicable
Fund's net assets if that is less) in any 90-day period. Securities delivered
in payment of redemptions are valued at the same value assigned to them in
computing the applicable Fund's net asset value per share. Shareholders
receiving such securities are likely to incur brokerage costs on their
subsequent sales of such securities.
PERFORMANCE INFORMATION
The Funds may from time to time include figures indicating their yield
and total return in advertisements or reports to shareholders or prospective
investors. Following is information on how those figures are computed.
Yield
ALL FUNDS
All Funds may advertise "yield," "dividend yield" and "distribution
yield" for each class. Quotations of yield for each class of these Funds will
be based on all investment income per share earned during a particular 30-day
period (including dividends and interest), less expenses accrued during the
period ("net investment income"), and are computed by dividing net investment
income by the maximum offering price per share (which includes the maximum
sales charge) on the last day of the period, according to the following
formula:
34
<PAGE> 93
<TABLE>
<S> <C>
6
Yield = 2[(a-b + 1) -1]
---
cd
where a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements or waivers),
c = the average daily number of shares outstanding during period that were entitled to receive
dividends, and
d = the maximum offering price per share on the last day of the period.
</TABLE>
For the 30-day period ended December 31, 1997, the yield for Class A
shares and Class C shares of REAL ESTATE FUND were 1.38% and 0.70%,
respectively.
Dividend yield is a measure of investment return during a specified
period based on dividends actually paid by a class of a Fund during that
period. Dividend yield is calculated by totaling the dividends paid by a class
from its net investment income during the specified period and dividing that
sum by the net asset value per share of the class on the last day of the
period. Distribution yield is computed in the same way, but includes
distributions paid with respect to a class from short-term capital gains
realized by the Fund, as well as dividends from the net investment income of
the class. Where the dividend or distribution yield is calculated for a period
of less than a year, results may be annualized by using the following
calculation method:
Total dividends/distributions paid by the class during the specified
period are divided by the net asset value of a class share on the last
day of the specified period. This result is divided by the number of
days in the specified period and the result is multiplied by 365.
The dividend yield for the 30-day period ended December 31, 1997, for
Class A shares and Class C shares of REAL ESTATE FUND were 2.80% and 2.10%,
respectively.
The distribution (including income and short-term capital gains
distributions) yield for the 365-day period ended December 31, 1997, for Class
A shares and Class C shares of REAL ESTATE FUND were 4.96% and 4.26%,
respectively.
Class B shares had not commenced operation as of December 31, 1997;
therefore, no yield information is available for the period ended December 31,
1997, as quoted above.
Total Return
Funds may advertise their "average annual total return" and their
"total return." Average annual total return and total return figures represent
the increase (or decrease) in the value of an investment in the Fund over a
specified period. Both calculations assume that all income dividends and
capital gains distributions during the period are reinvested at net asset value
in additional shares of the respective Fund.
Quotations of the average annual total return for each class reflect
the deduction of a proportional share of expenses allocated to the class and
Class Expenses on an annual basis. The results, which are annualized,
represent an average annual compound rate of return on a hypothetical
investment in the class over a period of 1, 5 and 10 years ending on the most
recent calendar quarter.
The average annual total return as of December 31, 1997, for Class A
shares of each of the following Funds for the periods listed below are as
follows:
35
<PAGE> 94
<TABLE>
<CAPTION>
Fund Since Inception*
---- ---------------
<S> <C>
LARGE CAP VALUE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.43%
FLEX FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.73%
MULTIFLEX FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.88%
REAL ESTATE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.11%
INTERNATIONAL VALUE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.58%
- ------------
</TABLE>
* From 01-01-97 (commencement of operations) (12 months).
The average annual total return as of December 31, 1997, for shares now
designated as Class C shares of each of the following Funds for the periods
listed below are as follows:
<TABLE>
<CAPTION>
Since
Fund 1 Year 5 Years 10 Years Inception
- ---- ------ ------- -------- ---------
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND . . . . . . . . 29.66% 17.46% 15.39% 14.72%
FLEX FUND . . . . . . . . . . . . . 22.64% 14.74% N/A 12.50%*
MULTIFLEX FUND . . . . . . . . . . . 17.55% N/A N/A 13.37%**
REAL ESTATE FUND . . . . . . . . . . 17.88% N/A N/A 23.86%***
INTERNATIONAL VALUE FUND . . . . . . 11.98% N/A N/A 17.02%***
</TABLE>
_______________________
* From 02-24-88 (commencement of operations) (9.10 years).
** From 11-17-93 (commencement of operations) (4.1 years).
*** From 05-01-95 (commencement of operations) (2.7 years).
Class B shares had not commenced operations as of December 31, 1997;
therefore, no total return information is available for the period ended
December 31, 1997.
The following tables illustrate performance of shares of each Fund for
Class A shares and those shares now designated as Class C shares. (Class B
shares were not offered during the periods illustrated.)
<TABLE>
<CAPTION>
Class A Class C
----------------- ---------------------------------
One Five Ten
Since Inception* Year Years Years
--------------- ---- ----- -----
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND
Based on the average annual
compound rates of return listed above
over these periods, you could have
expected the following redeemable
values on a $1,000 investment assuming
redemption at the end of each time
period (December 31, 1997) . . . . . . . . . . $1,244 $1,297 $2,236 $4,186
You could have expected the following
values assuming no redemption at the
end of each time period
(December 31, 1997) . . . . . . . . . . . . . . $1,317 $1,307 $2,336 $4,186
</TABLE>
__________
* Class A Shares commenced operations on January 1, 1997.
36
<PAGE> 95
<TABLE>
<CAPTION>
Class A Class C
---------------------------
One Five
Since Inception* Year Years
--------------- ---- -----
<S> <C> <C> <C>
FLEX FUND
Based on the average annual compound rates of
return listed above over these periods, you could
have expected the following redeemable values
on a $1,000 investment assuming redemption at
the end of each time period (December 31, 1997) . . . . . . . $1,177 $1,226 $1,988
You could have expected the following values
assuming no redemption at the end of each time
period (December 31, 1997) . . . . . . . . . . . . . . . . . $1,246 $1,236 $1,988
</TABLE>
_____________
* Class A shares commenced operations on January 1, 1997.
Quotations of total return, which are not annualized, represent
historical earnings and asset value fluctuations. Total return is based on
past performance and is not a guarantee of future results. These rates of
return are net of all expenses and assume all dividends and distributions by
the Funds have been reinvested on the reinvestment dates during each period.
The following table provides the actual total rates of return for
shares that are now designated as Class C shares of the indicated Funds for the
fiscal years ended December 31, 1997, 1996, 1995, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
LARGE REAL INTERNATIONAL
CAP VALUE FLEX MULTIFLEX ESTATE VALUE
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1997 29.66% 22.64% 17.55% 17.88% 11.98%
1996 17.17% 13.61% 17.03% 36.43% 20.99%
1995 30.28% 27.30% 21.58% 9.12%** 11.28%**
1994 2.69% 0.64% -1.02% N/A N/A
1993 9.16% 10.48% 0.46%* N/A N/A
1992 4.84% 7.72% N/A N/A N/A
</TABLE>
* Period November 17, 1993 (commencement of operations) through December 31,
1993.
** Period May 1, 1995 (commencement of operations) through December 31, 1995.
The following are the actual total rates of return, as of December 31,
1997 (period January 1, 1997 (commencement of operations) through December 31,
1997), for the Class A shares of each Fund: LARGE CAP VALUE FUND 24.43%, FLEX
FUND 17.73%, MULTIFLEX FUND 12.88%, REAL ESTATE FUND 14.11% and INTERNATIONAL
VALUE FUND 7.58%.
Class B shares had not commenced operation as of December 31, 1997.
Performance information for a Fund or class reflects only the
performance of a hypothetical investment in that Fund or class during the
particular time period on which the calculations are based. Performance
information should be considered in light of the Fund's investment objectives
and policies, the types of quality
37
<PAGE> 96
of the Fund's portfolio investments, market conditions during the particular
time period and operating expenses. Such information should not be considered
as a representation of the future performance of a Fund or class.
MISCELLANEOUS
Principal Shareholders
As of February 2, 1998, the following entities owned of record or
beneficially 5% or more of the shares of a Fund:
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- ----------- ------------
<S> <C> <C>
CLASS A
- -------
LARGE CAP VALUE FUND
James L. Cash -0- 10.88%
5703 155th Ave. NE
Redmond, WA 98052
FLEX FUND
Merrill Lynch Pierce Fenner & Smith 60.18%** -0-
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East
Jacksonville, FL 32246
Cypress Enterprises -0- 8.69%
A Partnership
730 S. Tonti Street
New Orleans, LA 70119
MULTIFLEX FUND
Raymond James Assoc., Inc. -0- 6.18%
Cust. Charles C. Gleason IRA
4629 Rue Bayou
Sanibel, FL 33957
REAL ESTATE FUND
Merrill Lynch Pierce Fenner & Smith 8.50% -0-
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East
Jacksonville, FL 32246
</TABLE>
__________________________________
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** Beneficial Owner may be deemed to control the Fund by virtue of its
ownership percentage of the outstanding securities of that Fund.
38
<PAGE> 97
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- ----------- ------------
<S> <C> <C>
INTERNATIONAL VALUE FUND
Merrill Lynch Pierce Fenner & Smith 17.61 -0-
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
Paul F. Brown, Jr. -0- 6.09%
and W. Todd Raible
TTEES Royal Oil & Gas Corp.
PSP & TR DTD 12/27/97
P.O. Box 809
Indiana, PA 15701
CLASS C
LARGE CAP VALUE FUND
Merrill Lynch Pierce Fenner & Smith 16.64% -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
FLEX FUND
Merrill Lynch Pierce Fenner & Smith 10.82% -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
MULTIFLEX FUND
Merrill Lynch Pierce Fenner & Smith 8.99% -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
__________________________________
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
39
<PAGE> 98
<TABLE>
<CAPTION>
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- ----------- ------------
<S> <C> <C>
REAL ESTATE FUND
Merrill Lynch Pierce Fenner & Smith 6.93% -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
INTERNATIONAL VALUE FUND
Merrill Lynch Pierce Fenner & Smith 53.95%** -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
__________________________________
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** Beneficial Owner may be deemed to control the Fund by virtue of its
ownership percentage of the outstanding securities of that Fund.
As of February 2, 1998, the officers and Directors of the Company, as
a group, owned less than 1% of the outstanding shares of the Funds.
COMPUTATION OF NET ASSET VALUE
The net asset value per share of each Fund is normally determined
daily as of the close of trading of the NYSE (generally 4:00 p.m. Eastern time)
on each business day of the Fund. In the event the NYSE closes early (i.e.,
before 4:00 p.m. Eastern time) on a particular day, the net asset value of a
Fund is determined as of the close of the NYSE on such day. Net asset value
per share is determined by dividing the value of a Fund's securities, cash and
other assets (including interest accrued but not collected) attributable to a
particular class, less all its liabilities (including accrued expenses and
dividends payable) attributable to that class, by the total number of shares
outstanding of that class. Determination of a Fund's net asset value per share
is made in accordance with generally accepted accounting principles.
Each equity security held by a Fund is valued at its last sales price
on the exchange where the security is principally traded or, lacking any sales
on a particular day, the security is valued at the mean between the closing bid
and asked prices on that day. Each security traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based upon
quotes furnished by market makers for such securities. Each security reported
on the NASDAQ National Market System is valued at the last sales price on the
valuation date or absent a last sales price, at the mean between the closing
bid and asked prices on that day. Debt securities are valued on the basis of
prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices,
and may reflect appropriate factors such as institution-size trading in similar
groups of securities, developments related to special securities, yield,
quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Securities for which market quotations
are not readily available are valued at fair value as determined in good faith
by or under the
40
<PAGE> 99
supervision of the Company's officers in a manner specifically authorized by
the Board of Directors. Short-term obligations having 60 days or less to
maturity are valued on the basis of amortized cost. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S.
Government securities and money market instruments is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of each Fund's shares are
determined at such times. Foreign currency exchange rates are also generally
determined prior the close of the NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times
at which such values are determined and the close of the NYSE which will not be
reflected in the computation of a Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith by or
under the supervision of the Board of Directors.
The net asset value per share of each class of the Funds will not be
calculated on days that the NYSE is closed. These days presently include New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
THE CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the portfolio securities and cash of the
Funds and maintains certain records on behalf of the Funds. Subject to the
prior approval of the Board of Directors, the custodian may, in the future, use
the services of subcustodians as to one or more of the Funds.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado 80202,
serves as the independent accountants for each of the Funds, providing services
including audit of the annual financial statements, and preparation of tax
returns filed on behalf of the Funds.
41
<PAGE> 100
APPENDIX
Some of the terms used in the Fund's Prospectus and this Statement of
Additional Information are described below.
The term "MONEY MARKET" refers to the marketplace composed of the
financial institutions which handle the purchase and sale of liquid,
short-term, high-grade debt instruments. The money market is not a single
entity, but consists of numerous separate markets, each of which deals in a
different type of short-term debt instrument. These include U.S. Government
obligations, commercial paper, certificates of deposit and bankers'
acceptances, which are generally referred to as money market instruments.
U.S. GOVERNMENT OBLIGATIONS are debt securities (including bills,
notes and bonds) issued by the U.S. Treasury or issued by an agency or
instrumentality of the U.S. Government which is established under the authority
of an Act of Congress. Such agencies or instrumentalities include, but are not
limited to, the Federal National Mortgage Association, Government National
Mortgage Association, the Federal Farm Credit Bank, and the Federal Home Loan
Bank. Although all obligations of agencies, authorities and instrumentalities
are not direct obligations of the U.S. Treasury, payment of the interest and
principal on these obligations is generally backed directly or indirectly by
the U.S. Government. This support can range from the backing of the full faith
and credit of the United States to U.S. Treasury guarantees, or to the backing
solely of the issuing instrumentality itself. In the case of securities not
backed by the full faith and credit of the United States, the investor must
look principally to the agency issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against the United
States itself in the event the agency or instrumentality does not meet its
commitments.
BANK OBLIGATIONS include certificates of deposit which are negotiable
certificates evidencing the indebtedness of a commercial bank to repay funds
deposited with it for a definite period of time (usually from 14 days to one
year) at a stated interest rate.
BANKERS' ACCEPTANCES are credit instruments evidencing the obligation
of a bank to pay a draft which has been drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to pay
the face amount of the instrument upon maturity.
TIME DEPOSITS are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
COMMERCIAL PAPER consists of short-term (usually one to 180 days)
unsecured promissory notes issued by corporations in order to finance their
current operations.
CORPORATE DEBT obligations are bonds and notes issued by corporations
and other business organizations, including business trusts, in order to
finance their long-term credit needs.
CERTIFICATES OF DEPOSIT are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning
a specified return.
MORTGAGE-BACKED securities are interests in a pool of mortgage loans.
Most mortgage securities are pass- through securities, which means that they
provide investors with payments consisting of both principal and interest as
mortgages in the underlying mortgage pool are paid off by the borrowers. The
dominant issuers or guarantors of mortgage securities are the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS") are hybrid instruments
with characteristics of both mortgage- backed and mortgage pass-through
securities. Similar to a bond, interest and pre-paid principal on a CMO are
paid, in most cases, semi-annually. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by Funds of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are
structured into multiple classes, with each class bearing a different stated
maturity. Monthly
42
<PAGE> 101
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class; investors holding the longer maturity
classes receive principal only after the first class has been retired.
MUNICIPAL BONDS are debt obligations which generally have a maturity
at the time of issue in excess of one year and are issued to obtain funds for
various public purposes. The two principal classifications of municipal bonds
are "general obligation" and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable only from the
revenues derived from a particular facility or class of facilities, or, in some
cases, from the proceeds of a special excise or specific revenue source.
Industrial development bonds or private activity bonds are issued by or on
behalf of public authorities to obtain funds for privately operated facilities
and are, in most cases, revenue bonds which do not generally carry the pledge
of the full faith and credit of the issuer of such bonds, but depend for
payment on the ability of the industrial user to meet its obligations (or any
property pledged as security).
ZERO COUPON BONDS are debt obligations issued without any requirement
for the periodic payment of interest. Zero coupon bonds are issued at a
significant discount from face value. The discount approximates the total
amount of interest the bonds would accrue and compound over the period until
maturity at a rate of interest reflecting the market rate at the time of
issuance. A Fund, if it holds zero coupon bonds in its Fund, however, would
recognize income currently for Federal tax purposes in the amount of the
unpaid, accrued interest (determined under tax rules) and generally would be
required to distribute dividends representing such income to shareholders
currently, even though funds representing such income would not have been
received by the Fund. Cash to pay dividends representing unpaid, accrued
interest may be obtained from sales proceeds of Fund securities and Fund shares
and from loan proceeds. Because interest on zero coupon obligations is not
paid to the Fund on a current basis but is in effect compounded, the value of
the securities of this type is subject to greater fluctuations in response to
changing interest rates than the value of debt obligations which distribute
income regularly.
RATINGS OF CORPORATE DEBT OBLIGATIONS Fund purchases of taxable
obligations are not limited to those obligations rated within the four highest
categories by Moody's and S&P. However, the Flex Fund's standards for
investment grade obligations are generally similar to those standards included
in the four highest categories by Moody's and S&P. The MultiFlex Fund may
invest up to 5% of Fund assets in corporate bonds rated below Baa by Moody's or
below BBB by S&P, but rated at least Ba by Moody's or BB by S&P.
The characteristics of corporate debt obligations rated by Moody's are
generally as follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length
43
<PAGE> 102
of time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative
elements. The future of such bonds cannot be considered as well assured.
B -- Bonds which are rated B generally lack characteristics of a
desirable investment.
Caa -- Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds rated Ca are speculative to a high degree.
C -- Bonds rated C are the lowest rated class of bonds and are
regarded as having extremely poor prospects.
The characteristics of corporate debt obligations rated by S&P are
generally as follows:
AAA -- This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay principal and interest.
AA -- Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
BB -- Debt rated BB is predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with terms of the
obligation. BB indicates the lowest degree of speculation; CC indicates the
highest degree of speculation.
BB,B,CCC,CC -- Debt in these ratings is predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with
terms of the obligation. BB indicates the lowest degree of speculation and CC
the highest.
A bond rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished by the issuer
or obtained by the rating services from other sources which they consider
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of, such information, or for other reasons.
RATINGS OF COMMERCIAL PAPER. Commercial paper rated A-1 by Standard &
Poor's has the following characteristics: liquidity ratios are adequate to meet
cash requirements; the issuer's long-term debt is rated "A" or better; the
issuer has access to at least two additional channels of borrowing; and basic
earnings and cash flow have an upward trend with allowances made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry.
Commercial paper rated Prime 1 by Moody's is the highest commercial
paper assigned by Moody's. Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
44
<PAGE> 103
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and consumer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Relative strength or weakness of the above factors determine how the issuer's
commercial paper is rated within various categories.
DETERMINATION OF CREDIT QUALITY OF UNRATED SECURITIES. In determining
whether an unrated debt security is of comparable quality to a rated security,
the sub-adviser may consider the following factors, among others:
(1) other securities of the issuer that are rated;
(2) the issuer's liquidity, debt structure, repayment schedules,
and external credit support facilities;
(3) the reliability and quality of the issuer's management;
(4) the length to maturity of the security and the percentage of
the Fund represented by securities of that issuer;
(5) the issuer's earnings and cash flow trends;
(6) the issuer's industry, the issuer's position in its industry,
and an appraisal of speculative risks which may be inherent in
the industry;
(7) the financial strength of the issuer's parent and its
relationship with the issuer;
(8) the extent and reliability of credit support, including a
letter of credit or third party guarantee applicable to
payment of principal and interest;
(9) the issuer's ability to repay its debt from cash sources or
asset liquidation in the event that the issuer's backup credit
facilities are unavailable;
(10) other factors deemed relevant by the subadvisor.
45
<PAGE> 104
FINANCIAL STATEMENTS
FS
<PAGE> 105
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of the AIM Advisor Funds, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Advisor Flex Fund, one of the portfolios of the AIM
Advisor Funds, Inc. (hereafter referred to as the "Fund")
at December 31, 1997, the results of its operations for
the year then ended, the changes in its net assets for
each of the two years in the period then ended and the
financial highlights for the periods indicated, in
conformity with generally accepted accounting principles.
These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our
responsibility is to express an opinion on these
financial statements based on our audits. We conducted
our audits of these financial statements in accordance
with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made
by management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1997
by correspondence with the custodian and the application
of alternative auditing procedures where securities
purchased had not been received, provide a reasonable
basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Denver, Colorado
February 5, 1998
FS-1
<PAGE> 106
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-76.72%
AEROSPACE/DEFENSE-1.95%
Boeing Co. (The) 110,000 $ 5,383,125
- --------------------------------------------------------------
Lockheed Martin Corp. 70,000 6,895,000
- --------------------------------------------------------------
12,278,125
- --------------------------------------------------------------
AGRICULTURAL PRODUCTS-1.09%
Archer-Daniels-Midland Co. 315,000 6,831,563
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-1.84%
Genuine Parts Co. 200,000 6,787,500
- --------------------------------------------------------------
Snap-on Inc. 110,000 4,798,750
- --------------------------------------------------------------
11,586,250
- --------------------------------------------------------------
AUTOMOBILES-1.36%
Ford Motor Co. 175,000 8,520,313
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.75%
First Union Corp. 60,000 3,075,000
- --------------------------------------------------------------
NationsBank Corp. 100,000 6,081,250
- --------------------------------------------------------------
Wachovia Corp. 100,000 8,112,500
- --------------------------------------------------------------
17,268,750
- --------------------------------------------------------------
BANKS (MONEY CENTER)-1.66%
First Chicago N.B.D. Corp. 125,000 10,437,500
- --------------------------------------------------------------
BANKS (REGIONAL)-1.66%
First of America Bank Corp. 135,000 10,411,875
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-1.05%
Anheuser-Busch Companies, Inc. 150,000 6,600,000
- --------------------------------------------------------------
CHEMICALS-1.21%
Dow Chemical Co. (The) 75,000 7,612,500
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-4.01%
Compaq Computer Corp. 150,000 8,465,625
- --------------------------------------------------------------
Hewlett-Packard Co. 100,000 6,250,000
- --------------------------------------------------------------
International Business Machines
Corp. 100,000 10,456,250
- --------------------------------------------------------------
25,171,875
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-2.66%
Computer Associates International,
Inc. 150,000 7,931,250
- --------------------------------------------------------------
Electronic Data Systems Corp. 200,000 8,787,500
- --------------------------------------------------------------
16,718,750
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.21%
Fleming Companies Inc. 100,000 1,343,750
- --------------------------------------------------------------
SUPERVALU, Inc. 150,000 6,281,250
- --------------------------------------------------------------
7,625,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRIC COMPANIES-3.69%
Edison International 250,000 $ 6,796,875
- --------------------------------------------------------------
Entergy Corp. 300,000 8,981,250
- --------------------------------------------------------------
GPU, Inc. 175,000 7,371,875
- --------------------------------------------------------------
23,150,000
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.08%
General Electric Co. 100,000 7,337,500
- --------------------------------------------------------------
Rockwell International Corp. 110,000 5,747,500
- --------------------------------------------------------------
13,085,000
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.65%
American General Corp. 110,000 5,946,875
- --------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 181,500 10,731,188
- --------------------------------------------------------------
16,678,063
- --------------------------------------------------------------
FOODS-2.40%
H.J. Heinz Co. 125,000 6,351,562
- --------------------------------------------------------------
Unilever N.V.-New York Shares
(Netherlands) 140,000 8,741,250
- --------------------------------------------------------------
15,092,812
- --------------------------------------------------------------
FOOTWEAR-0.46%
Reebok International Ltd.(a) 100,000 2,881,250
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-2.26%
Abbott Laboratories 100,000 6,556,250
- --------------------------------------------------------------
American Home Products Corp. 100,000 7,650,000
- --------------------------------------------------------------
14,206,250
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.17%
Mylan Laboratories, Inc. 350,000 7,328,125
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-3.79%
Lilly (Eli) & Co. 100,000 6,962,500
- --------------------------------------------------------------
Merck & Co., Inc. 100,000 10,625,000
- --------------------------------------------------------------
Schering-Plough Corp. 100,000 6,212,500
- --------------------------------------------------------------
23,800,000
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.94%
Columbia/HCA Healthcare Corp. 200,000 5,925,000
- --------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.66%
Whirlpool Corp. 75,000 4,125,000
- --------------------------------------------------------------
HOUSEWARES-0.65%
Fortune Brands, Inc. 110,000 4,076,875
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.01%
Loews Corp. 60,000 6,367,500
- --------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 107
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY)-2.23%
Ohio Casualty Corp. 150,000 $ 6,693,750
- --------------------------------------------------------------
SAFECO Corp. 150,000 7,312,500
- --------------------------------------------------------------
14,006,250
- --------------------------------------------------------------
INSURANCE BROKERS-1.19%
Marsh & McLennan Co. 100,000 7,456,250
- --------------------------------------------------------------
IRON & STEEL-1.15%
Nucor Corp. 150,000 7,246,875
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-4.14%
Hanson PLC-ADR (United Kingdom) 225,000 5,189,062
- --------------------------------------------------------------
Minnesota Mining and Manufacturing
Co. 70,000 5,744,375
- --------------------------------------------------------------
National Service Industries, Inc. 75,000 3,717,187
- --------------------------------------------------------------
Norsk Hydro A.S.A.-ADR (Norway) 100,000 5,100,000
- --------------------------------------------------------------
Textron, Inc. 100,000 6,250,000
- --------------------------------------------------------------
26,000,624
- --------------------------------------------------------------
METALS MINING-0.79%
Phelps Dodge Corp. 80,000 4,980,000
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-4.39%
Amoco Corp. 50,000 4,256,250
- --------------------------------------------------------------
Exxon Corp. 100,000 6,118,750
- --------------------------------------------------------------
Repsol S.A.-ADR (Spain) 200,000 8,512,499
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York Shares (Netherlands) 160,000 8,670,000
- --------------------------------------------------------------
27,557,499
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.68%
Westvaco Corp. 135,000 4,244,063
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.98%
Gannett Co., Inc. 100,000 6,181,250
- --------------------------------------------------------------
RAILROADS-0.81%
Illinois Central Corp. 150,000 5,109,375
- --------------------------------------------------------------
RESTAURANTS-0.95%
McDonald's Corp. 125,000 5,968,750
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.82%
Sherwin-Williams Co. 185,000 5,133,750
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.52%
Dillards Inc. 100,000 3,525,000
- --------------------------------------------------------------
J.C. Penney Co., Inc. 100,000 6,031,250
- --------------------------------------------------------------
9,556,250
- --------------------------------------------------------------
RETAIL (DRUG STORES)-0.70%
Rite Aid Corp. 75,000 4,401,563
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.46%
Kmart Corp. 250,000 2,890,625
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)-0.98%
Dun & Bradstreet Corp. 200,000 $ 6,187,500
- --------------------------------------------------------------
SPECIALTY PRINTING-0.96%
Deluxe Corp. 175,000 6,037,500
- --------------------------------------------------------------
TELEPHONE-4.35%
Bell Atlantic Corp. 70,000 6,370,000
- --------------------------------------------------------------
British Telecommunications PLC-ADR
(United Kingdom) 88,000 7,067,500
- --------------------------------------------------------------
Telefonica de Espana-ADR (Spain) 60,000 5,463,750
- --------------------------------------------------------------
Telefonos de Mexico S.A.-ADR
(Mexico) 150,000 8,409,375
- --------------------------------------------------------------
27,310,625
- --------------------------------------------------------------
TEXTILES (APPAREL)-1.98%
Liz Claiborne, Inc. 100,000 4,181,250
- --------------------------------------------------------------
VF Corp. 180,000 8,268,750
- --------------------------------------------------------------
12,450,000
- --------------------------------------------------------------
TOBACCO-1.67%
Gallaher Group PLC-ADR (United
Kingdom) 110,000 2,351,250
- --------------------------------------------------------------
Philip Morris Companies, Inc. 180,000 8,156,250
- --------------------------------------------------------------
10,507,500
- --------------------------------------------------------------
WASTE MANAGEMENT-1.76%
Browning-Ferris Industries, Inc. 150,000 5,550,000
- --------------------------------------------------------------
Waste Management, Inc. 200,000 5,500,000
- --------------------------------------------------------------
11,050,000
- --------------------------------------------------------------
Total Common Stocks 482,054,625
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CORPORATE BONDS & NOTES-2.82%
AUTOMOBILES-0.12%
Ford Motor Co., Notes, 7.50%,
11/15/99 $ 750,000 $ 770,100
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.41%
National City Corp., Sub Notes,
7.20%, 05/15/05 1,000,000 1,040,840
- --------------------------------------------------------------
NationsBank Corp., Sr. Notes,
5.375%, 04/15/00 1,550,000 1,527,758
- --------------------------------------------------------------
2,568,598
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.48%
Motorola Inc., Notes, 6.50%,
03/01/08 3,000,000 3,034,620
- --------------------------------------------------------------
CONSUMER FINANCE-0.47%
Commercial Credit Co., Notes,
5.55%, 02/15/01 3,000,000 2,946,540
- --------------------------------------------------------------
ELECTRIC COMPANIES-0.49%
Penn Power & Lighting, First
Mortgage Notes, 6.875%, 02/01/03 1,000,000 1,026,870
- --------------------------------------------------------------
6.55%, 03/01/06 1,900,000 1,921,717
- --------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 108
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
ELECTRIC COMPANIES-(CONTINUED)
Union Electric, First Mortgage
Notes, 6.75%, 10/15/99 $ 150,000 $ 151,940
- --------------------------------------------------------------
3,100,527
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.24%
Boeing Co., Notes, 6.625%,
06/01/05 1,500,000 1,530,960
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.49%
Sherwin-Williams Co., Notes,
6.50%, 02/01/02 3,000,000 3,044,880
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.12%
Wal-Mart Stores, Notes, 5.50%,
03/01/98 750,000 750,188
- --------------------------------------------------------------
Total Corporate Bonds & Notes 17,746,413
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-4.01%
Government National Mortgage
Association ("GNMA")-1.08%
Pass through certificates
6.50%, 10/15/08 1,215,910 1,228,446
- --------------------------------------------------------------
7.00%, 10/15/08 1,137,865 1,164,525
- --------------------------------------------------------------
6.00%, 11/15/08 1,300,666 1,297,414
- --------------------------------------------------------------
7.50%, 03/15/26 3,029,768 3,114,965
- --------------------------------------------------------------
6,805,350
- --------------------------------------------------------------
Federal Home Loan Mortgage Corp.
("FHLMC")-0.93%
Pass through certificates
6.50%, 07/01/01 3,389,645 3,409,745
- --------------------------------------------------------------
8.00%, 10/01/10 2,366,659 2,445,777
- --------------------------------------------------------------
5,855,522
- --------------------------------------------------------------
Federal National Mortgage
Association ("FNMA")-2.00%
Pass through certificates
8.50%, 03/01/10 2,356,062 2,448,090
- --------------------------------------------------------------
6.50%, 06/01/11 to 05/01/26 7,251,640 7,209,879
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
Federal National Mortgage Association
("FNMA")-(Continued)
Pass through certificates-(Continued)
7.50%, 10/01/96 to 11/01/26 $ 2,807,244 $ 2,874,786
- --------------------------------------------------------------
12,532,755
- --------------------------------------------------------------
Total U.S. Government Agency
Securities 25,193,627
- --------------------------------------------------------------
U.S. TREASURY SECURITIES-15.63%
U.S. Treasury Bonds-4.09%
7.25%, 08/15/22 9,000,000 10,399,680
- --------------------------------------------------------------
9.375%, 02/15/06 8,000,000 9,845,920
- --------------------------------------------------------------
9.25%, 02/15/16 4,000,000 5,428,360
- --------------------------------------------------------------
25,673,960
- --------------------------------------------------------------
U.S. Treasury Notes-11.54%
6.125%, 03/31/98 10,000,000 10,019,300
- --------------------------------------------------------------
7.125%, 10/15/98 5,000,000 5,057,700
- --------------------------------------------------------------
8.875%, 02/15/99 6,250,000 6,467,687
- --------------------------------------------------------------
6.75%, 06/30/99 5,000,000 5,080,400
- --------------------------------------------------------------
6.375%, 07/15/99 5,000,000 5,053,850
- --------------------------------------------------------------
8.75%, 08/15/00 9,000,000 9,663,120
- --------------------------------------------------------------
7.875%, 08/15/01 7,000,000 7,487,620
- --------------------------------------------------------------
7.50%, 05/15/02 4,500,000 4,806,405
- --------------------------------------------------------------
6.25%, 02/15/03 5,000,000 5,115,750
- --------------------------------------------------------------
7.25%, 05/15/04 6,000,000 6,478,440
- --------------------------------------------------------------
6.50%, 08/15/05 7,000,000 7,306,670
- --------------------------------------------------------------
72,536,942
- --------------------------------------------------------------
Total U.S. Treasury Securities 98,210,902
- --------------------------------------------------------------
REPURCHASE AGREEMENT-0.56%(b)
Smith Barney Inc., 6.75%,
01/02/98(c) 3,519,858 3,519,858
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.74% 626,725,425
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.26% 1,605,092
- --------------------------------------------------------------
NET ASSETS-100.00% $628,330,517
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to insure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(c) Joint repurchase agreement entered into 12/31/97 with a maturing value of
$400,150,000. Collateralized by $395,097,000 U.S. Government obligations, 0%
to 13.875% due 01/07/98 to 12/15/43 with an aggregate market value at
12/31/97 of $408,000,323.
Abbreviations:
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
FS-4
<PAGE> 109
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$432,776,171) $626,725,425
- ---------------------------------------------------------
Receivables for:
Capital stock sold 1,053,096
- ---------------------------------------------------------
Interest and dividends 3,500,542
- ---------------------------------------------------------
Investment for deferred compensation plan 2,561
- ---------------------------------------------------------
Other assets 14,718
- ---------------------------------------------------------
Total assets 631,296,342
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 779,071
- ---------------------------------------------------------
Deferred compensation plan 2,561
- ---------------------------------------------------------
Accrued advisory fees 397,296
- ---------------------------------------------------------
Accrued operating services fees 233,315
- ---------------------------------------------------------
Accrued distribution fees 1,511,312
- ---------------------------------------------------------
Accrued directors' fees and expenses 42,270
- ---------------------------------------------------------
Total liabilities 2,965,825
- ---------------------------------------------------------
Net assets applicable to shares outstanding $628,330,517
=========================================================
NET ASSETS:
Class A $ 25,151,388
=========================================================
Class C $603,179,129
=========================================================
CAPITAL STOCK, $.001, PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,274,141
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 30,552,730
=========================================================
Class A:
Net asset value and redemption price per
share $ 19.74
=========================================================
Offering price per share:
(Net asset value of $19.74
divided by 94.50%) $ 20.89
=========================================================
Class C:
Net asset value and offering price per
share $ 19.74
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 11,975,969
- ---------------------------------------------------------
Dividends 9,478,210
- ---------------------------------------------------------
Total investment income 21,454,179
- ---------------------------------------------------------
EXPENSES:
Advisory fees 4,244,780
- ---------------------------------------------------------
Operating services fees 2,513,883
- ---------------------------------------------------------
Distribution fees-Class A 34,863
- ---------------------------------------------------------
Distribution fees-Class C 5,560,293
- ---------------------------------------------------------
Directors' fees and expenses 61,419
- ---------------------------------------------------------
Total expenses 12,415,238
- ---------------------------------------------------------
Less: Fees waived by distributors (10,010)
- ---------------------------------------------------------
Net expenses 12,405,228
- ---------------------------------------------------------
Net investment income 9,048,951
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain from investment
securities 23,883,293
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities 86,058,520
- ---------------------------------------------------------
Net gain from investment securities 109,941,813
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $118,990,764
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 110
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,048,951 $ 8,108,449
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities 23,883,293 23,531,236
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 86,058,520 26,214,708
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 118,990,764 57,854,393
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (246,939) --
- -----------------------------------------------------------------------------------------
Class C (8,674,714) (8,041,627)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (610,538) --
- -----------------------------------------------------------------------------------------
Class C (14,999,384) (23,712,747)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 24,377,889 --
- -----------------------------------------------------------------------------------------
Class C 19,575,501 64,656,241
- -----------------------------------------------------------------------------------------
Net increase in net assets 138,412,579 90,756,260
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 489,917,938 399,161,678
- -----------------------------------------------------------------------------------------
End of period $628,330,517 $489,917,938
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $426,093,882 $382,140,492
- -----------------------------------------------------------------------------------------
Undistributed net investment income 166,050 69,809
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities 8,121,332 (183,096)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 193,949,253 107,890,733
- -----------------------------------------------------------------------------------------
$628,330,517 $489,917,938
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE> 111
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Flex Fund (the "Fund", formerly INVESCO Advisor Flex Portfolio) is a
series portfolio of AIM Advisor Funds, Inc. (the "Company" formerly, INVESCO
Advisor Funds, Inc.). The Company is a Maryland corporation and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of seven diversified
portfolios. The Fund currently offers two different classes of shares: Class A
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class C shares are sold with a contingent deferred sales charge. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. The Fund's investment objective
is to achieve a high total return on investment through capital appreciation and
current income, without regard to federal income tax considerations. Information
presented in these financial statements pertains only to the Fund.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on
the NASDAQ National Market System is valued at the last sales price on the
valuation date, or absent a last sales price, at the mean of the closing bid
and asked prices. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued at the mean between last
bid and asked prices based upon quotes furnished by independent sources.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or
under the supervision of the Company's Board of Directors. Investments with
maturities of 60 days or less are valued on the basis of amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1997,
undistributed net investment income was reduced by $31,057 and undistributed
net realized gains increased by $31,057 in order to comply with the
requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
D. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
E. Expenses-Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Capital Management, Inc. ("ICM") whereby AIM pays ICM an
annual rate of 0.20% of the Fund's average daily net assets. Prior to August 4,
1997, the Company had an investment advisory agreement with INVESCO Services,
Inc. ("ISI") to serve as the Fund's investment advisor. Under the terms of the
prior investment agreement, the Fund paid ISI an advisory fee equal to an annual
rate of 0.75% of the average daily net assets of the Fund. Under the terms of
the prior sub-advisory agreement between ISI and ICM, ISI paid ICM a
sub-advisory fee equal to an annual rate of 0.20% of the Fund's average daily
net assets.
The Company, pursuant to an operating services agreement with AIM, has agreed
to pay AIM an annual rate of 0.45% of average daily net assets of the Fund for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. This
agreement provides that AIM pays all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
period August 4, 1997 to December 31, 1997, AIM was paid $1,106,526 for such
services. Prior to August 4, 1997, the Company had an operating services
FS-7
<PAGE> 112
agreement with ISI whereby the Fund paid ISI an annual rate of 0.45% of average
daily net assets of the Fund. During the period January 1, 1997 through August
3, 1997, the Fund paid ISI $1,407,357.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class C shares of the Fund. The Company has adopted a
distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and the Fund's Class C shares (the "Plan"). The Fund,
pursuant to the Plan, pays AIM Distributors compensation at a maximum annual
rate of 0.35% of the average daily net assets attributable to the Class A
shares. AIM has voluntarily agreed to limit the Plan payments to 0.25% for three
years beginning August 4, 1997. The Fund, pursuant to the Plan, pays AIM
Distributors a maximum annual rate of 1.00% of the Fund's average daily net
assets attributable to the Class C shares. Of these amounts, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class A and Class C
shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own shares of
the Fund. Any amounts not paid as a service fee under the Plan would constitute
an asset-based sales charge. The Plan also imposes a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the period August 4, 1997 to December 31, 1997, the Class A and
Class C shares paid AIM Distributors $19,781 and $2,430,068, respectively, as
compensation under the Plan. During the year ended December 31, 1997, AIM
Distributors and ISI waived fees of $10,010 for the Class A shares. Prior to
August 4, 1997, the Fund entered into a distribution plan with ISI in accordance
with Rule 12b-1 of the 1940 Act under substantially identical terms as described
for AIM Distributors above. During the period January 1, 1997 to August 3, 1997,
the Class A and Class C shares paid ISI $5,072 and $3,130,225, respectively, as
compensation under the Plan.
AIM Distributors received commissions of $11,729 from sales of Class A shares
of the Fund during the period August 4, 1997 to December 31, 1997. ISI received
commissions of $6,860 from sales of Class A shares of the Fund during the period
January 1, 1997 through August 3, 1997. Such commissions are not an expense to
the Fund. They are deducted from, and are not included in, the proceeds from
sales of Class A shares. During the period August 4, 1997 to December 31, 1997,
AIM Distributors received commissions of $18,422 in contingent deferred sales
charges imposed on redemptions of shares. Certain officers and directors of the
Company are officers and directors of AIM, A I M Fund Services, Inc. and AIM
Distributors. During the period January 1, 1997 through August 3, 1997, ISI
received commissions of $18,877 in contingent deferred sales charges imposed on
redemptions of shares.
The combined effect of the advisory master investment agreements, operating
services agreement and the distribution Plan for the Fund is to place a cap or
ceiling on the total expenses of the Fund, other than brokerage commissions,
interest, taxes, litigation, directors' fees and expenses, and other
extraordinary expenses. AIM has voluntarily agreed to adhere to maximum expense
ratios for the Fund. To the extent that the Fund exceeds the amounts, AIM or its
affiliates will waive its fees to reimburse the Fund to assure that the Fund's
expenses do not exceed the designated maximum amounts except for those items
specifically identified above. If, in any calendar quarter, the average daily
net assets of the Fund are less than $500 million, the Fund's expenses shall not
exceed 1.55% for Class A and 2.20% for Class C; on the next $500 million of net
assets, expenses shall not exceed 1.50% for Class A and 2.15% for Class C; on
the next $1 billion of net assets, expenses shall not exceed 1.45% for Class A
and 2.10% for Class C; and on all assets over $2 billion, expenses shall not
exceed 1.40% for Class A and 2.05% for Class C.
During the period August 4, 1997 to December 31, 1997, the Fund paid legal
fees of $765 for services rendered by Kramer, Levin, Naftalis & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1997 was
$126,040,604 and $88,262,748, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $199,182,995
- -------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (5,233,741)
- -------------------------------------------------------------
Net unrealized appreciation of investment
securities $193,949,254
=============================================================
</TABLE>
Investments have the same cost for tax and financial
statement purposes.
FS-8
<PAGE> 113
NOTE 5-CAPITAL STOCK*
Changes in the Fund's capital stock outstanding during the years ended December
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A** 1,255,277 $ 24,015,843 -- $ --
- --------------------------------------------------------------------------------------------------------------------
Class C 4,707,789 86,294,017 6,596,988 107,726,947
- --------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A** 42,162 821,435 -- --
- --------------------------------------------------------------------------------------------------------------------
Class C 1,120,103 21,660,078 1,659,332 27,317,233
- --------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A** (23,298) (459,389) -- --
- --------------------------------------------------------------------------------------------------------------------
Class C (4,738,134) (88,378,594) (4,281,464) (70,387,939)
- --------------------------------------------------------------------------------------------------------------------
2,363,899 $ 43,953,390 3,974,856 $ 64,656,241
====================================================================================================================
</TABLE>
* Shares have been restated to reflect a 4 for 1 stock split, effected in the
form of a 300% stock dividend, on November 7, 1997.
** Class A shares commenced operations on January 1, 1997.
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended December 31, 1997 and for a share of Class C
capital stock outstanding during each of the years in the five-year period ended
December 31, 1997.(a)
CLASS A:
<TABLE>
<CAPTION>
1997(b)
----------
<S> <C>
Net asset value, beginning of period $ 16.63
- ------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.41(c)
- ------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.63
- ------------------------------------------------------------------------
Total from investment operations 4.04
- ------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.43)
- ------------------------------------------------------------------------
Distributions from capital gains (0.50)
- ------------------------------------------------------------------------
Total distributions (0.93)
- ------------------------------------------------------------------------
Net asset value, end of period $ 19.74
========================================================================
Total return(d) 24.60%
========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 25,151
========================================================================
Ratio of expenses to average net assets(e) 1.45%(f)
========================================================================
Ratio of net investment income to average net assets(g) 2.34%(f)
========================================================================
Portfolio turnover rate 17%
========================================================================
Average brokerage commission rate(h) $ 0.0537
========================================================================
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct sales charges.
(e) After fee waivers. The ratio of expenses to average net assets prior to fee
waivers was 1.55%.
(f) Ratios are based on average net assets of $10,010,061.
(g) After fee waivers. The ratio of net investment income to average net assets
prior to fee waivers was 2.24%.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold.
FS-9
<PAGE> 114
NOTE 6-FINANCIAL HIGHLIGHTS-continued
CLASS C:(a)
<TABLE>
<CAPTION>
1997(b) 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.63 $ 15.66 $ 12.63 $ 13.54 $ 12.76
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.30(c) 0.30 0.32 0.32 0.28
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 3.60 1.81 3.09 (0.23) 1.05
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 3.90 2.11 3.41 0.09 1.33
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.29) (0.29) (0.32) (0.31) (0.27)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from capital gains (0.50) (0.85) (0.06) (0.69) (0.28)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.79) (1.14) (0.38) (1.00) (0.55)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 19.74 $ 16.63 $ 15.66 $ 12.63 $ 13.54
============================================================ ======== ======== ======== ======== ========
Total return(d) 23.64% 13.61% 27.30% 0.64% 10.48%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $603,179 $489,918 $399,162 $243,848 $274,349
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 2.20%(e) 2.26% 2.28% 2.25% 2.25%(f)
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 1.59%(e) 1.81% 2.28% 2.32% 2.10%(f)
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 17% 26% 5% 36% 27%
============================================================ ======== ======== ======== ======== ========
Average brokerage commission rate(g) $ 0.0537 $ 0.0549 N/A N/A N/A
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct contingent deferred sales charges.
(e) Ratios are based on average net assets of $556,338,988.
(f) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or expense
reimbursements are 2.26% and 2.09%, respectively, for 1993.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-10
<PAGE> 115
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of the AIM Advisor Funds, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Advisor International Value Fund, one of the
portfolios of the AIM Advisor Funds, Inc. (hereafter
referred to as the "Fund") at December 31, 1997, the
results of its operations for the year then ended, the
changes in net assets for each of the two years in the
periods then ended and the financial highlights for the
periods indicated, in conformity with generally accepted
accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with generally accepted auditing standards
which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian
and the application of alternative auditing procedures
where securities purchased had not been received, provide
a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Denver, Colorado
February 5, 1998
FS-11
<PAGE> 116
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-97.58%
ARGENTINA-1.18%
YPF Sociedad Anonima-ADR
(Oil-International Integrated) 35,000 $ 1,196,562
- ---------------------------------------------------------------
AUSTRALIA-6.82%
Amcor Ltd.-ADR (Containers &
Packaging ) 60,000 1,020,000
- ---------------------------------------------------------------
National Australia Bank Ltd.-ADR
(Banks-Regional) 30,000 2,118,750
- ---------------------------------------------------------------
News Corp. Ltd. (The)
(Publishing-Newspapers) 400,000 2,208,129
- ---------------------------------------------------------------
Rio Tinto Ltd.-ADR (Metals Mining) 34,000 1,586,437
- ---------------------------------------------------------------
6,933,316
- ---------------------------------------------------------------
BRAZIL-0.92%
Telecomunicacoes Brasileiras
S.A.-Telebras-ADR (Telephone) 8,000 931,500
- ---------------------------------------------------------------
DENMARK-5.12%
Den Danske Bank-ADR (Banks-Money
Center) 20,000 2,666,778
- ---------------------------------------------------------------
Novo Nordisk A.S.-ADR (Health
Care-Drugs-Major Pharmaceuticals) 35,000 2,533,125
- ---------------------------------------------------------------
5,199,903
- ---------------------------------------------------------------
FRANCE-5.99%
Danone-ADR (Foods) 60,000 2,144,328
- ---------------------------------------------------------------
Elf Aquitaine S.A.-ADR
(Oil-International Integrated) 30,000 1,758,750
- ---------------------------------------------------------------
Societe Generale-ADR (Banks-Major
Regional) 80,000 2,180,896
- ---------------------------------------------------------------
6,083,974
- ---------------------------------------------------------------
GERMANY-8.11%
BASF A.G.-ADR
(Chemicals-Diversified) 60,000 2,127,312
- ---------------------------------------------------------------
Bayer A.G.-ADR
(Chemicals-Diversified) 40,000 1,494,956
- ---------------------------------------------------------------
Deutsche Bank A.G.-ADR (Banks-Major
Regional) 35,000 2,472,130
- ---------------------------------------------------------------
RWE A.G.-ADR (Electric Companies) 40,000 2,146,776
- ---------------------------------------------------------------
8,241,174
- ---------------------------------------------------------------
HONG KONG-1.90%
Sun Hung Kai Properties Ltd.-ADR
(Land Development) 140,000 975,702
- ---------------------------------------------------------------
Swire Pacific Ltd.-ADR
(Manufacturing-Diversified) 175,000 959,875
- ---------------------------------------------------------------
1,935,577
- ---------------------------------------------------------------
ITALY-4.67%
Istituto Mobiliare Italiano
S.p.A.-ADR (Banks-Regional) 70,000 2,502,500
- ---------------------------------------------------------------
Telecom Italia S.p.A.-ADR
(Telephone) 35,000 2,240,000
- ---------------------------------------------------------------
4,742,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-10.92%
Canon, Inc.-ADR (Office Equipment &
Supplies) 15,000 $ 1,751,250
- ---------------------------------------------------------------
Dai Nippon Printing Co., Ltd.-ADR
(Specialty Printing) 11,000 2,072,740
- ---------------------------------------------------------------
Fuji Photo Film-ADR
(Photography/Imaging) 40,000 1,527,500
- ---------------------------------------------------------------
Hitachi Ltd.-ADR
(Manufacturing-Diversified) 17,000 1,176,187
- ---------------------------------------------------------------
Kirin Brewery Company, Ltd.-ADR
(Beverages-Alcoholic) 23,000 1,687,625
- ---------------------------------------------------------------
Kyocera Corp.-ADR
(Electronics-Component
Distributors) 10,000 905,000
- ---------------------------------------------------------------
Nintendo Co. Ltd. (Leisure
Time-Products) 20,000 1,975,952
- ---------------------------------------------------------------
11,096,254
- ---------------------------------------------------------------
MEXICO-2.41%
Cemex S.A. de C.V.-ADR (Building
Materials) 125,000 1,327,237
- ---------------------------------------------------------------
Telefonos de Mexico S.A.-ADR
(Telephone) 20,000 1,121,250
- ---------------------------------------------------------------
2,448,487
- ---------------------------------------------------------------
NETHERLANDS-9.30%
Akzo Nobel N.V.-ADR (Chemicals) 30,000 2,606,250
- ---------------------------------------------------------------
ING Groep N.V.-ADR
(Insurance-Life/Health) 45,000 1,904,062
- ---------------------------------------------------------------
Royal Dutch Petroleum Co.-New York
Shares-ADR (Oil-International
Integrated) 45,000 2,438,437
- ---------------------------------------------------------------
Unilever N.V.-New York Shares-ADR
(Foods) 40,000 2,497,500
- ---------------------------------------------------------------
9,446,249
- ---------------------------------------------------------------
NORWAY-1.51%
Norsk Hydro A.S.A.-ADR
(Manufacturing-Diversified) 30,000 1,530,000
- ---------------------------------------------------------------
PORTUGAL-2.31%
Portugal Telecom S.A.-ADR
(Telephone) 50,000 2,350,000
- ---------------------------------------------------------------
SINGAPORE-1.85%
Development Bank of Singapore
Ltd.-ADR (Banks-Money Center) 55,000 1,880,186
- ---------------------------------------------------------------
SPAIN-7.84%
Banco Santander-ADR (Banks-Regional) 60,000 1,953,750
- ---------------------------------------------------------------
Endesa S.A.-ADR (Electric Companies) 100,000 1,818,750
- ---------------------------------------------------------------
Repsol S.A.-ADR (Oil-International
Integrated) 45,000 1,915,313
- ---------------------------------------------------------------
Telefonica de Espana-ADR (Telephone) 25,000 2,276,563
- ---------------------------------------------------------------
7,964,376
- ---------------------------------------------------------------
SWEDEN-3.58%
Astra A.B.-ADR (Health
Care-Drugs-Generic & Other) 125,000 2,148,438
- ---------------------------------------------------------------
Volvo A.B.-ADR (Automobiles) 55,000 1,485,000
- ---------------------------------------------------------------
3,633,438
- ---------------------------------------------------------------
SWITZERLAND-5.01%
Nestle S.A.-ADR (Foods) 30,000 2,251,206
- ---------------------------------------------------------------
</TABLE>
FS-12
<PAGE> 117
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-(CONTINUED)
Novartis A.G.-ADR (Health
Care-Diversified) 35,000 $ 2,843,575
- ---------------------------------------------------------------
5,094,781
- ---------------------------------------------------------------
UNITED KINGDOM-18.14%
Associated British Foods PLC-ADR
(Foods) 250,000 2,143,125
- ---------------------------------------------------------------
British Airways PLC-ADR (Airlines) 23,000 2,154,813
- ---------------------------------------------------------------
British Telecommunications PLC-ADR
(Telephone) 35,000 2,810,938
- ---------------------------------------------------------------
Carlton Communications PLC-ADR
(Electrical Equipment) 53,000 2,067,000
- ---------------------------------------------------------------
Glaxo Wellcome PLC-ADR (Health
Care-Drugs-Major Pharmaceuticals) 50,000 2,393,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
HSBC Holdings PLC-ADR (Banks-Money
Center) 10,000 $ 2,465,067
- ---------------------------------------------------------------
J. Sainsbury PLC-ADR (Retail-Food
Chains) 60,000 2,011,992
- ---------------------------------------------------------------
PowerGen PLC-ADR (Electric Companies) 45,000 2,390,625
- ---------------------------------------------------------------
18,437,310
- ---------------------------------------------------------------
Total Common Stocks 99,145,587
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-2.49%(a)
Smith Barney Inc., 6.75%,
01/02/98(b) 2,527,605
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.07% 101,673,192
- ---------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.07% (67,063)
- ---------------------------------------------------------------
NET ASSETS-100.00% $ 101,606,129
===============================================================
</TABLE>
Abbreviations
ADR-American Depositary Receipt
Notes to Schedule of Investments:
(a) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(b) Joint repurchase agreement entered into 12/31/97 with a maturing value of
$400,150,000. Collateralized by $395,097,000 U.S. Government obligations, 0%
to 13.875%, due 01/07/98 to 12/15/43 with an aggregate market value at
12/31/97 of $408,000,323.
See Notes to Financial Statements.
FS-13
<PAGE> 118
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$86,614,500) $101,673,192
- ---------------------------------------------------------
Foreign currencies, at market value (cost
$5,234) 5,146
- ---------------------------------------------------------
Receivables for:
Capital stock sold 326,028
- ---------------------------------------------------------
Interest and dividends 188,382
- ---------------------------------------------------------
Investment for deferred compensation plan 2,009
- ---------------------------------------------------------
Total assets 102,194,757
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 226,033
- ---------------------------------------------------------
Deferred compensation plan 2,009
- ---------------------------------------------------------
Accrued advisory fees 84,798
- ---------------------------------------------------------
Accrued operating services fees 38,159
- ---------------------------------------------------------
Accrued distribution fees 234,728
- ---------------------------------------------------------
Accrued directors' fees and expenses 2,901
- ---------------------------------------------------------
Total liabilities 588,628
- ---------------------------------------------------------
Net assets applicable to shares outstanding $101,606,129
=========================================================
NET ASSETS:
Class A $ 8,444,413
=========================================================
Class C $ 93,161,716
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 563,467
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 6,239,744
=========================================================
Class A:
Net asset value and redemption price per
share $ 14.99
=========================================================
Offering price per share:
(Net asset value of $14.99 divided
by 94.50%) $ 15.86
=========================================================
Class C:
Net asset value and offering price per
share $ 14.93
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 150,874
- --------------------------------------------------------
Dividends (net of $114,696 foreign
withholding tax) 1,907,947
- --------------------------------------------------------
Total investment income 2,058,821
- --------------------------------------------------------
EXPENSES:
Advisory fees 809,518
- --------------------------------------------------------
Operating services fees 364,272
- --------------------------------------------------------
Distribution fees-Class A 11,010
- --------------------------------------------------------
Distribution fees-Class C 778,604
- --------------------------------------------------------
Directors' fees 9,936
- --------------------------------------------------------
Total expenses 1,973,340
- --------------------------------------------------------
Less: Fees waived by distributor (3,204)
- --------------------------------------------------------
Net expenses 1,970,136
- --------------------------------------------------------
Net investment income 88,685
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 892,398
- --------------------------------------------------------
Foreign currencies (6,931)
- --------------------------------------------------------
885,467
- --------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 7,942,468
- --------------------------------------------------------
Foreign currencies (88)
- --------------------------------------------------------
7,942,380
- --------------------------------------------------------
Net gain from investment securities and
foreign currencies 8,827,847
- --------------------------------------------------------
Net increase in net assets resulting from
operations $8,916,532
========================================================
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE> 119
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 88,685 $ (49,154)
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 885,467 226,482
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 7,942,380 6,597,676
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 8,916,532 6,775,004
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (4,884) --
- -----------------------------------------------------------------------------------------
Class C (54,101) --
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (99,400) --
- -----------------------------------------------------------------------------------------
Class C (1,300,488) (102,718)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 8,386,957 --
- -----------------------------------------------------------------------------------------
Class C 33,845,537 35,777,007
- -----------------------------------------------------------------------------------------
Net increase in net assets 49,690,153 42,449,293
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 51,915,976 9,466,683
- -----------------------------------------------------------------------------------------
End of period $101,606,129 $ 51,915,976
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 86,958,918 $ 44,726,424
- -----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (25,744) (48,513)
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currency transactions (385,649) 121,841
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 15,058,604 7,116,224
- -----------------------------------------------------------------------------------------
$101,606,129 $ 51,915,976
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-15
<PAGE> 120
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor International Value Fund (the "Fund", formerly INVESCO Advisor
International Value Fund) is a series portfolio of AIM Advisor Funds, Inc. (the
"Company" formerly, INVESCO Advisor Funds, Inc.). The Company is a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end series management investment company
consisting of seven diversified portfolios. The Fund currently offers two
different classes of shares: Class A shares and Class C shares. Class A shares
are sold with a front-end sales charge. Class C shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. The Fund's investment objective is to achieve a high total return on
investment through capital appreciation and current income, without regard to
U.S. or foreign tax considerations. Information presented in these financial
statements pertains only to the Fund.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on
the NASDAQ National Market System is valued at the last sales price on the
valuation date, or absent a last sales price, at the mean of the closing bid
and asked prices. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued at the mean between last
bid and asked prices based upon quotes furnished by independent sources.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or
under the supervision of the Company's Board of Directors. Investments with
maturities of 60 days or less are valued on the basis of amortized cost
which approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such time. Foreign
currency exchange rates are also generally determined prior to the close of
the New York Stock Exchange. Occasionally, events affecting the values of
such securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange which would
not be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value as determined in
good faith by or under the supervision of the Board of Directors.
B. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at the date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
D. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1997,
undistributed net investment income was reduced by $6,931 and undistributed
net realized gains increased by $6,931 in order to comply with the
requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
E. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
FS-16
<PAGE> 121
F. Expenses-Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Global Asset Management Limited ("IGAM") whereby AIM pays
IGAM an annual rate of 0.35% of average net assets up to $50 million; 0.30% on
average net assets over $50 million up to $100 million; and 0.25% on average net
assets in excess of $100 million. Prior to August 4, 1997, the Company had an
investment advisory agreement with INVESCO Services, Inc. ("ISI") to serve as
the Fund's investment advisor. Under the terms of the prior investment advisory
agreement, the Fund paid ISI an advisory fee equal to an annual rate of 1.00% of
the average daily net assets of the Fund. Under the terms of the prior
sub-advisory agreement between ISI and INVESCO Capital Management, Inc. ("ICM"),
ISI paid ICM a sub-advisory fee equal to an annual rate of 0.35% of average net
assets up to $50 million; 0.30% on average net assets over $50 million up to
$100 million; and 0.25% on average net assets in excess of $100 million.
The Company, pursuant to an operating services agreement with AIM, has agreed
to pay AIM an annual rate of 0.45% of average daily net assets of the Fund for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. This
agreement provides that AIM pays all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
period August 4, 1997 to December 31, 1997, AIM was paid $178,446 for such
services. Prior to August 4, 1997, the Company had an operating services
agreement with ISI whereby the Fund paid ISI an annual rate of 0.45% of average
daily net assets of the Fund. During the period January 1, 1997 through August
3, 1997, the Fund paid ISI $185,826.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class C shares of the Fund. The Company has adopted a
distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and the Fund's Class C shares (the "Plan"). The Fund,
pursuant to the Plan, pays AIM Distributors compensation at a maximum annual
rate of 0.35% of the average daily net assets attributable to the Class A
shares. AIM has voluntarily agreed to limit the Plan payments to 0.25% for three
years beginning August 4, 1997. The Fund, pursuant to the Plan, pays AIM
Distributors a maximum annual rate of 1.00% of the Fund's average daily net
assets attributable to the Class C shares. Of these amounts, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class A and C shares
to selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own shares of the Fund.
Any amounts not paid as a service fee under the Plan would constitute an
asset-based sales charge. The Plan also imposes a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the period August 4, 1997 to December 31, 1997, the Class A and
Class C shares paid AIM Distributors $6,530 and $370,806, respectively, as
compensation under the Plan. During the year ended December 31, 1997 AIM
Distributors and ISI waived fees of $3,204 for the Class A shares. Prior to
August 4, 1997, the Fund entered into a distribution plan with ISI in accordance
with Rule 12b-1 of the 1940 Act under substantially identical terms as described
for AIM Distributors above. During the period January 1, 1997 to August 3, 1997
the Class A and Class C shares paid ISI $1,276 and $407,798, respectively as
compensation under the Plan.
AIM Distributors received commissions of $16,464 from sales of Class A shares
of the Fund during the period August 4, 1997 to December 31, 1997. ISI received
commissions of $8,333 from sales of Class A shares of the Fund during the period
January 1, 1997 through August 3, 1997. Such commissions are not an expense to
the Fund. They are deducted from, and are not included in, the proceeds from
sales of Class A shares. During the period August 4, 1997 to December 31, 1997,
AIM Distributors received commissions of $13,392 in contingent deferred sales
charges imposed on redemptions of shares. Certain officers and directors of the
Company are officers and directors of AIM, A I M Fund Services, Inc. and AIM
Distributors. During the period January 1, 1997 through August 3, 1997, ISI
received commissions of $8,219 in contingent deferred sales charges imposed on
redemptions of shares.
The combined effect of the master investment advisory agreements and Operating
Services Agreement and the Distribution Plan for the Fund is to place a cap or
ceiling on the total expenses of the Fund, other than brokerage commissions,
interest, taxes, litigation, directors' fees and expenses, and other
extraordinary expenses. AIM has voluntarily agreed to adhere to maximum expense
ratios for the Fund. To the extent that the Fund exceeds the amounts, AIM or its
affiliates will waive its fees to reimburse the Fund to assure that the Fund's
expenses do not exceed the designated maximum amounts except for those items
specifically identified above. If, in any calendar quarter, the average net
assets of the Fund are less than $100 million, the Fund's expenses shall not
exceed 1.80% for Class A and 2.45% for Class C; on the next $400 million of net
assets, expenses shall not exceed 1.75% for Class A and 2.40% for Class C; on
the next $500 million, expenses shall not exceed 1.70% for Class A and 2.35% for
Class C; on the next $1 billion of net assets, expenses shall not exceed 1.65%
for Class A and 2.30% for Class C; and on all assets over $2 billion, expenses
shall not exceed 1.60% for Class A and 2.25% for Class C.
During the period August 4, 1997 to December 31, 1997, the Fund paid legal
fees of $601 for services rendered by Kramer, Levin, Naftalis & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
FS-17
<PAGE> 122
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1997 was
$47,760,091 and $7,103,841, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $19,402,883
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (4,345,254)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $15,057,629
=========================================================================
</TABLE>
Cost of investments for tax purposes is $86,615,563.
NOTE 5-CAPITAL STOCK*
Changes in the Fund's capital stock outstanding during the years ended December
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A** 638,784 $ 9,521,875 -- $ --
- --------------------------------------------------------------------------------------------------------------------
Class C 3,118,584 44,774,893 3,172,292 37,650,713
- --------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A** 5,815 92,368 -- --
- --------------------------------------------------------------------------------------------------------------------
Class C 59,331 998,719 4,372 52,532
- --------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A** (81,132) (1,227,286) -- --
- --------------------------------------------------------------------------------------------------------------------
Class C (806,643) (11,928,075) (158,888) (1,926,238)
- --------------------------------------------------------------------------------------------------------------------
2,934,739 $ 42,232,494 3,017,776 $ 35,777,007
====================================================================================================================
</TABLE>
* Shares have been restated to reflect a 4 for 1 stock split, effected in the
form of a 300% stock dividend, on November 7, 1997.
** Class A shares commenced operations on January 1, 1997.
FS-18
<PAGE> 123
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended December 31, 1997 and for a share of Class C
capital stock outstanding during each of the years in the two-year period ended
December 31, 1997 and the period May 1, 1995 (date operations commenced) through
December 31, 1995.(a)
CLASS A:
<TABLE>
<CAPTION>
1997(b)
----------
<S> <C>
Net asset value, beginning of period $ 13.42
- ------------------------------------------------------------ ----------
Income from investment operations:
Net investment income 0.17(c)
- ------------------------------------------------------------ ----------
Net gains on securities (both realized and unrealized) 1.69
- ------------------------------------------------------------ ----------
Total from investment operations 1.86
- ------------------------------------------------------------ ----------
Less distributions:
Dividends from net investment income (0.07)
- ------------------------------------------------------------ ----------
Distributions from capital gains (0.22)
- ------------------------------------------------------------ ----------
Total distributions (0.29)
- ------------------------------------------------------------ ----------
Net asset value, end of period $ 14.99
============================================================ ==========
Total return(d) 13.84%
============================================================ ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 8,444
============================================================ ==========
Ratio of expenses to average net assets(e) 1.71%(f)
============================================================ ==========
Ratio of net investment income to average net assets(g) 0.83%(f)
============================================================ ==========
Portfolio turnover rate 9%
============================================================ ==========
Average brokerage commission rate(h) $ 0.0507
============================================================ ==========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct sales charges.
(e) After fee waivers. The ratio of expenses to average net assets prior to fee
waivers was 1.81%.
(f) Ratios are based on average net assets of $3,145,579.
(g) After fee waivers. The ratio of net investment income to average net assets
prior to fee waivers was 0.73%.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-19
<PAGE> 124
NOTE 6-FINANCIAL HIGHLIGHTS-continued
CLASS C:(a)
<TABLE>
<CAPTION>
1997(b) 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.42 $ 11.13 $ 10.00
- ------------------------------------------------------------ -------- -------- --------
Income from investment operations:
Net investment income 0.01(c) (0.01) --
- ------------------------------------------------------------ -------- -------- --------
Net gains on securities (both realized and unrealized) 1.73 2.34 1.13
- ------------------------------------------------------------ -------- -------- --------
Total from investment operations 1.74 2.33 1.13
- ------------------------------------------------------------ -------- -------- --------
Less distributions:
Dividends from net investment income (0.01) -- --
- ------------------------------------------------------------ -------- -------- --------
Distributions from capital gains (0.22) (0.04) --
- ------------------------------------------------------------ -------- -------- --------
Total distributions (0.23) (0.04) --
- ------------------------------------------------------------ -------- -------- --------
Net asset value, end of period $ 14.93 $ 13.42 $ 11.13
============================================================ ======== ======== ========
Total return(d) 12.98% 20.99% 11.28%
============================================================ ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 93,162 $ 51,916 $ 9,467
============================================================ ======== ======== ========
Ratio of expenses to average net assets 2.46%(e) 2.50% 2.50%(f)
============================================================ ======== ======== ========
Ratio of net investment income (loss) to average net assets 0.08%(e) (0.16)% 0.03%(f)
============================================================ ======== ======== ========
Portfolio turnover rate 9% 5% 2%
============================================================ ======== ======== ========
Average brokerage commission rate(g) $ 0.0507 $ 0.0602 N/A
============================================================ ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(e) Ratios are based on average net assets of $77,973,564.
(f) Annualized
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-20
<PAGE> 125
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of the AIM Advisor Funds, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Advisor Large Cap Value Fund, one of the portfolios
of the AIM Advisor Funds, Inc. (hereafter referred to as
the "Fund") at December 31, 1997, the results of its
operations for the year then ended, the changes in its
net assets for each of the two years in the period then
ended and the financial highlights for the periods
indicated, in conformity with generally accepted
accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with generally accepted auditing standards
which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian
and the application of alternative auditing procedures
where securities purchased had not been received, provide
a reasonable basis for our opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Denver, Colorado
February 5, 1998
FS-21
<PAGE> 126
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-97.26%
AEROSPACE/DEFENSE-1.99%
Lockheed Martin Corp. 35,860 $ 3,532,210
- -------------------------------------------------------------
AGRICULTURAL PRODUCTS-1.09%
Archer-Daniels-Midland Co. 89,250 1,935,609
- -------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.85%
Cooper Tire & Rubber Co. 62,000 1,511,250
- -------------------------------------------------------------
AUTOMOBILES-1.59%
Chrysler Corp. 80,000 2,815,000
- -------------------------------------------------------------
BANKS (MAJOR REGIONAL)-3.30%
First Union Corp. 60,000 3,075,000
- -------------------------------------------------------------
NationsBank Corp. 45,674 2,777,550
- -------------------------------------------------------------
5,852,550
- -------------------------------------------------------------
BANKS (MONEY CENTER)-2.53%
First Chicago N.B.D. Corp. 53,800 4,492,300
- -------------------------------------------------------------
BANKS (REGIONAL)-2.61%
First of America Bank Corp. 60,000 4,627,500
- -------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-1.75%
PepsiCo, Inc. 85,000 3,097,188
- -------------------------------------------------------------
CHEMICALS-0.97%
Dow Chemical Co. (The) 17,000 1,725,500
- -------------------------------------------------------------
COMPUTERS (HARDWARE)-5.73%
Compaq Computer Corp. 51,250 2,892,422
- -------------------------------------------------------------
Hewlett-Packard Co. 56,000 3,500,000
- -------------------------------------------------------------
International Business Machines Corp. 36,000 3,764,250
- -------------------------------------------------------------
10,156,672
- -------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-4.90%
Computer Associates International,
Inc. 82,500 4,362,188
- -------------------------------------------------------------
Electronic Data Systems Corp. 98,300 4,319,056
- -------------------------------------------------------------
8,681,244
- -------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-2.27%
SUPERVALU, INC. 96,000 4,020,000
- -------------------------------------------------------------
ELECTRIC COMPANIES-8.04%
Baltimore Gas & Electric Co. 55,500 1,890,469
- -------------------------------------------------------------
Cinergy Corp. 61,000 2,337,063
- -------------------------------------------------------------
Entergy Corp. 120,000 3,592,500
- -------------------------------------------------------------
PP&L Resources, Inc. 70,000 1,675,625
- -------------------------------------------------------------
SCANA Corp. 54,500 1,631,594
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRIC COMPANIES-(CONTINUED)
Texas Utilities Co. 75,000 $ 3,117,189
- -------------------------------------------------------------
14,244,440
- -------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.99%
General Electric Co. 48,000 3,522,000
- -------------------------------------------------------------
ELECTRONICS (DEFENSE)-1.12%
Raytheon Co. 39,400 1,989,700
- -------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-4.81%
American General Corp. 48,600 2,627,438
- -------------------------------------------------------------
Fannie Mae 40,000 2,282,500
- -------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover
& Co. 61,050 3,609,581
- -------------------------------------------------------------
8,519,519
- -------------------------------------------------------------
FOODS-1.67%
H.J. Heinz Co. 58,350 2,964,909
- -------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-2.96%
Abbott Laboratories 41,600 2,727,400
- -------------------------------------------------------------
American Home Products Corp. 32,900 2,516,850
- -------------------------------------------------------------
5,244,250
- -------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-5.54%
Lilly (Eli) & Co. 30,400 2,116,600
- -------------------------------------------------------------
Merck & Co., Inc. 30,900 3,283,125
- -------------------------------------------------------------
Schering-Plough Corp. 71,200 4,423,300
- -------------------------------------------------------------
9,823,025
- -------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-1.59%
Columbia/HCA Healthcare Corp. 95,200 2,820,300
- -------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-1.04%
Maytag Corp. 49,200 1,835,775
- -------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-1.11%
Kimberly-Clark Corp. 40,000 1,972,500
- -------------------------------------------------------------
HOUSEWARES-1.05%
Fortune Brands, Inc. 50,000 1,853,125
- -------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.06%
Jefferson-Pilot Corp. 24,000 1,869,000
- -------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-3.70%
Chubb Corp. 25,000 1,890,625
- -------------------------------------------------------------
General Re Corp. 13,500 2,862,000
- -------------------------------------------------------------
SAFECO Corp. 37,000 1,803,750
- -------------------------------------------------------------
6,556,375
- -------------------------------------------------------------
</TABLE>
FS-22
<PAGE> 127
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MACHINERY (DIVERSIFIED)-0.98%
Dover Corp. 48,000 $ 1,734,000
- -------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.26%
Textron, Inc. 64,000 4,000,000
- -------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.82%
York International Corp. 36,700 1,451,944
- -------------------------------------------------------------
METALS MINING-0.70%
Phelps Dodge Corp. 20,000 1,245,000
- -------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-1.05%
Pitney Bowes, Inc. 20,700 1,861,706
- -------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-6.24%
Amoco Corp. 24,600 2,094,074
- -------------------------------------------------------------
Exxon Corp. 52,000 3,181,750
- -------------------------------------------------------------
Repsol S.A.-ADR (Spain) 60,000 2,553,750
- -------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York Shares (Netherlands) 59,600 3,229,575
- -------------------------------------------------------------
11,059,149
- -------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.89%
Westvaco Corp. 50,000 1,571,874
- -------------------------------------------------------------
PHOTOGRAPHY/IMAGING-2.08%
Xerox Corp. 50,000 3,690,625
- -------------------------------------------------------------
RAILROADS-1.23%
Illinois Central Corp. 64,200 2,186,812
- -------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-2.14%
Lowe's Companies, Inc. 46,200 2,203,163
- -------------------------------------------------------------
Sherwin-Williams Co. 57,300 1,590,074
- -------------------------------------------------------------
3,793,237
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES)-1.36%
J.C. Penney Co., Inc. 40,000 $ 2,412,500
- -------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-2.18%
Dun & Bradstreet Corp. 125,000 3,867,188
- -------------------------------------------------------------
TELEPHONE-2.29%
Southern New England
Telecommunications Corp. 35,000 1,760,937
- -------------------------------------------------------------
Telefonos de Mexico S.A.-ADR (Mexico) 40,800 2,287,350
- -------------------------------------------------------------
4,048,287
- -------------------------------------------------------------
TEXTILES (APPAREL)-1.18%
Liz Claiborne, Inc. 49,800 2,082,262
- -------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.98%
Shaw Industries, Inc. 149,000 1,732,124
- -------------------------------------------------------------
TOBACCO-4.46%
Philip Morris Companies, Inc. 79,200 3,588,750
- -------------------------------------------------------------
UST, Inc. 117,000 4,321,689
- -------------------------------------------------------------
7,910,439
- -------------------------------------------------------------
WASTE MANAGEMENT-1.16%
Waste Management, Inc. 75,000 2,062,500
- -------------------------------------------------------------
Total Common Stocks 172,371,588
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-2.73%(a)
Smith Barney Inc., 6.75%,
01/02/98(b) $4,839,870 4,839,870
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.99% 177,211,458
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.01% 16,369
- --------------------------------------------------------------
NET ASSETS-100.00% $177,227,827
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to insure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investments companies managed by the
investment advisor or its affiliates.
(b) Joint repurchase agreement entered into 12/31/97 with a maturing value of
$400,150,000. Collateralized by $395,097,000 U.S. Government obligations, 0%
to 13.875% due 01/07/98 to 12/15/43 with an aggregate market value at
12/31/97 of $408,000,323.
Abbreviations:
ADR - American Depositary Receipt
See Notes to Financial Statements.
FS-23
<PAGE> 128
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$109,675,167) $177,211,458
- ---------------------------------------------------------
Receivables for:
Capital stock sold 278,933
- ---------------------------------------------------------
Interest and dividends 406,277
- ---------------------------------------------------------
Investment for deferred compensation plan 2,092
- ---------------------------------------------------------
Other assets 4,436
- ---------------------------------------------------------
Total assets 177,903,196
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 56,225
- ---------------------------------------------------------
Deferred compensation plan 2,092
- ---------------------------------------------------------
Accrued advisory fees 110,771
- ---------------------------------------------------------
Accrued operating services fees 66,462
- ---------------------------------------------------------
Accrued distribution fees 422,994
- ---------------------------------------------------------
Accrued directors' fees and expenses 16,825
- ---------------------------------------------------------
Total liabilities 675,369
- ---------------------------------------------------------
Net assets applicable to shares outstanding $177,227,827
=========================================================
NET ASSETS:
Class A $ 5,000,130
=========================================================
Class C $172,227,697
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 207,399
=========================================================
Class C
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 7,153,303
=========================================================
Class A:
Net asset value and redemption price per
share $ 24.11
=========================================================
Offering price per share:
(Net asset value of $24.11 divided by
94.50%) $ 25.51
=========================================================
Class C:
Net asset value and offering price per
share $ 24.08
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 330,699
- --------------------------------------------------------
Dividends (net of $5,361 foreign
withholding tax) 3,197,343
- --------------------------------------------------------
Total investment income 3,528,042
- --------------------------------------------------------
EXPENSES:
Advisory fees 1,184,878
- --------------------------------------------------------
Operating services fees 710,927
- --------------------------------------------------------
Directors' fees and expenses 18,267
- --------------------------------------------------------
Distribution fees-Class A 5,462
- --------------------------------------------------------
Distribution fees-Class C 1,564,270
- --------------------------------------------------------
Total expenses 3,483,804
- --------------------------------------------------------
Less: Fees waived by distributor (1,570)
- --------------------------------------------------------
Net expenses 3,482,234
- --------------------------------------------------------
Net investment income 45,808
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain from investment
securities 17,674,268
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 24,024,117
- --------------------------------------------------------
Net gain on investment securities 41,698,385
- --------------------------------------------------------
Net increase in net assets resulting from
operations $41,744,193
========================================================
</TABLE>
See Notes to Financial Statements.
FS-24
<PAGE> 129
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 45,808 $ 302,211
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities 17,674,268 5,485,198
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 24,024,117 14,241,394
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 41,744,193 20,028,803
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (6,926) --
- -----------------------------------------------------------------------------------------
Class C (10,706) (326,780)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (415,931) --
- -----------------------------------------------------------------------------------------
Class C (17,806,373) --
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 5,055,769 --
- -----------------------------------------------------------------------------------------
Class C 11,252,055 4,140,414
- -----------------------------------------------------------------------------------------
Net increase in net assets 39,812,081 23,842,437
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 137,415,746 113,573,309
- -----------------------------------------------------------------------------------------
End of period $177,227,827 $137,415,746
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $105,927,721 $ 89,619,897
- -----------------------------------------------------------------------------------------
Undistributed net investment income (loss) 5,961 (22,215)
- -----------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities 3,757,854 4,305,890
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 67,536,291 43,512,174
- -----------------------------------------------------------------------------------------
$177,227,827 $137,415,746
=========================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Large Cap Value Fund (the "Fund", formerly INVESCO Advisor Equity
Fund) is a series portfolio of AIM Advisor Funds, Inc. (the "Company" formerly,
INVESCO Advisor Funds, Inc.) The Company is a Maryland corporation and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of seven
diversified portfolios. The Fund currently offers two different classes of
shares: Class A shares and Class C shares. Class A shares are sold with a
front-end sales charge. Class C shares are sold with a contingent deferred sales
charge. Matters affecting each portfolio or class will be voted on exclusively
by the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. The Fund's investment
objective is to achieve a high total return on investment through capital
appreciation and current income, without regard to federal income tax
considerations. Information presented in these financial statements pertains
only to the Fund.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on
the NASDAQ National Market System is valued at the last sales price on the
valuation date, or absent a last sales price, at the mean of the closing bid
and asked prices. Debt obligations (including
FS-25
<PAGE> 130
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the
above methods are valued at the mean between last bid and asked prices based
upon quotes furnished by independent sources. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's Board of Directors. Investments with maturities of 60 days or less
are valued on the basis of amortized cost which approximates market value.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
D. Expenses-Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Capital Management, Inc. ("ICM") whereby AIM pays ICM an
annual rate of 0.20% of the Fund's average daily net assets. Prior to August 4,
1997, the Company had an investment advisory agreement with INVESCO Services,
Inc. ("ISI") to serve as the Fund's investment advisor. Under the terms of the
prior investment agreement, the Fund paid ISI an advisory fee equal to an annual
rate of 0.75% of the average daily net assets of the Fund. Under the terms of
the prior sub-advisory agreement between ISI and ICM, ISI paid ICM a
sub-advisory fee equal to an annual rate of 0.20% of the Fund's average daily
net assets.
The Company, pursuant to an operating services agreement with AIM, has agreed
to pay AIM an annual rate of 0.45% of average daily net assets of the Fund for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. This
agreement provides that AIM pays all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
period August 4, 1997 to December 31, 1997, AIM was paid $313,139 for such
services. Prior to August 4, 1997, the Company had an operating services
agreement with ISI whereby the Fund paid ISI an annual rate of 0.45% of average
daily net assets of the Fund. During the period January 1, 1997 through August
3, 1997, the Fund paid ISI $397,788.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class C shares of the Fund. The Company has adopted a
distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and the Fund's Class C shares (the "Plan"). The Fund,
pursuant to the Plan, pays AIM Distributors compensation at a maximum annual
rate of 0.35% of the average daily net assets attributable to the Class A
shares. AIM has voluntarily agreed to limit the Plan payments to 0.25% for three
years beginning August 4, 1997. The Fund, pursuant to the Plan, pays AIM
Distributors a maximum annual rate of 1.00% of the Fund's average daily net
assets attributable to the Class C shares. Of these amounts, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class A and C shares
to selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own shares of the Fund.
Any amounts not paid as a service fee under the Plan would constitute an
asset-based sales charge. The Plan also imposes a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the period August 4, 1997 to December 31, 1997, the Class A and
Class C shares paid AIM Distributors $3,069 and $683,679, respectively, as
compensation under the Plan. During the year ended December 31, 1997 AIM
Distributors and ISI waived fees of $1,570 for the Class A shares. Prior to
August 4, 1997, the Fund entered into a distribution plan with ISI in accordance
with Rule 12b-1 of the 1940 Act under substantially identical terms as described
for AIM Distributors above. During the period January 1, 1997 to August 3, 1997
the Class A and Class C shares paid ISI $823 and $880,591, respectively as
compensation under the Plan.
AIM Distributors received commissions of $7,461 from sales of Class A shares
of the Fund during the period August 4, 1997 to December 31, 1997. ISI received
commissions of $999 from sales of Class A shares of the Fund during the period
January 1, 1997 through August 3, 1997. Such commissions are not an expense to
the Fund. They are deducted from, and are not included in, the proceeds from
sales of Class A shares. During the period August 4, 1997 to December 31, 1997,
AIM Distributors received commissions of $570 in contingent deferred sales
charges imposed on redemptions of shares. Certain officers and directors of the
Company are officers and directors of AIM, A I M Fund Services, Inc. and AIM
Distributors. During the period January 1, 1997 through August 3, 1997, ISI
received commissions of $8,692 in contingent deferred sales charges imposed on
redemptions of shares.
The combined effect of the master investment advisory agreements and operating
services agreement and the distribution plans for the Fund is to place a cap or
ceiling on the total expenses
FS-26
<PAGE> 131
of the Fund, other than brokerage commissions, interest, taxes, litigation,
directors' fees and expenses, and other extraordinary expenses. AIM has
voluntarily agreed to adhere to maximum expense ratios for the Fund. To the
extent that the Fund exceeds the amounts, AIM or its affiliates will waive its
fees to reimburse the Fund to assure that the Fund's expenses do not exceed the
designated maximum amounts except for those items specifically identified above.
If, in any calendar quarter, the average net assets of the Fund are less than
$500 million, the Fund's expenses shall not exceed 1.55% for Class A and 2.20%
for Class C; on the next $500 million of net assets, expenses shall not exceed
1.50% for Class A and 2.15% for Class C; on the next $1 billion of net assets,
expenses shall not exceed 1.45% for Class A and 2.10% for Class C; and on all
assets over $2 billion, expenses shall not exceed 1.40% for Class A and 2.05%
for Class C.
During the period August 4, 1997 to December 31, 1997, the Fund paid legal
fees of $625 for services rendered by Kramer, Levin, Naftalis & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1997 was
$52,014,131 and $53,036,580, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $68,808,948
- -------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,272,657)
- -------------------------------------------------------------
Net unrealized appreciation of investment
securities $67,536,291
=============================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5-CAPITAL STOCK*
Changes in the Fund's capital stock outstanding during the years ended December
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A** 198,806 $ 4,859,057 -- $ --
- ----------------------------------------------------------- --------- ------------ --------- ------------
Class C 745,080 17,246,229 1,052,644 19,738,118
- ----------------------------------------------------------- --------- ------------ --------- ------------
Issued as reinvestment of dividends:
Class A** 15,389 365,541 -- --
- ----------------------------------------------------------- --------- ------------ --------- ------------
Class C 683,868 16,255,395 13,084 248,270
- ----------------------------------------------------------- --------- ------------ --------- ------------
Reacquired:
Class A** (6,796) (168,829) -- --
- ----------------------------------------------------------- --------- ------------ --------- ------------
Class C (955,477) (22,249,569) (837,888) (15,845,974)
- ----------------------------------------------------------- --------- ------------ --------- ------------
680,870 $ 16,307,824 227,840 $ 4,140,414
=========================================================== ========= ============ ========= ============
</TABLE>
* Shares have been restated to reflect a 4 for 1 stock split, effected in the
form of a 300% stock dividend, on November 7, 1997.
** Class A shares commenced operations on January 1, 1997.
FS-27
<PAGE> 132
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended December 31, 1997 and for a share of Class C
capital stock outstanding during each of the years in the five-year period ended
December 31, 1997.(a)
CLASS A:
<TABLE>
<CAPTION>
1997(b)
-------
<S> <C>
Net asset value, beginning of period $ 20.57
- ------------------------------------------------------------ -------
Income from investment operations:
Net investment income 0.23(c)
- ------------------------------------------------------------ -------
Net gains on securities (both realized and unrealized) 6.17
- ------------------------------------------------------------ -------
Total from investment operations 6.40
- ------------------------------------------------------------ -------
Less distributions:
Dividends from net investment income (0.15)
- ------------------------------------------------------------ -------
Distributions from capital gains (2.71)
- ------------------------------------------------------------ -------
Total distributions (2.86)
- ------------------------------------------------------------ -------
Net asset value, end of period $ 24.11
============================================================ =======
Total return(d) 31.66%
============================================================ =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 5,000
============================================================ =======
Ratio of expenses to average net assets(e) 1.46%(f)
============================================================ =======
Ratio of net investment income to average net assets(g) 0.77%(f)
============================================================ =======
Portfolio turnover rate 34%
============================================================ =======
Average brokerage commission rate(h) $0.0538
============================================================ =======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct sales charges.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 1.56%.
(f) Ratios are based on average net assets of $1,570,213.
(g) After fee waivers. Ratio of net investment income to average net assets
prior to fee waivers was 0.67%.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold.
CLASS C:(a)
<TABLE>
<CAPTION>
1997(b) 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.57 $ 17.60 $ 13.96 $ 14.90 $ 15.82
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.01(c) 0.05 0.10 0.09 0.10
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 6.21 2.97 4.11 0.32 1.35
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 6.22 3.02 4.21 0.41 1.45
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- (0.05) (0.10) (0.09) (0.10)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from capital gains (2.71) -- (0.47) (1.26) (2.27)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (2.71) (0.05) (0.57) (1.35) (2.37)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 24.08 $ 20.57 $ 17.60 $ 13.96 $ 14.90
============================================================ ======== ======== ======== ======== ========
Total return(d) 30.66% 17.17% 30.28% 2.69% 9.16%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $172,228 $137,416 $113,573 $ 77,929 $ 86,659
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(e) 2.21%(f) 2.26% 2.28% 2.25% 2.25%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(e) 0.02%(f) 0.24% 0.64% 0.61% 0.62%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 34% 19% 17% 21% 47%
============================================================ ======== ======== ======== ======== ========
Average brokerage commission rate(g) $ 0.0538 $ 0.0590 N/A N/A N/A
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct contingent deferred sales charges.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 2.25% (annualized) and 0.62% (annualized), respectively,
for 1993.
(f) Ratios are based on average net assets of $156,522,171.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-28
<PAGE> 133
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of the AIM Advisor Funds, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Advisor MultiFlex Fund, one of the portfolios of the
AIM Advisor Funds, Inc. (hereafter referred to as the
"Fund") at December 31, 1997, the results of its
operations for the year then ended, the changes in its
net assets for each of the two years in the period then
ended and the financial highlights for the periods
indicated, in conformity with generally accepted
accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with generally accepted auditing standards
which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian
and the application of alternative auditing procedures
where securities purchased had not been received, provide
a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Denver, Colorado
February 5, 1998
FS-29
<PAGE> 134
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-79.34%
AEROSPACE/DEFENSE-0.61%
BE Aerospace, Inc.(a) 15,900 $ 425,325
- --------------------------------------------------------------
Boeing Co. (The) 13,000 636,188
- --------------------------------------------------------------
Lockheed Martin Corp. 9,616 947,176
- --------------------------------------------------------------
Sequa Corp.(a) 5,500 357,844
- --------------------------------------------------------------
2,366,533
- --------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.41%
Archer-Daniels-Midland Co. 50,925 1,104,436
- --------------------------------------------------------------
Universal Corp. 11,300 464,713
- --------------------------------------------------------------
1,569,149
- --------------------------------------------------------------
AIR FREIGHT-0.30%
Airborne Freight Corp. 11,600 720,650
- --------------------------------------------------------------
Expeditors International of
Washington, Inc. 11,300 435,050
- --------------------------------------------------------------
1,155,700
- --------------------------------------------------------------
AIRLINES-0.46%
British Airways PLC-ADR (United
Kingdom) 19,000 1,780,063
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.49%
Arvin Industries, Inc. 17,500 582,969
- --------------------------------------------------------------
Borg-Warner Automotive, Inc. 14,600 759,200
- --------------------------------------------------------------
Cooper Tire & Rubber Co. 22,300 543,563
- --------------------------------------------------------------
1,885,732
- --------------------------------------------------------------
AUTOMOBILES-0.49%
Ford Motor Co. 16,600 808,213
- --------------------------------------------------------------
Volvo A.B.-ADR (Sweden) 40,000 1,080,000
- --------------------------------------------------------------
1,888,213
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-3.50%
ABN Amro Holding N.V.-ADR
(Netherlands) 80,000 1,560,000
- --------------------------------------------------------------
Banco Santander-ADR (Spain) 62,700 2,041,669
- --------------------------------------------------------------
Deutsche Bank A.G.-ADR (Germany) 30,000 2,118,969
- --------------------------------------------------------------
HSBC Holdings PLC-ADR (United
Kingdom) 8,000 1,972,054
- --------------------------------------------------------------
Istituto Mobiliare Italiano
S.p.A.-ADR (Italy) 45,000 1,608,750
- --------------------------------------------------------------
National Australia Bank Ltd.-ADR
(Australia) 25,000 1,765,625
- --------------------------------------------------------------
NationsBank Corp. 21,662 1,317,320
- --------------------------------------------------------------
Wachovia Corp. 14,000 1,135,750
- --------------------------------------------------------------
13,520,137
- --------------------------------------------------------------
BANKS (MONEY CENTER)-1.99%
Credit Suisse Group-ADR
(Switzerland) 50,000 1,936,850
- --------------------------------------------------------------
Den Danske Bank-ADR (Denmark) 17,000 2,266,761
- --------------------------------------------------------------
First Chicago N.B.D. Corp. 17,000 1,419,500
- --------------------------------------------------------------
Societe Generale-ADR (France) 75,000 2,044,590
- --------------------------------------------------------------
7,667,701
- --------------------------------------------------------------
BANKS (REGIONAL)-1.55%
ALBANK Financial Corp. 15,840 814,770
- --------------------------------------------------------------
CCB Financial Corp. 5,100 548,250
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BANKS (REGIONAL)-(CONTINUED)
Cullen/Frost Bankers, Inc. 11,600 $ 703,975
- --------------------------------------------------------------
Development Bank of Singapore
Ltd.-ADR (Singapore) 40,000 1,367,408
- --------------------------------------------------------------
First Midwest Bancorp, Inc. 11,500 503,125
- --------------------------------------------------------------
Imperial Bancorp(a) 18,800 927,075
- --------------------------------------------------------------
Independent Bank Corp. 16,600 305,025
- --------------------------------------------------------------
Magna Group, Inc. 18,100 828,075
- --------------------------------------------------------------
5,997,703
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.62%
Adolph Coors Co. 5,700 189,525
- --------------------------------------------------------------
Compania Cervecerias Unidas
S.A.-ADR (Chile) 45,000 1,321,875
- --------------------------------------------------------------
Kirin Brewery Co., Ltd.-ADR (Japan) 12,000 880,500
- --------------------------------------------------------------
2,391,900
- --------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.27%
PepsiCo, Inc. 28,350 1,033,003
- --------------------------------------------------------------
BIOTECHNOLOGY-0.00%
Amylin Pharmaceuticals, Inc.(a) 1,200 6,525
- --------------------------------------------------------------
BUILDING MATERIALS-0.15%
Cameron Ashley Building Products(a) 5,100 85,425
- --------------------------------------------------------------
TJ International, Inc. 20,400 504,900
- --------------------------------------------------------------
590,325
- --------------------------------------------------------------
CHEMICALS-1.01%
Akzo Nobel N.V.-ADR (Netherlands) 20,000 1,737,500
- --------------------------------------------------------------
Dow Chemical Co. (The) 6,200 629,300
- --------------------------------------------------------------
Norsk Hydro A.S.A.-ADR (Norway) 30,000 1,530,000
- --------------------------------------------------------------
3,896,800
- --------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.85%
BASF A.G.-ADR (Germany) 50,000 1,772,760
- --------------------------------------------------------------
Bayer A.G.-ADR (Germany) 40,000 1,494,956
- --------------------------------------------------------------
3,267,716
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.65%
Dexter Corp. 28,800 1,243,800
- --------------------------------------------------------------
Fuller (H.B.) Co. 5,000 247,500
- --------------------------------------------------------------
Konica Corp.-ADR (Japan) 22,000 1,015,219
- --------------------------------------------------------------
2,506,519
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.13%
Brightpoint, Inc.(a) 13,600 188,700
- --------------------------------------------------------------
MasTec, Inc.(a) 6,800 155,550
- --------------------------------------------------------------
Tekelec(a) 5,400 164,700
- --------------------------------------------------------------
508,950
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-1.09%
Compaq Computer Corp. 19,500 1,100,531
- --------------------------------------------------------------
Data General Corp.(a) 10,700 186,581
- --------------------------------------------------------------
Hewlett-Packard Co. 18,400 1,150,000
- --------------------------------------------------------------
</TABLE>
FS-30
<PAGE> 135
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (HARDWARE)-(CONTINUED)
International Business Machines
Corp. 9,400 $ 982,888
- --------------------------------------------------------------
Stratus Computer, Inc.(a) 20,600 778,938
- --------------------------------------------------------------
4,198,938
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.05%
Premiere Technologies, Inc.(a) 6,300 174,038
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.18%
Adaptec, Inc.(a) 18,900 701,663
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-1.78%
Aspen Technologies, Inc.(a) 9,600 328,800
- --------------------------------------------------------------
Boole & Babbage, Inc.(a) 18,000 537,750
- --------------------------------------------------------------
Computer Associates International,
Inc. 28,350 1,499,006
- --------------------------------------------------------------
Computer Task Group, Inc. 24,600 874,838
- --------------------------------------------------------------
Electronic Data Systems Corp. 39,600 1,739,925
- --------------------------------------------------------------
Harbinger Corp.(a) 9,300 261,563
- --------------------------------------------------------------
Manugistics Group, Inc.(a) 7,800 348,075
- --------------------------------------------------------------
Platinum Technology, Inc. 11,400 322,050
- --------------------------------------------------------------
Structural Dynamics Research
Corp.(a) 14,000 315,000
- --------------------------------------------------------------
Symantec Corp.(a) 13,500 296,156
- --------------------------------------------------------------
Veritas Software Corp.(a) 7,000 357,000
- --------------------------------------------------------------
6,880,163
- --------------------------------------------------------------
CONSTRUCTION (CEMENT & AGGREGATES)-0.84%
Cemex S.A. de C.V.-ADR (Mexico) 110,000 1,167,969
- --------------------------------------------------------------
Centex Construction Products, Inc. 12,000 361,500
- --------------------------------------------------------------
Southdown, Inc. 10,300 607,700
- --------------------------------------------------------------
Vulcan Materials Co. 11,000 1,123,375
- --------------------------------------------------------------
3,260,544
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.12%
Oneida Limited 17,250 460,359
- --------------------------------------------------------------
CONSUMER FINANCE-0.07%
FIRSTPLUS Financial Group, Inc. 7,500 287,813
- --------------------------------------------------------------
CONTAINERS & PACKAGING
(PAPER)-0.15%
Amcor Ltd.-ADR (Australia) 35,000 595,000
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.36%
AmeriSource Health Corp.-Class A(a) 4,900 285,425
- --------------------------------------------------------------
Bindley Western Industries, Inc. 18,900 583,538
- --------------------------------------------------------------
Richfood Holdings, Inc. 17,900 505,675
- --------------------------------------------------------------
1,374,638
- --------------------------------------------------------------
ELECTRIC COMPANIES-3.20%
Central Louisiana Electric 7,600 246,050
- --------------------------------------------------------------
Central Maine Power Co. 16,000 244,000
- --------------------------------------------------------------
CILCORP, Inc. 5,500 268,813
- --------------------------------------------------------------
Commonwealth Energy System 10,400 345,800
- --------------------------------------------------------------
DTE Energy Co. 26,700 926,156
- --------------------------------------------------------------
Endesa S.A.-ADR (Spain) 90,000 1,636,875
- --------------------------------------------------------------
Entergy Corp. 24,000 718,500
- --------------------------------------------------------------
Hawaiian Electric Industries, Inc. 15,200 621,300
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRIC COMPANIES-(CONTINUED)
Hongkong Electric Holdings Ltd.-ADR
(HongKong) 250,000 $ 950,200
- --------------------------------------------------------------
IES Industries, Inc. 8,800 323,950
- --------------------------------------------------------------
Interstate Power Co. 9,300 348,169
- --------------------------------------------------------------
Minnesota Power & Light Co. 8,300 361,569
- --------------------------------------------------------------
PowerGen PLC-ADR (United Kingdom) 35,000 1,859,375
- --------------------------------------------------------------
RWE A.G. (Germany) 32,000 1,717,420
- --------------------------------------------------------------
SIGCORP, Inc. 10,950 321,656
- --------------------------------------------------------------
Southern Co. 30,000 776,250
- --------------------------------------------------------------
Texas Utilities Co. 16,000 665,000
- --------------------------------------------------------------
12,331,083
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.02%
Black Box Corp.(a) 9,000 318,375
- --------------------------------------------------------------
Carlton Communications PLC-ADR
(United Kingdom) 45,000 1,755,000
- --------------------------------------------------------------
Electro Scientific Industries,
Inc.(a) 9,500 361,000
- --------------------------------------------------------------
Emerson Electric Co. 17,600 993,300
- --------------------------------------------------------------
Esterline Technologies Corp.(a) 6,200 223,200
- --------------------------------------------------------------
General Electric Co. 11,000 807,125
- --------------------------------------------------------------
Hitachi Ltd.-ADR (Japan) 18,000 1,245,375
- --------------------------------------------------------------
Matsushita Electric Industrial Co.,
Ltd. 6,000 912,000
- --------------------------------------------------------------
Robbins & Myers, Inc. 23,100 915,338
- --------------------------------------------------------------
Technitrol, Inc. 9,000 270,000
- --------------------------------------------------------------
7,800,713
- --------------------------------------------------------------
ELECTRONIC (COMPONENT DISTRIBUTORS)-0.21%
Kyocera Corp.-ADR (Japan) 9,000 814,500
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.26%
Raytheon Co. 20,000 1,010,000
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.16%
CellStar Corp.(a) 9,800 194,775
- --------------------------------------------------------------
Methode Electronics, Inc.-Class A 26,300 427,375
- --------------------------------------------------------------
622,150
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.43%
Dallas Semiconductor Corp. 9,300 378,975
- --------------------------------------------------------------
PMC-Sierra, Inc. 10,000 310,000
- --------------------------------------------------------------
Texas Instruments, Inc. 15,000 675,000
- --------------------------------------------------------------
Unitrode Corp. 13,000 279,500
- --------------------------------------------------------------
1,643,475
- --------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.18%
Stone & Webster, Inc. 14,900 698,438
- --------------------------------------------------------------
ENTERTAINMENT-0.54%
Carmike Cinemas, Inc. 17,000 487,688
- --------------------------------------------------------------
News Corp. Ltd. (The)-ADR
(Australia) 50,000 1,115,625
- --------------------------------------------------------------
Walt Disney Co. (The) 5,000 495,313
- --------------------------------------------------------------
2,098,626
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.23%
Etec Systems, Inc.(a) 11,000 511,500
- --------------------------------------------------------------
</TABLE>
FS-31
<PAGE> 136
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
EQUIPMENT (SEMICONDUCTOR)-(CONTINUED)
Kulicke & Soffa Industries, Inc.(a) 21,200 $ 394,850
- --------------------------------------------------------------
906,350
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.02%
American General Corp. 19,900 1,075,844
- --------------------------------------------------------------
Fannie Mae 24,300 1,386,619
- --------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 14,850 878,006
- --------------------------------------------------------------
U.S. Trust Corp. 9,700 607,463
- --------------------------------------------------------------
3,947,932
- --------------------------------------------------------------
FOODS-2.10%
Associated British Foods PLC-ADR
(United Kingdom) 200,000 1,714,500
- --------------------------------------------------------------
Danone-ADR (France) 50,000 1,786,940
- --------------------------------------------------------------
Earthgrains Co. (The)-ADR 10,000 470,000
- --------------------------------------------------------------
H.J. Heinz Co. 19,000 965,438
- --------------------------------------------------------------
Nestle S.A.-ADR (Switzerland) 27,000 2,026,085
- --------------------------------------------------------------
Ralston-Ralston Purina Group 12,100 1,124,544
- --------------------------------------------------------------
8,087,507
- --------------------------------------------------------------
FOOTWEAR-0.15%
Nike, Inc.-Class B 15,000 588,750
- --------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.04%
Anchor Gaming(a) 3,000 167,250
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.14%
Abbott Laboratories 17,650 1,157,178
- --------------------------------------------------------------
American Home Products Corp. 11,000 841,500
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 17,900 1,693,788
- --------------------------------------------------------------
Johnson & Johnson 10,800 711,450
- --------------------------------------------------------------
4,403,916
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-2.04%
Agouron Pharmaceuticals, Inc.(a) 17,700 519,938
- --------------------------------------------------------------
Alpharma, Inc. 5,200 113,100
- --------------------------------------------------------------
Astra A.B.-ADR (Sweden) 110,000 1,890,625
- --------------------------------------------------------------
ICN Pharmaceuticals, Inc. 9,800 478,363
- --------------------------------------------------------------
Novartis-ADR (Switzerland) 26,666 2,166,479
- --------------------------------------------------------------
Novo Nordisk A.S.-ADR (Denmark) 34,000 2,460,750
- --------------------------------------------------------------
Parexel International Corp.(a) 6,100 225,700
- --------------------------------------------------------------
7,854,955
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-1.49%
Glaxo Wellcome PLC-ADR (United
Kingdom) 40,000 1,915,000
- --------------------------------------------------------------
Lilly (Eli) & Co. 11,800 821,575
- --------------------------------------------------------------
Merck & Co., Inc. 11,000 1,168,750
- --------------------------------------------------------------
Schering-Plough Corp. 30,100 1,869,963
- --------------------------------------------------------------
5,775,288
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.52%
Columbia/HCA Healthcare Corp. 39,428 1,168,055
- --------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 16,800 846,300
- --------------------------------------------------------------
2,014,355
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (LONG TERM CARE)-0.33%
Integrated Health Services, Inc. 33,000 $ 1,029,188
- --------------------------------------------------------------
NovaCare, Inc.(a) 19,400 253,413
- --------------------------------------------------------------
1,282,601
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.24%
Trigon Healthcare, Inc.(a) 35,500 927,438
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.91%
ADAC Laboratories(a) 16,200 319,950
- --------------------------------------------------------------
Arterial Vascular Engineering,
Inc.(a) 9,400 611,000
- --------------------------------------------------------------
ATL Ultrasound, Inc.(a) 6,300 289,800
- --------------------------------------------------------------
Biomet, Inc. 19,500 499,688
- --------------------------------------------------------------
Invacare Corp. 34,500 750,375
- --------------------------------------------------------------
Safeskin Corp.(a) 7,500 425,625
- --------------------------------------------------------------
Theragenics Corp.(a) 3,300 118,800
- --------------------------------------------------------------
West Co., Inc. (The) 16,200 481,950
- --------------------------------------------------------------
3,497,188
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.19%
FPA Medical Management, Inc.(a) 11,700 217,913
- --------------------------------------------------------------
Hooper Holmes, Inc. 34,200 498,038
- --------------------------------------------------------------
715,951
- --------------------------------------------------------------
HOMEBUILDING-0.38%
Centex Corp. 1,600 100,700
- --------------------------------------------------------------
Lennar Corp. 18,900 407,531
- --------------------------------------------------------------
Pulte Corp. 16,200 677,363
- --------------------------------------------------------------
U.S. Home Corp.(a) 7,200 282,600
- --------------------------------------------------------------
1,468,194
- --------------------------------------------------------------
HOUSEHOLD FURNITURE &
APPLIANCES-0.61%
Ethan Allen Interiors, Inc. 21,500 829,094
- --------------------------------------------------------------
Furniture Brands International,
Inc.(a) 32,700 670,350
- --------------------------------------------------------------
Scotsman Industries, Inc. 9,000 219,938
- --------------------------------------------------------------
Whirlpool Corp. 11,500 632,500
- --------------------------------------------------------------
2,351,882
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.75%
Kimberly-Clark Corp. 18,200 897,488
- --------------------------------------------------------------
Unilever N.V.-New York Shares
(Netherlands) 32,000 1,998,000
- --------------------------------------------------------------
2,895,488
- --------------------------------------------------------------
HOUSEWARES-0.14%
Fortune Brands, Inc. 14,500 537,406
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.38%
Delphi Financial Group, Inc.(a) 6,732 302,940
- --------------------------------------------------------------
Guarantee Life Companies Inc. (The) 16,700 475,950
- --------------------------------------------------------------
Jefferson-Pilot Corp. 2,600 202,475
- --------------------------------------------------------------
Presidential Life Corp. 24,500 496,125
- --------------------------------------------------------------
1,477,490
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.67%
American International Group, Inc. 10,425 1,133,719
- --------------------------------------------------------------
FBL Financial Group, Inc. 6,700 268,838
- --------------------------------------------------------------
</TABLE>
FS-32
<PAGE> 137
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE)-(CONTINUED)
Travelers Group, Inc. 22,035 $ 1,187,136
- --------------------------------------------------------------
2,589,693
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-1.23%
Chubb Corp. 2,900 219,313
- --------------------------------------------------------------
Executive Risk Inc. 3,600 251,325
- --------------------------------------------------------------
Frontier Insurance Group, Inc. 9,420 215,483
- --------------------------------------------------------------
General Re Corp. 3,800 805,600
- --------------------------------------------------------------
Lawyers Title Corp. 21,000 660,188
- --------------------------------------------------------------
Orion Capital Corp. 26,000 1,207,375
- --------------------------------------------------------------
SAFECO Corp. 18,500 901,875
- --------------------------------------------------------------
W. R. Berkley Corp. 11,100 487,013
- --------------------------------------------------------------
4,748,172
- --------------------------------------------------------------
INSURANCE BROKERS-0.32%
Marsh & McLennan Co. 8,050 600,228
- --------------------------------------------------------------
Poe & Brown, Inc. 14,200 633,675
- --------------------------------------------------------------
1,233,903
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.50%
Interra Financial, Inc.(a) 9,800 676,200
- --------------------------------------------------------------
Raymond James Financial, Inc. 31,450 1,248,172
- --------------------------------------------------------------
1,924,372
- --------------------------------------------------------------
IRON & STEEL-0.25%
National Steel Corp.(a) 24,300 280,969
- --------------------------------------------------------------
Nucor Corp. 14,000 676,375
- --------------------------------------------------------------
957,344
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.67%
Mattel, Inc. 21,200 789,700
- --------------------------------------------------------------
Nintendo Co. Ltd.-ADR (Japan) 145,000 1,784,312
- --------------------------------------------------------------
2,574,012
- --------------------------------------------------------------
LODGING-HOTELS-0.29%
Bristol Hotel Co.(a) 9,300 270,281
- --------------------------------------------------------------
Prime Hospitality Corp.(a) 42,600 867,975
- --------------------------------------------------------------
1,138,256
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.40%
Dover Corp. 29,700 1,072,913
- --------------------------------------------------------------
Manitiwoc Co., Inc. (The) 14,850 482,625
- --------------------------------------------------------------
1,555,538
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.12%
Carlisle Companies, Inc. 19,300 825,075
- --------------------------------------------------------------
GenCorp, Inc. 17,200 430,000
- --------------------------------------------------------------
IDEX Corp. 19,200 669,600
- --------------------------------------------------------------
Textron, Inc. 20,000 1,250,000
- --------------------------------------------------------------
Tredegar Industries, Inc. 17,500 1,152,813
- --------------------------------------------------------------
4,327,488
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.42%
AptarGroup, Inc. 6,700 371,850
- --------------------------------------------------------------
Cognex Corp.(a) 12,200 332,450
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-(CONTINUED)
Dionex Corp.(a) 8,100 $ 407,025
- --------------------------------------------------------------
York International Corp. 12,500 494,530
- --------------------------------------------------------------
1,605,855
- --------------------------------------------------------------
METAL FABRICATORS-0.15%
Commercial Metals Co. 6,000 189,375
- --------------------------------------------------------------
Oregon Metallurgical Corp.(a) 11,600 387,150
- --------------------------------------------------------------
576,525
- --------------------------------------------------------------
METALS MINING-0.51%
Phelps Dodge Corp. 8,500 529,125
- --------------------------------------------------------------
Rio Tinto Ltd. (Australia) 31,000 1,446,456
- --------------------------------------------------------------
1,975,581
- --------------------------------------------------------------
NATURAL GAS-0.28%
Energen Corp. 16,500 655,875
- --------------------------------------------------------------
ONEOK, Inc. 10,200 411,825
- --------------------------------------------------------------
1,067,700
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.21%
Pitney Bowes, Inc. 9,000 809,437
- --------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-1.68%
Amoco Corp. 7,000 595,875
- --------------------------------------------------------------
Exxon Corp. 17,400 1,064,662
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York Shares (Netherlands) 27,600 1,495,575
- --------------------------------------------------------------
Shell Transport & Trading Co.-ADR
(United Kingdom) 45,000 1,968,750
- --------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Argentina) 40,000 1,367,500
- --------------------------------------------------------------
6,492,362
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.30%
Marine Drilling Companies, Inc.(a) 21,400 444,050
- --------------------------------------------------------------
Trico Marine Services, Inc.(a) 6,800 199,750
- --------------------------------------------------------------
Veritas DGC, Inc.(a) 13,100 517,450
- --------------------------------------------------------------
1,161,250
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.30%
Cabot Oil & Gas Corp.-Class A 49,100 954,380
- --------------------------------------------------------------
HS Resources, Inc.(a) 37,200 513,825
- --------------------------------------------------------------
Louis Dreyfus Natural Gas Corp.(a) 12,400 231,725
- --------------------------------------------------------------
Repsol S.A.-ADR (Spain) 37,000 1,574,813
- --------------------------------------------------------------
Snyder Oil Corp. 33,600 613,200
- --------------------------------------------------------------
St. Mary Land & Exploration Co. 800 28,000
- --------------------------------------------------------------
Total S.A.-ADR (France) 20,000 1,110,000
- --------------------------------------------------------------
5,025,943
- --------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-0.06%
Tesoro Petroleum Corp.(a) 14,500 224,750
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.17%
Atlantic Richfield Co. 7,800 624,975
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.35%
Chesapeake Corp. 23,200 797,500
- --------------------------------------------------------------
</TABLE>
FS-33
<PAGE> 138
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS-(CONTINUED)
Westvaco Corp. 18,000 $ 565,875
- --------------------------------------------------------------
1,363,375
- --------------------------------------------------------------
PERSONAL CARE-0.33%
Carter-Wallace, Inc. 31,900 538,312
- --------------------------------------------------------------
Perrigo Co.(a) 56,400 754,350
- --------------------------------------------------------------
1,292,662
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.71%
Fuji Photo Film-ADR (Japan) 44,000 1,680,250
- --------------------------------------------------------------
Xerox Corp. 14,500 1,070,280
- --------------------------------------------------------------
2,750,530
- --------------------------------------------------------------
PUBLISHING-0.62%
Dai Nippon Printing Co., Ltd.-ADR
(Japan) 9,000 1,695,877
- --------------------------------------------------------------
Houghton Mifflin Co. 18,400 706,100
- --------------------------------------------------------------
2,401,977
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.34%
Gannett Co., Inc. 11,600 717,025
- --------------------------------------------------------------
McClatchy Newspapers, Inc. 7,000 190,312
- --------------------------------------------------------------
Pulitzer Publishing Co. 6,400 402,000
- --------------------------------------------------------------
1,309,337
- --------------------------------------------------------------
RAILROADS-0.22%
Illinois Central Corp. 25,000 851,563
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-18.59%
American General Hospitality Corp. 103,300 2,763,275
- --------------------------------------------------------------
Apartment Investment & Management
Co. 39,700 1,458,975
- --------------------------------------------------------------
Arden Realty Group, Inc. 56,900 1,749,675
- --------------------------------------------------------------
Bedford Property Investors, Inc. 35,900 785,312
- --------------------------------------------------------------
Cali Realty Corp. 54,200 2,222,200
- --------------------------------------------------------------
CBL & Associates Properties, Inc. 79,600 1,965,125
- --------------------------------------------------------------
Charles E. Smith Residential
Realty, Inc. 41,200 1,462,600
- --------------------------------------------------------------
Chelsea GCA Realty, Inc. 17,100 653,006
- --------------------------------------------------------------
CRIIMI MAE, Inc. 25,800 387,000
- --------------------------------------------------------------
Eastgroup Properties, Inc. 33,900 733,088
- --------------------------------------------------------------
Equity Office Properties Trust 124,879 3,941,507
- --------------------------------------------------------------
Equity Residential Properties Trust 51,500 2,603,969
- --------------------------------------------------------------
Essex Property Trust, Inc. 76,700 2,684,500
- --------------------------------------------------------------
Excel Realty Trust, Inc. 47,000 1,480,500
- --------------------------------------------------------------
FelCor Suite Hotels, Inc. 26,200 930,100
- --------------------------------------------------------------
First Industrial Realty Trust, Inc. 58,500 2,113,313
- --------------------------------------------------------------
Gables Residential Trust 60,100 1,660,263
- --------------------------------------------------------------
General Growth Properties 5,600 202,300
- --------------------------------------------------------------
Healthcare Realty Trust, Inc. 42,700 1,235,631
- --------------------------------------------------------------
Highwoods Properties, Inc. 38,100 1,416,844
- --------------------------------------------------------------
JP Realty, Inc. 25,700 666,594
- --------------------------------------------------------------
Kilroy Realty Corp. 60,700 1,745,125
- --------------------------------------------------------------
Kimco Realty Corp. 62,550 2,204,888
- --------------------------------------------------------------
Koger Equity, Inc. 87,900 1,928,306
- --------------------------------------------------------------
Liberty Property Trust 102,900 2,939,081
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST-(CONTINUED)
Merry Land & Investment Co., Inc. 69,300 $ 1,585,238
- --------------------------------------------------------------
MGI Properties, Inc. 48,200 1,156,800
- --------------------------------------------------------------
Oasis Residential, Inc. 46,100 1,028,606
- --------------------------------------------------------------
Pan Pacific Retail Properties, Inc. 46,800 1,000,350
- --------------------------------------------------------------
Parkway Properties, Inc. 26,600 912,713
- --------------------------------------------------------------
Patriot American Hospitality, Inc. 108,428 3,124,081
- --------------------------------------------------------------
Prentiss Properties Trust 76,500 2,137,219
- --------------------------------------------------------------
Price REIT, Inc. 33,000 1,350,937
- --------------------------------------------------------------
Prime Group Realty Trust 65,500 1,326,375
- --------------------------------------------------------------
Public Storage, Inc. 65,200 1,915,250
- --------------------------------------------------------------
Security Capital Group Inc.,
Warrants, expiring 09/18/98
(Luxembourg)(a) 1,346 7,065
- --------------------------------------------------------------
Security Capital U.S. Realty
(Luxembourg)(a) 98,700 1,401,540
- --------------------------------------------------------------
Shurgard Storage Centers, Inc. 58,500 1,696,500
- --------------------------------------------------------------
Simon DeBartolo Group, Inc. 61,100 1,997,206
- --------------------------------------------------------------
Starwood Lodging Trust 34,550 1,999,581
- --------------------------------------------------------------
Sun Hung Kai Properties Ltd.-ADR (Hong
Kong) 100,000 696,930
- --------------------------------------------------------------
Sunstone Hotel Investors, Inc. 105,400 1,818,150
- --------------------------------------------------------------
Tower Realty Trust, Inc. 64,000 1,576,000
- --------------------------------------------------------------
TriNet Corporate Realty Trust, Inc. 21,800 843,387
- --------------------------------------------------------------
Vornado Realty Trust 24,800 1,164,050
- --------------------------------------------------------------
Weeks Corp. 33,000 1,056,000
- --------------------------------------------------------------
71,727,155
- --------------------------------------------------------------
RESTAURANTS-0.85%
Applebee's International, Inc. 16,100 290,806
- --------------------------------------------------------------
Brinker International, Inc.(a) 27,400 438,400
- --------------------------------------------------------------
CKE Restaurants, Inc. 22,350 941,493
- --------------------------------------------------------------
Consolidated Products, Inc.(a) 16,125 264,047
- --------------------------------------------------------------
McDonald's Corp. 20,500 978,875
- --------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 15,200 349,600
- --------------------------------------------------------------
3,263,221
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.24%
Sherwin-Williams Co. 32,800 910,200
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.03%
MicroAge, Inc.(a) 8,800 132,550
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.42%
Carson Pirie Scott & Co.(a) 7,800 390,975
- --------------------------------------------------------------
J.C. Penney Co., Inc. 13,375 806,680
- --------------------------------------------------------------
Proffitt's, Inc.(a) 14,800 420,875
- --------------------------------------------------------------
1,618,530
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.16%
Ames Department Stores, Inc.(a) 17,200 301,000
- --------------------------------------------------------------
ShopKo Stores, Inc.(a) 15,400 334,950
- --------------------------------------------------------------
635,950
- --------------------------------------------------------------
RETAIL (DRUG STORES)-0.27%
Rite Aid Corp. 18,000 1,056,375
- --------------------------------------------------------------
</TABLE>
FS-34
<PAGE> 139
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL MERCHANDISE)-0.11%
Wal-Mart Stores, Inc. 10,500 $ 414,093
- --------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.19%
Lands' End, Inc.(a) 21,000 736,312
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.32%
AutoZone, Inc.(a) 7,500 217,500
- --------------------------------------------------------------
Footstar, Inc.(a) 15,400 413,875
- --------------------------------------------------------------
Pier 1 Imports, Inc. 14,550 329,193
- --------------------------------------------------------------
Sports Authority, Inc. (The)(a) 18,100 266,975
- --------------------------------------------------------------
1,227,543
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.15%
Pacific Sunwear of California(a) 16,000 473,000
- --------------------------------------------------------------
Paul Harris Stores, Inc.(a) 12,300 123,768
- --------------------------------------------------------------
596,768
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.78%
Astoria Financial Corp. 7,700 429,275
- --------------------------------------------------------------
FirstFed Financial Corp.(a) 8,600 333,250
- --------------------------------------------------------------
ONBANCorp, Inc. 18,000 1,269,000
- --------------------------------------------------------------
Sovereign Bancorp, Inc. 28,900 599,675
- --------------------------------------------------------------
St. Paul Bancorp, Inc. 10,400 273,000
- --------------------------------------------------------------
WSFS Financial Corp.(a) 3,600 72,000
- --------------------------------------------------------------
2,976,200
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.23%
Acxiom Corp.(a) 25,400 488,950
- --------------------------------------------------------------
True North Communications, Inc. 16,100 398,474
- --------------------------------------------------------------
887,424
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.59%
Caribiner International, Inc.(a) 9,600 427,200
- --------------------------------------------------------------
DeVry, Inc.(a) 21,500 685,313
- --------------------------------------------------------------
Dun & Bradstreet Corp. 23,000 711,562
- --------------------------------------------------------------
G & K Services, Inc.-Class A 10,900 457,800
- --------------------------------------------------------------
2,281,875
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.27%
Banctec, Inc.(a) 21,800 584,513
- --------------------------------------------------------------
Gerber Scientific, Inc. 22,900 455,137
- --------------------------------------------------------------
1,039,650
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.17%
Fair, Issac and Company, Inc. 6,000 199,875
- --------------------------------------------------------------
National Data Corp. 5,700 205,912
- --------------------------------------------------------------
Vanstar Corp.(a) 17,200 194,575
- --------------------------------------------------------------
600,362
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.11%
Norrell Corp. 20,800 413,400
- --------------------------------------------------------------
SPECIALTY PRINTING-0.08%
Consolidated Graphics, Inc.(a) 6,400 298,400
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.10%
Centennial Cellular Corp.(a) 18,900 $ 387,449
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.30%
Billing Information Concepts(a) 690 331,200
- --------------------------------------------------------------
Telefonos de Mexico S.A.-ADR
(Mexico) 1,500 840,937
- --------------------------------------------------------------
1,172,137
- --------------------------------------------------------------
TELEPHONE-2.22%
British Telecommunications PLC-ADR
(United Kingdom) 25,000 2,007,812
- --------------------------------------------------------------
Portugal Telecom S.A.-ADR
(Portugal) 35,000 1,645,000
- --------------------------------------------------------------
Southern New England
Telecommunications Corp. 23,350 1,174,797
- --------------------------------------------------------------
Telecom Italia S.p.A.-ADR (Italy) 30,000 1,920,000
- --------------------------------------------------------------
Telefonica de Espana-ADR (Spain) 20,000 1,821,250
- --------------------------------------------------------------
8,568,859
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.39%
Kellwood Co. 23,800 714,000
- --------------------------------------------------------------
Nautica Enterprises, Inc.(a) 10,100 234,824
- --------------------------------------------------------------
Oxford Industries, Inc. 6,900 224,250
- --------------------------------------------------------------
St. John Knits, Inc. 8,200 328,000
- --------------------------------------------------------------
1,501,074
- --------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.75%
Interface, Inc. 15,400 446,600
- --------------------------------------------------------------
Shaw Industries, Inc. 60,100 698,662
- --------------------------------------------------------------
Springs Industries, Inc.-Class A 24,400 1,268,800
- --------------------------------------------------------------
WestPoint Stevens, Inc. 9,100 429,975
- --------------------------------------------------------------
2,844,037
- --------------------------------------------------------------
TEXTILES (SPECIALTY)-0.11%
Unifi, Inc. 10,000 406,874
- --------------------------------------------------------------
TOBACCO-0.32%
Philip Morris Companies, Inc. 21,950 994,609
- --------------------------------------------------------------
Standard Commercial Corp.(a) 15,100 250,093
- --------------------------------------------------------------
1,244,702
- --------------------------------------------------------------
TRUCKERS-0.36%
Heartland Express, Inc.(a) 2,450 65,844
- --------------------------------------------------------------
Roadway Express, Inc. 22,700 502,237
- --------------------------------------------------------------
Werner Enerprises, Inc. 18,300 375,150
- --------------------------------------------------------------
Yellow Corp.(a) 17,800 447,225
- --------------------------------------------------------------
1,390,456
- --------------------------------------------------------------
WASTE MANAGEMENT-0.30%
Arch Coal, Inc., 8,300 227,212
- --------------------------------------------------------------
Waste Management, Inc. 33,500 921,250
- --------------------------------------------------------------
1,148,462
- --------------------------------------------------------------
WATER UTILITIES-0.05%
E'Town Corp. 5,100 204,955
- --------------------------------------------------------------
Total Common Stocks 306,152,364
- --------------------------------------------------------------
</TABLE>
FS-35
<PAGE> 140
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NON-CONVERTIBLE PREFERRED STOCKS-0.29%
CONSUMER FINANCE-0.16%
Home Ownership Funding Corp.,
13.33% step down Pfd.
(Acquired 02/13/97; Cost
$640,000)(b) 6,400 $ 623,200
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-0.13%
Tier One Properties, 11.095% step
down Pfd.
(Acquired 01/31/97; Cost
$500,000)(b) 5,000 510,625
- --------------------------------------------------------------
Total Non-Convertible Preferred Stocks 1,133,825
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CORPORATE BONDS & NOTES-4.79%
BUILDING MATERIALS-0.72%
USG Corp., Sr. Notes, 8.50%,
08/01/05 $2,550,000 $ 2,773,125
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.45%
Motorola Inc., Deb., 8.40%,
08/15/31 1,400,000 1,739,892
- --------------------------------------------------------------
CONSUMER FINANCE-0.62%
Beneficial Corp., Deb, 8.40%,
05/15/08 1,000,000 1,135,680
- --------------------------------------------------------------
GMAC, Medium Term Notes, 6.40%,
05/19/99 1,250,000 1,252,125
- --------------------------------------------------------------
2,387,805
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.21%
Association Corp. N.A., Sr. Notes,
7.75%, 02/15/05 1,200,000 1,292,832
- --------------------------------------------------------------
CIT Group Holdings, Sr., Medium
Term Notes, 5.88%, 12/09/99 800,000 797,448
- --------------------------------------------------------------
General Electric Capital Corp,
Medium Term Notes, 5.80%,
04/01/08 1,200,000 1,366,776
- --------------------------------------------------------------
US West Cap Funding Inc., Notes,
6.31%, 11/01/05 1,200,000 1,205,520
- --------------------------------------------------------------
4,662,576
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.52%
Bear Stearns Companies., Inc.,
Notes, 6.25%, 12/01/00 1,000,000 999,900
- --------------------------------------------------------------
Lehman Brothers Holdings., Inc.,
Notes, 5.75%, 02/15/98 1,000,000 1,000,260
- --------------------------------------------------------------
2,000,160
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-0.62%
Kimco Realty, Medium Term Notes,
7.06%, 07/14/09 970,000 996,559
- --------------------------------------------------------------
Spieker Properties, Inc., Unsec.
Gtd. Notes, 6.95%, 12/15/02 325,000 331,373
- --------------------------------------------------------------
Spieker Properties, Inc., Unsec.
Notes, 7.125%, 12/01/06 325,000 336,141
- --------------------------------------------------------------
Weingarten Realty Investment,
Medium Term Notes, 6.90%,
11/24/08 700,000 724,087
- --------------------------------------------------------------
2,388,160
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.26%
Bellsouth Telecommunication, Deb,
5.85%, 11/15/45 1,000,000 1,001,560
- --------------------------------------------------------------
TELEPHONE-0.39%
GTE Corp., Deb., 10.25%, 11/01/20 620,000 684,399
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELEPHONE-(CONTINUED)
GTE Corp., Notes, 7.51%, 04/01/09 $ 765,000 $ 816,729
- --------------------------------------------------------------
1,501,128
- --------------------------------------------------------------
Total Corporate Bonds & Notes 18,454,406
- --------------------------------------------------------------
ASSET BACKED SECURITIES-2.33%
AUTOMOBILES-0.32%
Premier Auto Trust, 6.20%, 11/06/00 1,235,000 1,238,458
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.34%
Nationsbank Auto Owner Trust,
6.375%, 07/15/00 1,325,000 1,330,406
- --------------------------------------------------------------
CONSUMER FINANCE-1.67%
Advanta Mortgage Loan Trust, 6.66%,
03/25/22 2,000,000 2,002,188
- --------------------------------------------------------------
Contrimortgage Home Equity Loan
Trust, 6.40%, 01/15/12 1,900,000 1,900,437
- --------------------------------------------------------------
First Plus Home Loan Trust, 6.57%,
01/15/12 1,000,000 1,008,130
- --------------------------------------------------------------
IMC Home Equity Loan Trust, 6.71%,
01/20/12 1,500,000 1,510,155
- --------------------------------------------------------------
6,420,910
- --------------------------------------------------------------
Total Mortgage Backed Securities 8,989,774
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-4.49%
FEDERAL HOME LOAN BANK BOARD-0.52%
DEB.
6.15%, 11/05/99 2,000,000 2,001,880
- --------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC")-0.95%
DEB.
6.50%, 01/14/00 1,000,000 1,000,720
- --------------------------------------------------------------
5.70%, 04/15/05 1,000,000 996,290
- --------------------------------------------------------------
1,997,010
- --------------------------------------------------------------
PASS THROUGH CERTIFICATES
6.50%, 08/01/03 296,656 300,640
- --------------------------------------------------------------
9.00%, 01/01/05 257,659 267,644
- --------------------------------------------------------------
9.00%, 08/15/06 765,690 804,504
- --------------------------------------------------------------
8.00%, 08/01/17 296,730 309,988
- --------------------------------------------------------------
1,682,776
- --------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA")-2.73%
DEB.
7.50%, 01/25/06 1,000,000 1,027,668
- --------------------------------------------------------------
7.00%, 12/01/27 3,100,000 3,124,211
- --------------------------------------------------------------
4,151,879
- --------------------------------------------------------------
PASS THROUGH CERTIFICATES
9.00%, 12/01/06 889,801 930,118
- --------------------------------------------------------------
8.50%, 06/01/07 918,252 944,652
- --------------------------------------------------------------
6.00%, 06/25/09 866,526 848,881
- --------------------------------------------------------------
6.00%, 04/01/24 1,929,250 1,874,382
- --------------------------------------------------------------
6.50%, 10/01/27 to 11/01/27 1,807,002 1,785,535
- --------------------------------------------------------------
6,383,568
- --------------------------------------------------------------
</TABLE>
FS-36
<PAGE> 141
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA")-0.29%
DEB.
7.00%, 01/16/07 $1,100,000 $ 1,112,342
- --------------------------------------------------------------
Total U.S. Government Agency Securities 17,329,455
- --------------------------------------------------------------
U.S. TREASURY SECURITIES-4.24%
U.S. TREASURY NOTES & BONDS
5.875%, 10/31/98 1,300,000 1,302,561
- --------------------------------------------------------------
5.50%, 11/15/98 3,000,000 2,997,270
- --------------------------------------------------------------
6.375%, 01/15/99 4,750,000 4,787,145
- --------------------------------------------------------------
6.875%, 07/31/99 500,000 509,045
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
8.75%, 05/15/17 $1,300,000 $ 1,704,625
- --------------------------------------------------------------
7.875%, 02/15/21 4,100,000 5,036,932
- --------------------------------------------------------------
Total U. S. Treasury Securities 16,337,578
- --------------------------------------------------------------
REPURCHASE AGREEMENT(c)- 4.50%
Smith Barney Inc., 6.75%,
01/02/98(d) 17,376,851 17,376,851
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.98% 385,774,253
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.02% 95,681
- --------------------------------------------------------------
NET ASSETS-100.00% $385,869,934
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of the securities has been determined in
accordance with the procedures established by the Board of Directors. The
aggregate market value of these securities at 12/31/97 was $1,133,825, which
represented 0.29% of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor.
(d) Joint repurchase agreement entered into 12/31/97 with a maturing value of
$400,150,000. Collateralized by $395,097,000 U.S. Government obligations, 0%
to 13.875% due 01/07/98 to 12/15/43 with an aggregate market value at
12/31/97 of $408,000,323.
Abbreviations:
ADR - American Depositary Receipt
Deb. - Debentures
Gtd. - Guaranteed
Pfd. - Preferred
Sr. - Senior
Unsec. - Unsecured
See Notes to Financial Statements.
FS-37
<PAGE> 142
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$315,329,449) $385,774,253
- ---------------------------------------------------------
Receivables for:
Investments sold 267,500
- ---------------------------------------------------------
Capital stock sold 709,641
- ---------------------------------------------------------
Interest and dividends 1,685,130
- ---------------------------------------------------------
Paydowns 37,915
- ---------------------------------------------------------
Investment for deferred compensation plan 2,291
- ---------------------------------------------------------
Other assets 4,663
- ---------------------------------------------------------
Total assets 388,481,393
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,020,923
- ---------------------------------------------------------
Capital stock reacquired 181,759
- ---------------------------------------------------------
Deferred compensation plan 2,291
- ---------------------------------------------------------
Accrued advisory fees 321,150
- ---------------------------------------------------------
Accrued operating services fees 132,706
- ---------------------------------------------------------
Accrued distribution fees 931,214
- ---------------------------------------------------------
Accrued directors' fees and expenses 21,416
- ---------------------------------------------------------
Total liabilities 2,611,459
- ---------------------------------------------------------
Net assets applicable to shares outstanding $385,869,934
=========================================================
NET ASSETS:
Class A $ 9,066,158
=========================================================
Class C $376,803,776
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 638,212
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 26,506,870
=========================================================
Class A:
Net asset value and redemption price per
share $ 14.21
=========================================================
Offering price per share:
(Net asset value of $14.21 divided
by 94.50%) $ 15.04
=========================================================
Class C:
Net asset value and offering price per
share $ 14.22
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 4,171,573
- --------------------------------------------------------
Dividends (net of $86,003 foreign
withholding tax) 6,793,380
- --------------------------------------------------------
Total investment income 10,964,953
- --------------------------------------------------------
EXPENSES:
Advisory fees 3,280,042
- --------------------------------------------------------
Operating services fees 1,362,017
- --------------------------------------------------------
Distribution fees-Class A 10,953
- --------------------------------------------------------
Distribution fees-Class C 3,249,734
- --------------------------------------------------------
Directors' fees and expenses 35,107
- --------------------------------------------------------
Total expenses 7,937,853
- --------------------------------------------------------
Less: Fees waived by advisor (3,147)
- --------------------------------------------------------
Net expenses 7,934,706
- --------------------------------------------------------
Net investment income 3,030,247
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM
INVESTMENT SECURITIES:
Net realized gain on sales of investment
securities 28,345,151
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 24,205,999
- --------------------------------------------------------
Net gain from investment securities 52,551,150
- --------------------------------------------------------
Net increase in net assets resulting from
operations $55,581,397
========================================================
</TABLE>
See Notes to Financial Statements.
FS-38
<PAGE> 143
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,030,247 $ 2,502,127
- -----------------------------------------------------------------------------------------
Net realized gain on sales of investment securities 28,345,151 10,629,068
- -----------------------------------------------------------------------------------------
Net Unrealized appreciation of investment securities 24,205,999 23,172,870
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 55,581,397 36,304,065
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (54,439) --
- -----------------------------------------------------------------------------------------
Class C (2,620,318) (2,400,549)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (574,586) --
- -----------------------------------------------------------------------------------------
Class C (29,179,585) (7,382,073)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 9,196,237 --
- -----------------------------------------------------------------------------------------
Class C 86,678,096 65,729,841
- -----------------------------------------------------------------------------------------
Net increase in net assets 119,026,802 92,251,284
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 266,843,132 174,591,848
- -----------------------------------------------------------------------------------------
End of period $385,869,934 266,843,132
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $313,154,757 217,280,424
- -----------------------------------------------------------------------------------------
Undistributed net investment income 479,628 124,138
- -----------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities 1,790,745 3,199,765
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 70,444,804 46,238,805
- -----------------------------------------------------------------------------------------
$385,869,934 $266,843,132
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-39
<PAGE> 144
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor MultiFlex Fund (the "Fund", formerly INVESCO Advisor MultiFlex Fund)
is a series portfolio of AIM Advisor Funds, Inc. (the "Company"). The Company is
a Maryland corporation registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end series management investment company
consisting of seven diversified portfolios. The Fund currently offers two
different classes of shares: Class A shares and Class C shares. Class A shares
are sold with a front-end sales charge. Class C shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. The Fund's investment objective is to achieve a high total return on
investment through capital appreciation and current income, without regard to
federal income tax considerations. Information presented in these financial
statements pertains only to the Fund.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on
the NASDAQ National Market System is valued at the last sales price on the
valuation date, or absent a last sales price, at the mean of the closing bid
and asked prices. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued at the mean between last
bid and asked prices based upon quotes furnished by independent sources.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or
under the supervision of the Company's Board of Directors. Investments with
maturities of 60 days or less are valued on the basis of amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
D. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
E. Expenses-Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated between the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Management and Research, Inc. ("IMR") whereby AIM pays
IMR an annual rate of 0.35% of the Fund's average daily net assets up to $500
million and 0.25% on the Fund's average daily net assets in excess of $500
million. Prior to August 4, 1997, the Company had an investment advisory
agreement with INVESCO Services, Inc. ("ISI") to serve as the Fund's investment
advisor. Under the terms of the prior investment agreement, the Fund paid ISI an
advisory fee equal to an annual rate of 1.00% of the average daily net assets of
the Fund. Under the terms of the prior sub-advisory agreement between ISI and
IMR, ISI paid IMR a sub-advisory fee equal to an annual rate of 0.35% of the
Fund's average daily net assets up to $500 million and 0.25% on the Fund's
average daily net assets in excess of $500 million.
The Company, pursuant to an Operating Services Agreement with AIM, has agreed
to reimburse AIM at an annual rate of 0.45% of daily net assets of the Fund for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. This
agreement provides that AIM pays all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
period August 4, 1997 to December 31, 1997, AIM was reimbursed $622,522 for such
services. Prior to August 4, 1997, the Company had an operating services
agreement with ISI whereby the Fund paid ISI an annual rate of 0.45% of daily
net assets of the Fund. During the period
FS-40
<PAGE> 145
January 1, 1997 through August 3, 1997, the Fund paid ISI $739,495.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class C shares of the Fund. The Company has adopted a
distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and the Fund's Class C shares (the "Plan"). The Fund,
pursuant to the Plan, pays AIM Distributors compensation at a maximum annual
rate of 0.35% of the average net assets attributable to the Class A shares. AIM
has voluntarily agreed to limit the Plan payments to 0.25% for three years
beginning August 4, 1997. The Fund, pursuant to the Plan, pays AIM Distributors
a maximum annual rate of 1.00% of the Fund's average daily net assets
attributable to the Class C shares. Of these amounts, the Fund may pay a service
fee of 0.25% of the average daily net assets of the Class A and C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own shares of the Fund.
Any amounts not paid as a service fee under the Plan would constitute an
asset-based sales charge. The Plan also imposes a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the period August 4, 1997 to December 31, 1997, the Class A and
Class C shares paid AIM Distributors $5,740 and $1,482,976, respectively, as
compensation under the Plans. During the year ended December 31, 1997 AIM
Distributions and ISI waived fees of $3,147 for the Class A Shares. Prior to
August 4, 1997, the Fund entered into a distribution plan with ISI in accordance
with Rule 12b-1 of the 1940 Act with substantially identical terms as described
for AIM Distributors above. During the period January 1, 1997 to August 3, 1997
the Class A and Class C shares paid ISI $2,066 and $1,766,758, respectively as
compensation under the Plans.
AIM Distributors received commissions of $30,382 from sales of Class A shares
of the Fund during the period August 4, 1997 to December 31, 1997. ISI received
commissions of $7,203 from sales of Class A shares of the Fund during the period
January 1, 1997 to August 3, 1997. Such commissions are not an expense to the
Fund. They are deducted from, and are not included in, the proceeds from sales
of Class A shares. During the period August 4, 1997 to December 31, 1997, AIM
Distributors received commissions of $10,269 in contingent deferred sales
charges imposed on redemptions of Fund shares. Certain officers and directors of
the Company are officers and directors of AIM, A I M Fund Services, Inc. and AIM
Distributors. During the period January 1, 1997 through August 3, 1997, ISI
received commissions of $12,043 in contingent deferred sales charges imposed on
redemptions of Fund shares.
The combined effect of the master investment advisory agreement, operating
services agreement and the Distribution Plans for the Fund is to place a cap or
ceiling on the total expenses of the Fund, other than brokerage commissions,
interest, taxes, litigation, directors' fees and expenses, and other
extraordinary expenses. AIM has voluntarily agreed to adhere to maximum expense
ratios for the Fund. To the extent that the Fund exceeds the amounts, AIM or its
affiliates will waive its fees to reimburse the Fund to assure that the Fund's
expenses do not exceed the designated maximum amounts except for those items
specifically identified above. If, in any calendar quarter, the average net
assets of the Fund are less than $100 million, the Fund's expenses shall not
exceed 1.80% for Class A and 2.45% for Class C; on the next $400 million of net
assets, expenses shall not exceed 1.75% for Class A and 2.40% for Class C; on
the next $500 million, expenses shall not exceed 1.70% for Class A and 2.35% for
Class C; on the next $1 billion of net assets, expenses shall not exceed 1.65%
for Class A and 2.30% for Class C; and on all assets over $2 billion, expenses
shall not exceed 1.60% for Class A and 2.25% for Class C.
During the period August 4, 1997 to December 31, 1997, the Fund paid legal
fees of $686 for services rendered by Kramer, Levin, Naftalis & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1997 was
$256,748,688 and $195,480,365, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $79,110,453
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (8,668,717)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $70,441,736
=========================================================================
</TABLE>
Cost of investments for tax purposes is $315,332,517.
FS-41
<PAGE> 146
NOTE 5-CAPITAL STOCK*
Changes in the Fund's capital stock outstanding for the years ended December 31,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A** 619,395 $ 8,916,997 -- $ --
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
Class C 6,751,442 95,937,310 6,600,656 80,727,974
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
Issued as reinvestment of dividends:
Class A** 44,119 616,050 -- --
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
Class C 2,197,213 30,337,244 692,736 8,779,155
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
Reacquired:
Class A** (25,302) (336,810) -- --
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
Class C (2,756,585) (39,596,458) (1,928,332) (23,777,288)
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
6,830,282 $ 95,874,333 5,365,060 $ 65,729,841
=========================================================== ========== ============ ========== ============
</TABLE>
* Shares have been restated to reflect a 4 for 1 stock split, effected in the
form of a 300% stock dividend, on November 7, 1997.
** Class A shares commenced operations on January 1, 1997.
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended December 31, 1997 and for a share of Class C
capital stock outstanding during each of the years in the four-year period ended
December 31, 1997 and the period November 17, 1993 (date operations commenced)
through December 31, 1993.(a)
CLASS A:
<TABLE>
<CAPTION>
1997(b)
----------
<S> <C>
Net asset value, beginning of period $ 13.14
- ------------------------------------------------------------ ----------
Income from investment operations:
Net investment income 0.23
- ------------------------------------------------------------ ----------
Net gains on securities (both realized and unrealized) 2.26
- ------------------------------------------------------------ ----------
Total from investment operations 2.49
- ------------------------------------------------------------ ----------
Less distributions:
Dividends from net investment income (0.22)
- ------------------------------------------------------------ ----------
Distributions from capital gains (1.20)
- ------------------------------------------------------------ ----------
Total distributions (1.42)
- ------------------------------------------------------------ ----------
Net asset value, end of period $ 14.21
============================================================ ==========
Total return(c) 19.40%
============================================================ ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 9,066
============================================================ ==========
Ratio of expenses to average net assets(d) 1.67%(e)
============================================================ ==========
Ratio of net investment income to average net assets(f) 1.67%(e)
============================================================ ==========
Portfolio turnover rate 62%
============================================================ ==========
Average brokerage commission rate(g) $ 0.0592
============================================================ ==========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Does not deduct contingent deferred sales charges.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 1.77%.
(e) Ratios are based on average net assets of $3,147,191.
(f) After fee waivers. Ratio of net investment income to average net assets
prior to fee waivers was 1.57%.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold.
FS-42
<PAGE> 147
NOTE 6-FINANCIAL HIGHLIGHTS-continued
CLASS C:
<TABLE>
<CAPTION>
1997(b) 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.14 $ 11.68 $ 9.78 $ 10.04 $ 10.00
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.13 0.14 0.16 0.16 0.01
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 2.26 1.83 1.94 (0.26) 0.04
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 2.39 1.97 2.10 (0.10) 0.05
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.11) (0.13) (0.16) (0.16) (0.01)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from capital gains (1.20) (0.38) (0.04) -- --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (1.31) (0.51) (0.20) (0.16) (0.01)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 14.22 $ 13.14 $ 11.68 $ 9.78 $ 10.04
============================================================ ======== ======== ======== ======== ========
Total return(c) 18.55% 17.03% 21.58% (1.02)% 0.46%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $376,804 $266,843 $174,592 $120,220 $ 12,241
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 2.42%(d) 2.45% 2.50% 2.49% 2.50%(e)
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 0.92%(d) 1.16% 1.53% 2.01% 1.09%(e)
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 62% 62% 50% 81% 53%
============================================================ ======== ======== ======== ======== ========
Average brokerage commission rate(f) $ 0.0592 $ 0.0577 N/A N/A N/A
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Does not deduct sales charges.
(d) Ratios are based on average net assets of $325,274,785.
(e) Annualized.
(f) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-43
<PAGE> 148
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of the AIM Advisor Funds, Inc.:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Advisor Real Estate Fund, one of the portfolios of
the AIM Advisor Funds, Inc. (hereafter referred to as the
"Fund") at December 31, 1997, the results of its
operations for the year then ended, the changes in its
net assets for each of the two years in the period then
ended and the financial highlights for the periods
indicated, in conformity with generally accepted
accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with generally accepted auditing standards
which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian
and the application of alternative auditing procedures
where securities purchased had not been received, provide
a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Denver, Colorado
February 5, 1998
FS-44
<PAGE> 149
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-93.24%
DIVERSIFIED-5.44%
Cadillac Fairview Corp. (Canada)(a) 20,800 $ 488,800
- --------------------------------------------------------------
Catellus Development Corp.(a) 58,300 1,166,000
- --------------------------------------------------------------
Security Capital U.S. Realty
(Luxembourg)(a) 74,800 1,062,160
- --------------------------------------------------------------
TrizecHahn Corp. (Canada) 24,700 572,730
- --------------------------------------------------------------
3,289,690
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.11%
Amresco, Inc.(a) 42,200 1,276,550
- --------------------------------------------------------------
HEALTHCARE (DIVERSIFIED)-0.23%
Healthcare Realty Trust, Inc. 4,800 138,900
- --------------------------------------------------------------
INDUSTRIAL PROPERTIES-5.62%
EastGroup Properties, Inc. 45,400 981,775
- --------------------------------------------------------------
First Industrial Realty Trust, Inc. 32,300 1,166,838
- --------------------------------------------------------------
Weeks Corp. 38,900 1,244,800
- --------------------------------------------------------------
3,393,413
- --------------------------------------------------------------
INDUSTRIAL/OFFICE PROPERTIES-9.14%
Bedford Property Investors, Inc. 45,800 1,001,875
- --------------------------------------------------------------
Liberty Property Trust 53,450 1,526,666
- --------------------------------------------------------------
Prentiss Properties Trust 58,900 1,645,519
- --------------------------------------------------------------
TriNet Corporate Realty Trust, Inc. 34,900 1,350,193
- --------------------------------------------------------------
5,524,253
- --------------------------------------------------------------
LODGING-HOTELS-15.07%
American General Hospitality Corp. 65,600 1,754,800
- --------------------------------------------------------------
FelCor Suite Hotels, Inc. 37,700 1,338,350
- --------------------------------------------------------------
Hospitality Properties Trust 16,300 535,863
- --------------------------------------------------------------
Patriot American Hospitality, Inc. 78,770 2,269,561
- --------------------------------------------------------------
Starwood Lodging Trust 32,500 1,880,938
- --------------------------------------------------------------
Sunstone Hotel Investors, Inc. 77,100 1,329,975
- --------------------------------------------------------------
9,109,487
- --------------------------------------------------------------
MORTGAGE BACKED SECURITIES-3.32%
American Residential Investment
Trust, Inc. 31,000 368,125
- --------------------------------------------------------------
CRIIMI MAE, Inc. 73,200 1,098,000
- --------------------------------------------------------------
Imperial Credit Mortgage Holdings 30,300 541,613
- --------------------------------------------------------------
2,007,738
- --------------------------------------------------------------
OFFICE PROPERTIES-20.89%
Arden Realty Group, Inc. 47,100 1,448,325
- --------------------------------------------------------------
Cali Realty Corp. 50,000 2,050,000
- --------------------------------------------------------------
Equity Office Properties Trust 68,816 2,172,005
- --------------------------------------------------------------
Highwoods Properties, Inc. 47,350 1,760,828
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE PROPERTIES-(CONTINUED)
Kilroy Realty Corp. 38,700 $ 1,112,625
- --------------------------------------------------------------
Parkway Properties, Inc. 22,700 778,894
- --------------------------------------------------------------
Prime Group Realty Trust 50,000 1,012,500
- --------------------------------------------------------------
Tower Realty Trust, Inc. 93,100 2,292,588
- --------------------------------------------------------------
12,627,765
- --------------------------------------------------------------
REGIONAL MALLS-5.75%
CBL & Associates Properties, Inc. 70,250 1,734,297
- --------------------------------------------------------------
General Growth Properties 22,000 794,750
- --------------------------------------------------------------
Simon DeBartolo Group, Inc. 28,900 944,669
- --------------------------------------------------------------
3,473,716
- --------------------------------------------------------------
RESIDENTIAL PROPERTIES-14.46%
Apartment Investment & Management Co. 34,100 1,253,174
- --------------------------------------------------------------
Charles E. Smith Residential Realty,
Inc. 15,000 532,500
- --------------------------------------------------------------
Equity Residential Properties Trust 43,500 2,199,469
- --------------------------------------------------------------
Essex Property Trust, Inc. 54,000 1,890,000
- --------------------------------------------------------------
Gables Residential Trust 37,350 1,031,794
- --------------------------------------------------------------
Merry Land & Investment Co., Inc. 33,300 761,737
- --------------------------------------------------------------
Oasis Residential, Inc. 48,000 1,071,000
- --------------------------------------------------------------
8,739,674
- --------------------------------------------------------------
SELF-STORAGE-2.74%
Public Storage, Inc. 25,000 734,374
- --------------------------------------------------------------
Shurgard Storage Centers, Inc. 31,850 923,650
- --------------------------------------------------------------
1,658,024
- --------------------------------------------------------------
SHOPPING CENTERS-8.47%
Excel Realty Trust, Inc. 18,700 589,050
- --------------------------------------------------------------
JDN Realty Corp. 45,000 1,456,875
- --------------------------------------------------------------
Kimco Realty Corp. 25,350 893,587
- --------------------------------------------------------------
Pan Pacific Retail Properties, Inc. 23,500 502,313
- --------------------------------------------------------------
Price REIT, Inc. 22,100 904,719
- --------------------------------------------------------------
Vornado Realty Trust 16,400 769,775
- --------------------------------------------------------------
5,116,319
- --------------------------------------------------------------
Total Common Stocks 56,355,529
- --------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-6.48%(b)
Smith Barney, Inc. 6.75%(c) $3,915,909 3,915,909
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.72% 60,271,438
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.28% 168,963
- --------------------------------------------------------------
NET ASSETS-100.00% $60,440,401
==============================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to insure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(c) Joint repurchase agreement entered into 12/31/97 with a maturing value of
$400,150,000. Collateralized by $395,097,000 U.S. Government obligations, 0%
to 13.875% due 01/07/98 to 12/15/43 with an aggregate market value at
12/31/97 of $408,000,323.
See Notes to Financial Statements.
FS-45
<PAGE> 150
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$53,901,066) $ 60,271,438
- ---------------------------------------------------------
Receivables for:
Investments sold 14,469
- ---------------------------------------------------------
Capital stock sold 387,536
- ---------------------------------------------------------
Interest and dividends 386,326
- ---------------------------------------------------------
Investment for deferred compensation plan 1,949
- ---------------------------------------------------------
Other assets 2,871
- ---------------------------------------------------------
Total assets 61,064,589
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 432,665
- ---------------------------------------------------------
Capital stock reacquired 13,173
- ---------------------------------------------------------
Deferred compensation plan 1,949
- ---------------------------------------------------------
Accrued advisory fees 42,944
- ---------------------------------------------------------
Accrued operating services fees 21,472
- ---------------------------------------------------------
Accrued distribution fees 110,853
- ---------------------------------------------------------
Accrued directors' fees and expenses 1,132
- ---------------------------------------------------------
Total liabilities 624,188
- ---------------------------------------------------------
Net assets applicable to shares outstanding $ 60,440,401
=========================================================
NET ASSETS:
Class A $ 16,506,836
=========================================================
Class C $ 43,933,565
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE
Class A
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,048,908
=========================================================
Class C
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 2,791,898
=========================================================
Class A:
Net asset value and redemption price per
share $ 15.74
=========================================================
Offering price per share:
(Net asset value of $15.74
divided by 95.25%) $ 16.52
=========================================================
Class C:
Net asset value and offering price per
share $ 15.74
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 100,792
- --------------------------------------------------------
Dividends 1,643,046
- --------------------------------------------------------
Total investment income 1,743,838
- --------------------------------------------------------
EXPENSES:
Advisory fees 319,754
- --------------------------------------------------------
Operating services fees 158,068
- --------------------------------------------------------
Distribution fees-Class A 12,123
- --------------------------------------------------------
Distribution fees-Class C 320,877
- --------------------------------------------------------
Directors' fees and expenses 5,659
- --------------------------------------------------------
Total expenses 816,481
- --------------------------------------------------------
Less: Fees waived by distributor (3,511)
- --------------------------------------------------------
Net expenses 812,970
- --------------------------------------------------------
Net investment income 930,868
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain from investment
securities 3,781,061
- --------------------------------------------------------
Net unrealized appreciation on investment
securities 1,996,379
- --------------------------------------------------------
Net increase in net assets resulting from
operations $ 6,708,308
========================================================
</TABLE>
See Notes to Financial Statements.
FS-46
<PAGE> 151
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 930,868 $ 364,733
- ---------------------------------------------------------------------------------------
Net realized gain from investment securities 3,781,061 177,126
- ---------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,996,379 4,153,030
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,708,308 4,694,889
- ---------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (138,336) --
- ---------------------------------------------------------------------------------------
Class C (755,032) (332,659)
- ---------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (609,759) --
- ---------------------------------------------------------------------------------------
Class C (1,923,812) (134,173)
- ---------------------------------------------------------------------------------------
Share transactions-net:
Class A 16,620,595 --
- ---------------------------------------------------------------------------------------
Class C 19,971,956 10,773,564
- ---------------------------------------------------------------------------------------
Net increase in net assets 39,873,920 15,001,621
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 20,566,481 5,564,860
- ---------------------------------------------------------------------------------------
End of period $60,440,401 $20,566,481
=======================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $52,709,732 $16,117,181
- ---------------------------------------------------------------------------------------
Undistributed net investment income 72,384 34,884
- ---------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities 1,287,912 40,422
- ---------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 6,370,373 4,373,994
- ---------------------------------------------------------------------------------------
$60,440,401 $20,566,481
=======================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Real Estate Fund (the "Fund", formerly INVESCO Advisor Real Estate
Fund) is a series portfolio of AIM Advisor Funds, Inc. (the "Company" formerly,
INVESCO Advisor Funds, Inc.). The Company is a Maryland corporation and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of seven
diversified portfolios. The Fund currently offers two different classes of
shares: Class A shares and Class C shares. Class A shares are sold with a
front-end sales charge. Class C shares are sold with a contingent deferred sales
charge. Matters affecting each portfolio or class will be voted on exclusively
by the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. The Fund's investment
objective is to achieve a high total return on investment through capital
appreciation and current income, without regard to federal income tax
considerations. Information presented in these financial statements pertains
only to the Fund.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date, or absent a last sales
price, at the mean of the closing bid and asked prices. Securities for which
market prices are not provided by any of the above methods are valued at the
mean between last
FS-47
<PAGE> 152
bid and asked prices based upon quotes furnished by independent sources.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or
under the supervision of the Company's Board of Directors. Investments with
maturities of 60 days or less are valued on the basis of amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
D. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
E. Expenses-Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.90% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Realty Advisors, Inc. ("IRAI") whereby AIM pays IRAI an
annual rate of 0.35% of the Fund's average daily net assets on the first $100
million and 0.25% of the Fund's average daily net assets in excess of $100
million. Prior to August 4, 1997, the Company had an investment advisory
agreement with INVESCO Services, Inc. ("ISI") to serve as the Fund's investment
advisor. Under the terms of the prior investment agreement, the Fund paid ISI an
advisory fee equal to an annual rate of 0.90% of the average daily net assets of
the Fund. Under the terms of the prior sub-advisory agreement between ISI and
IRAI, ISI paid IRAI a sub-advisory fee equal to an annual rate of 0.35% of the
Fund's average daily net assets on the first $100 million and 0.25% on the
Fund's average daily net assets in excess of $100 million.
The Company, pursuant to an operating services agreement with AIM, has agreed
to pay AIM an annual rate of 0.45% of average daily net assets of the Fund for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. This
agreement provides that AIM pays all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
period August 4, 1997 to December 31, 1997, AIM was paid $84,332 for such
services. Prior to August 4, 1997, the Company had an operating services
agreement with ISI whereby the Fund paid ISI an annual rate of 0.45% of average
daily net assets of the Fund. During the period January 1, 1997 through August
3, 1997, the Fund paid ISI $73,736.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and Class C shares of the Fund. The Company has adopted a
distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and the Fund's Class C shares (the "Plan"). The Fund,
pursuant to the Plan, pays AIM Distributors compensation at a maximum annual
rate of 0.35% of the average daily net assets attributable to the Class A
shares. AIM has voluntarily agreed to limit the Plan payments to 0.25% for three
years beginning August 4, 1997. The Fund, pursuant to the Plan, pays AIM
Distributors a maximum annual rate of 1.00% of the Fund's average daily net
assets attributable to the Class C shares. Of these amounts, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class A and C shares
to selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own shares of the Fund.
Any amounts not paid as a service fee under the Plan would constitute an
asset-based sales charge. The Plan also imposes a cap on the total sales
charges, including asset-based sales charges, that may be paid by the respective
classes. During the period August 4, 1997 to December 31, 1997, the Class A and
Class C shares paid AIM Distributors $7,467 and $161,592, respectively, as
compensation under the Plan. During the year ended December 31, 1997, AIM
Distributors and ISI waived fees of $3,511 for the Class A shares. Prior to
August 4, 1997, the Fund entered into a distribution plan with ISI in accordance
with Rule 12b-1 of the 1940 Act under substantially identical terms as described
for AIM Distributors above. During the period January 1, 1997 to August 3, 1997,
the Class A and Class C shares paid ISI $1,145 and $159,285, respectively, as
compensation under the Plan.
AIM Distributors received commissions of $54,138 from sales of Class A shares
of the Fund during the period August 4, 1997 to December 31, 1997. ISI received
commissions of $1,424 from sales of Class A shares of the Fund during the period
January 1, 1997 through August 3, 1997. Such commissions are not an expense to
the Fund. They are deducted from, and are not included in, the proceeds from
sales of Class A shares. During the period August 4, 1997 to December 31, 1997,
AIM Distributors received commissions of $2,643 in contingent deferred sales
charges imposed on redemptions of shares. Certain officers and directors of the
Company are officers and directors of AIM, A I M Fund Services, Inc. and AIM
Distributors. During the period January 1, 1997 through August 3, 1997, ISI
received commissions of $1,935 in contingent deferred sales charges imposed on
redemptions of shares.
The combined effect of the advisory agreements, operating services agreement
and the distribution plans for the Fund is to place a cap or ceiling on the
total expenses of the Fund, other than
FS-48
<PAGE> 153
brokerage commissions, interest, taxes, litigation, directors' fees and
expenses, and other extraordinary expenses. AIM has voluntarily agreed to adhere
to maximum expense ratios for the Fund. To the extent that the Fund exceeds the
amounts, AIM or its affiliates will waive its fees to reimburse the Fund to
assure that the Fund's expenses do not exceed the designated maximum amounts
except for those items specifically identified above. If, in any calendar
quarter, the average net assets of the Fund are less than $500 million, the
Fund's expenses shall not exceed 1.70% for Class A and 2.35% for Class C; on the
next $500 million of net assets, expenses shall not exceed 1.65% for Class A and
2.30% for Class C; and on all assets over $1 billion, expenses shall not exceed
1.60% for Class A and 2.25% for Class C.
During the period August 4, 1997 to December 31, 1997, the Fund paid legal
fees of $582 for services rendered by Kramer, Levin, Naftalis & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1997 was
$50,874,677 and $19,383,820, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $6,889,219
- -----------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (518,847)
- -----------------------------------------------------------------
Net unrealized appreciation of investment
securities $6,370,372
=================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5-CAPITAL STOCK*
Changes in the Fund's capital stock outstanding during the years ended December
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A** 1,054,003 $16,739,222 -- $ --
- ----------------------------------------------------------------------
Class C 1,421,288 21,204,369 943,712 10,888,988
- ----------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A** 47,730 725,852 -- --
- ----------------------------------------------------------------------
Class C 162,326 2,458,661 34,412 421,963
- ----------------------------------------------------------------------
Reacquired:
Class A** (52,825) (844,479) -- --
- ----------------------------------------------------------------------
Class C (240,812) (3,691,074) (46,444) (537,387)
- ----------------------------------------------------------------------
2,391,710 $36,592,551 931,680 $10,773,564
======================================================================
</TABLE>
* Shares have been restated to reflect a 4 for 1 stock split, effected in the
form of a 300% stock dividend, on November 7, 1997.
** Class A shares commenced operations on January 1, 1997.
FS-49
<PAGE> 154
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended December 31, 1997 and a share of Class C
capital stock outstanding during each of the years in the two-year period ended
December 31, 1997 and the period May 1, 1995 (date operations commenced) through
December 31, 1995.(a)
CLASS A:
<TABLE>
<CAPTION>
1997(b)
----------
<S> <C>
Net asset value, beginning of period $ 14.19
- ------------------------------------------------------------ ----------
Income from investment operations:
Net investment income 0.34(c)
- ------------------------------------------------------------ ----------
Net gains on securities (both realized and unrealized) 2.39
- ------------------------------------------------------------ ----------
Total from investment operations 2.73
- ------------------------------------------------------------ ----------
Less distributions:
Dividends from net investment income (0.44)
- ------------------------------------------------------------ ----------
Distributions from capital gains (0.74)
- ------------------------------------------------------------ ----------
Total distributions (1.18)
- ------------------------------------------------------------ ----------
Net asset value, end of period $ 15.74
============================================================ ==========
Total return(d) 19.78%
============================================================ ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 16,507
============================================================ ==========
Ratio of expenses to average net assets(e) 1.60%(f)
============================================================ ==========
Ratio of net investment income to average net assets(g) 3.26%(f)
============================================================ ==========
Portfolio turnover rate 57%
============================================================ ==========
Average brokerage commission rate(h) $ 0.0584
============================================================ ==========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct sales charges.
(e) After fee waivers. The ratio of expenses to average net assets prior to fee
waivers was 1.70%.
(f) Ratios are based on average net assets of $3,510,793.
(g) After fee waivers. The ratio of net investment income to average net assets
prior to fee waivers was 3.16%.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold.
CLASS C:(a)
<TABLE>
<CAPTION>
1997(b) 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 14.19 $ 10.76 $ 10.00
- ------------------------------------------------------------ -------- -------- --------
Income from investment operations:
Net investment income 0.36(c) 0.33 0.16
- ------------------------------------------------------------ -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 2.26 3.51 0.75
- ------------------------------------------------------------ -------- -------- --------
Total from investment operations 2.62 3.84 0.91
- ------------------------------------------------------------ -------- -------- --------
Less distributions:
Dividends from net investment income (0.33) (0.31) (0.15)
- ------------------------------------------------------------ -------- -------- --------
Distributions from capital gains (0.74) (0.10) --
- ------------------------------------------------------------ -------- -------- --------
Total distributions (1.07) (0.41) (0.15)
- ------------------------------------------------------------ -------- -------- --------
Net asset value, end of period $ 15.74 $ 14.19 $ 10.76
============================================================ ======== ======== ========
Total return(d) 18.88% 36.43% 9.12%
============================================================ ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 43,934 $ 20,566 $ 5,565
============================================================ ======== ======== ========
Ratio of expenses to average net assets 2.35%(e) 2.40% 2.40%(f)
============================================================ ======== ======== ========
Ratio of net investment income to average net assets 2.54%(e) 3.21% 4.68%(f)
============================================================ ======== ======== ========
Portfolio turnover rate 57% 25% 7%
============================================================ ======== ======== ========
Average brokerage commission rate(g) $ 0.0584 $ 0.0601 N/A
============================================================ ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) The Fund changed investment advisors on August 4, 1997.
(c) Calculated using average shares outstanding.
(d) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(e) Ratios are based on average net assets of $32,160,457.
(f) Annualized.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold.
FS-50
<PAGE> 155
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Class A, Class B and Class C Shares of AIM Advisor Large Cap
Value Fund, AIM Advisor Flex Fund, AIM Advisor MultiFlex Fund,
AIM Advisor Real Estate Fund and AIM Advisor International
Value Fund (formerly, Equity, Flex, MultiFlex, Real Estate and
International Value Portfolios, respectively)
In Part A: Financial Highlights
In Part B: (1) Reports of Independent Accountants
(2) Schedules of Investments as of
December 31, 1997
(3) Statements of Assets and Liabilities as of
December 31, 1997
(4) Statements of Operations for the year ended
December 31, 1997
(5) Statements of Changes in Net Assets for the
years ended December 31, 1997 and 1996
(b) Exhibits:
1. (a) Amended and Restated Articles of Incorporation
dated March 7, 1995, previously filed with
Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on May 1,
1995, and were filed electronically as an
Exhibit to Registrant's Post-Effective
Amendment No. 33 on December 30, 1997, and are
incorporated by reference herein.
(b) Articles of Amendment to the Articles of
Incorporation, as filed with the State
Department of Assessments and Taxation of the
state of Maryland on January 16, 1996, filed
on EDGAR with Post-Effective Amendment No. 26
on April 22, 1996, and incorporated by
reference herein.
(c) Articles Supplementary, dated February 14,
1996, to the Articles of Incorporation are
filed herewith electronically.
(d) Articles Supplementary to the Articles of
Incorporation dated August 13, 1996, are
filed herewith electronically.
(e) Articles Supplementary, dated September 29,
1997, to the Articles of Incorporation were
filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33
on December 30, 1997, and are incorporated by
reference herein.
2. (a) By-Laws of Registrant, as amended, previously
filed with Post-Effective Amendment No. 24
to the Registrant's Registration Statement on
May 1, 1995, was filed on EDGAR with
Post-Effective Amendment No. 31 on April 30,
1997 and herein incorporated by reference.
C-1
<PAGE> 156
(b) Amended and Restated Bylaws of Registrant,
dated September 20, 1997, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December
30, 1997, and is incorporated by reference
herein.
3. Not applicable.
4. Not applicable.
5. (a) Investment Advisory Agreement between
Registrant and INVESCO Services, Inc. dated
as of February 28, 1997 was filed on EDGAR
with Post-Effective Amendment No. 31 on April
30, 1997.
(b) Investment Advisory Agreement between
Registrant and A I M Advisors, Inc. dated
August 4, 1997, was filed electronically as
an Exhibit to Registrant's Post-Effective
Amendment No. 33 on December 30, 1997, and is
incorporated by reference herein.
(c) Sub-Advisory Agreement between INVESCO
Services, Inc. and INVESCO Capital
Management, Inc. dated as of February 28,
1997, was filed on EDGAR with Post-Effective
Amendment No. 31 on April 30, 1997.
(d) Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Capital
Management, Inc. dated August 4, 1997, was
filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33
on December 30, 1997, and is incorporated by
reference herein.
(e) Sub-Advisory Agreement between INVESCO
Services, Inc. and INVESCO Management &
Research, Inc. dated as of February 28, 1997
was filed on EDGAR with Post-Effective
Amendment No. 31 on April 30, 1997.
(f) Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Management &
Research, Inc. dated August 4, 1997, was
filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33
on December 30, 1997, and is incorporated by
reference herein.
(g) Sub-Advisory Agreement between INVESCO
Services, Inc. and INVESCO Realty Advisors,
Inc. dated as of February 28, 1997 was filed
on EDGAR with Post-Effective Amendment No. 31
on April 30, 1997.
(h) Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Realty Advisors,
Inc. dated August 4, 1997, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December
30, 1997, and is incorporated by reference
herein.
(i) Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Global Asset
Management, Inc. dated August 4, 1997, is
filed herewith electronically.
6. (a) Distribution Agreement between Registrant and
INVESCO Services, Inc., dated as of February
28, 1997 was filed on EDGAR with
Post-Effective Amendment No. 31 on April 30,
1997.
C-2
<PAGE> 157
(b) Distribution Agreement between Registrant and
A I M Distributors, Inc. dated August 4, 1997, was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30,
1997, and is incorporated by reference herein.
(c) Form of Master Distribution Agreement between
Registrant and A I M Distributors, Inc.
(relating to Class B shares) was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December
30, 1997.
(d) Form of Selected Dealer Agreement between
A I M Distributors, Inc. and selected dealers
is filed herewith electronically.
(e) Form of Bank Selling Group Agreement between
A I M Distributors, Inc. and banks is filed
herewith electronically.
7. (a) Defined Benefit Deferred Compensation Plan
for Non-Interested Directors and Trustees was
filed on EDGAR with Post-Effective Amendment
No. 31 on April 30, 1997.
(b) Form of Deferred Compensation Agreement for
Registrant's Non-Affiliated Directors for
Non-Interested Directors and Trustees was
filed electronically as an Exhibit to Post-
Effective Amendment No. 32 on June 9, 1997
and is hereby incorporated by reference.
(c) Form of Deferred Compensation Agreement for
Registrant's Non-Affiliated Directors is
filed herewith electronically.
(d) Retirement Plan for Registrant's
Non-Affiliated Directors effective as of
March 8, 1994 as restated September 18, 1997
was filed electronically as an Exhibit to
Post- Effective Amendment No. 32 on June 9,
1997 and is hereby incorporated by reference.
8. (a) Form of Custodian Agreement between
Registrant and United Missouri Bank of Kansas
City, N.S., dated as of November 1, 1993,
previously filed with Post-Effective
Amendment No. 20 to the Registrant's
Registration Statement on September 10, 1993.
Custodian Agreement between Registrant and
United Missouri Bank of Kansas City, N.S.,
dated as of November 1, 1993, previously
filed with Post-Effective Amendment No. 22 to
the Registrant' Registration Statement on
April 28, 1994. Form of Custodian Agreement
between Registrant and United Missouri Bank,
dated May 1, 1995, previously filed with
Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on May 1,
1995, and filed on EDGAR with Post-Effective
Amendment No. 26 on April 22, 1996.
(b) Custodian Contract, dated August 4, 1997,
between Registrant and State Street Bank and
Trust Company is filed herewith
electronically.
9. (a) Operating Services Agreement between
Registrant and INVESCO Services, Inc., dated
as of February 28, 1997 was filed on EDGAR
with Post-Effective Amendment No. 31 on April
30, 1997.
(b) Operating Services Agreement between
Registrant and A I M Advisors, Inc. dated
August 4, 1997, was filed electronically as
an Exhibit to Registrant's Post-Effective
Amendment No. 33 on December 30, 1997, and is
incorporated by reference herein.
C-3
<PAGE> 158
(c) Transfer Agency and Service Agreement between
Registrant, A I M Advisors, Inc. and A I M
Fund Services, Inc. dated August 4, 1997, was
filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33
on December 30, 1997, and is incorporated by
reference herein.
(d) (1) Remote Access and Related Services
Agreement, dated as of December 23,
1994, between the Registrant and the
Shareholder Services Group, Inc. is
filed herewith electronically.
(2) Amendment No. 1, dated October 4, 1995,
to the Remote Access and First Data
Investor Services Group, Inc. (formerly
The Shareholder Services Group, Inc.) is
filed herewith electronically.
(3) Addendum No. 2, dated October 12, 1995,
to the Remote Access and Related
Services Agreement, dated December 23,
1994, between Registrant and First Data
Investor Services Group, Inc. is filed
herewith electronically.
(4) Amendment No. 3, dated as of February 1,
1997, to the Remote Access and Related
Services Agreement, dated December 23,
1994, between the Registrant and First
Data Investor Services Group, Inc. is
filed herewith electronically.
(5) Exhibit 1, effective as of August 4,
1997, to the Remote Access and Related
Services Agreement, dated December 23,
1994, between the Registrant and First
Data Investor Services Group, Inc. is
filed herewith electronically.
(6) Preferred Registration Technology Escrow
Agreement, dated September 10, 1997,
between Registrant and First Data
Investor Services Group, Inc., is filed
herewith electronically.
10. Opinion and Consent of Ballard Spahr Andrews
& Ingersoll was filed electronically as an
Exhibit to Registrant's Post-Effective
Amendment No. 33 on December 30, 1997, and is
incorporated by reference herein.
11. (a) Consent of Price Waterhouse LLP is filed
herewith electronically.
(b) Consent of Ballard Spahr Andrews & Ingersoll,
LLP is filed herewith electronically.
12. Not applicable.
13. Not applicable.
14. (a) Forms of Registrant's IRA Documents are filed
herewith electronically.
(b) Forms of Registrant's Simplified Employee
Pension Plan and Salary Reduction Simplified
Employee Pension Plan Documents are filed
herewith electronically.
C-4
<PAGE> 159
(c) Forms of Registrant's Money Purchase Pension
and Profit Sharing Plan Document, Trust
Agreement, Adoption Agreements, Summary Plan
Descriptions and Applications are filed
herewith electronically.
(d) Forms of Registrant's 403(b) Plan Documents
are filed herewith electronically.
(e) Forms of Registrant's SIMPLE IRA are filed
herewith electronically.
(f) Forms of Registrant's Roth IRA are filed
herewith electronically.
15. (a) Plan and Agreement of Distribution pursuant
to Rule 12b-1 between the Registrant and
INVESCO Services, Inc., dated as of January
1, 1997 was filed on EDGAR with Post-
Effective Amendment No. 31 on April 30, 1997.
(b) Plan and Agreement of Distribution pursuant
to Rule 12b-1 between the Registrant (on
behalf of Class A and Class C shares) and
A I M Distributors, Inc. dated August 4, 1997,
was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33
on December 30, 1997, and is incorporated by
reference herein.
(c) Form of Master Distribution Plan of the
Registrant (on behalf of Class B shares) was
filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33
on December 30, 1997.
(d) Form of Shareholder Service Agreement to be
used in connection with Registrant's Master
Distribution Plan is filed herewith
electronically.
(e) Form of Bank Shareholder Service Agreement to
be used in connection with Registrant's
Master Distribution Plan is filed herewith
electronically.
(f) Form of Variable Group Annuity Contractholder
Service Agreement to be used in connection
with Registrant's Master Distribution Plan is
filed herewith electronically.
(g) Form of Service Agreement of Bank Trust
Departments and for Brokers for Bank Trust
Departments to be used in connection with
Registrant's Master Distribution Plan is
filed herewith electronically.
16. Schedule of Performance Quotations is filed
herewith electronically.
18. (a) Plan Pursuant To Rule 18f-3 under the
Investment Company Act of 1940 by the
Registrant adopted by the Board of Directors
was filed on EDGAR with Post-Effective
Amendment No. 31 on April 30, 1997.
(b) Second Amended and Restated Multiple Class
Plan (Rule 18f-3) (effective September 1,
1997) was filed electronically as an Exhibit
to Registrant's Post-Effective Amendment No.
33 on December 30, 1997, and is incorporated
by reference herein.
27. Financial Data Schedule is filed herewith
electronically.
C-5
<PAGE> 160
Item 25. Persons Controlled by or Under Common Control with Registrant
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to
each such person indicate (1) if a company, the state or other
sovereign power under the laws of which it is organized, and (2)
the percentage of voting securities owned or other basis of control
by the person, if any, immediately controlling it.
None.
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a
specified date within 90 days prior to the date of filing, the
number of record holders of each class of securities of the
Registrant.
<TABLE>
<CAPTION>
Title of Series Number of Record Holders* as of February 2, 1998
--------------- ------------------------------------------------
Class A Class C
------- -------
<S> <C> <C>
Large Cap Value Fund 467 1,981
Flex Fund 288 6,637
MultiFlex Fund 783 5,717
Real Estate Fund 1,865 1,840
International Value 690 1,668
</TABLE>
* No Class B shares were outstanding as of February 2, 1998
Item 27. Indemnification
Section 2-418 of the General Corporation Law of the State of
Maryland, Article VI of the Registrant's Charter filed as Exhibit
1, Article VII of the Registrant's By-Laws filed as Exhibit 2, and
the Investment Advisory Agreement filed as Exhibit 5(a), provide,
or will provide, for indemnification.
The Registrant's Articles of Incorporation (Article VI) provide
that the Registrant shall indemnify (a) its directors to the
fullest extent permitted by law now or hereafter in force,
including the advance of expenses under the procedures provided
under such laws; (b) its officers to the same extent it shall
indemnify its directors; and (c) its officers who are not directors
to such further extent as shall be authorized by the Board of
Directors and be consistent with law, provided, however, that such
indemnification shall not be construed to protect any director or
officer against any liability to which such director or officer
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office.
The Registrant's By-laws (Article VII) provide that the Registrant
shall indemnify any director and/or officer who was or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is
or was a director or officer of the Registrant, or is or was
serving at the request of the Registrant as a director or officer
of another corporation, partnership, joint venture, trust or other
enterprise, against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding to the maximum extent permitted by law.
C-6
<PAGE> 161
With respect to indemnification of officers and directors, Section
2-418 of the Maryland General Corporation Law provides that a
corporation may indemnify any director who is made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Registrant) by reason of
service in that capacity, or is or was serving at the request of
the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement and expenses actually and
reasonably incurred by him in connection with such action, suit or
proceeding unless (1) it is established that the act or omission of
the director was material to the matter giving rise to the
proceeding, and (a) was committed in bad faith or (b) was the
result of active and deliberate dishonesty; or (2) the director
actually received an improper personal benefit of money, property,
or services; or (3) in the case of any criminal action or
proceeding, had reasonable cause to believe that the act or
omission was unlawful. A court of appropriate jurisdiction may,
however, except in proceedings by or in the right of the Registrant
or in which liability has been adjudged by reason of the person
receiving an improper personal benefit, order such indemnification
as the court shall deem proper if it determines that the director
is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not the director has met the
requisite standards of conduct. Under Section 2-418, the
Registrant shall also indemnify officers, employees, and agents of
the Registrant to the same extent that it shall indemnify
directors, and officers, employees and agents who are not directors
to such further extent, consistent with law, as may be provided by
general or specific action of the Board of Directors or contract.
Pursuant to Section 2-418 of the Maryland General Corporation Law,
the termination of any action, suit or proceeding by judgment,
order or settlement does not create a presumption that the person
did not meet the requisite standard of conduct required by Section
2-418. The termination of any action, suit or proceeding by
conviction, or a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, creates a
rebuttable presumption that the person did not meet the requisite
standard of conduct.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised
that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue. Insurance coverage is provided under a
joint Mutual Fund & Investment Advisory Professional and Directors
& Officers Liability Policy, issued by ICI Mutual Insurance
company, with a $25,000,000 limit of liability.
Item 28. Business and Other Connections of Investment Advisor and
Sub-Advisor
See "Management" in the Prospectus and "The Advisory and
Sub-Advisory Agreements" in the Statement of Additional Information
for information regarding the business of the investment advisor
and sub-advisors. The only employment of a substantial nature of
the Advisor's directors and officers is with the Advisor and its
affiliated companies. For information as to the business,
profession, vocation or employment of a substantial nature of each
of the officers and directors of INVESCO Capital Management, Inc.,
INVESCO
C-7
<PAGE> 162
Global Asset Management Limited, INVESCO Management & Research,
Inc., and INVESCO Realty Advisors, Inc., reference is made to Form
ADV filed under the Investment Advisers Act of 1940 by INVESCO
Capital Management, Inc., INVESCO Global Asset Management Limited,
INVESCO Management & Research, Inc. and INVESCO Realty Advisors,
Inc., herein incorporated by reference.
Item 29. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal
underwriter of its Retail Classes, also acts as a
principal underwriter to the following investment
companies:
AIM Equity Funds, Inc.
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
(b)
<TABLE>
<CAPTION>
Name and Positions and Positions and
Principal Business Offices with Offices with
Address* Underwriter Registrant
- ------- ------------- -------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman of the Board
of Directors
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President & Director President & Director
W. Gary Littlepage Senior Vice President & Director None
James L. Salners Senior Vice President None
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B.J. Thompson First Vice President None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
James R. Anderson Vice President None
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Mary K. Coleman Vice President None
</TABLE>
- --------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-8
<PAGE> 163
<TABLE>
<CAPTION>
Name and Positions and Positions and
Principal Business Offices with Offices with
Address* Underwriter Registrant
- ------- ------------- -------------
<S> <C> <C>
Melville B. Cox Vice President & Chief Compliance Vice President
Officer
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
Terri L. Randsell Vice President None
Carol F. Relihan Vice President Senior Vice President
& Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Christopher T. Simutis Vice President None
Robert D. Van Sant, Jr. Vice President None
Gary K. Wendler Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Luke Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri L. Fiedler Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Wayne W. LaPlante Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neil Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Nicholas D. White Assistant Vice President None
Norman W. Woodson Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
- --------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-9
<PAGE> 164
(c) - Not Applicable
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, maintains physical possession of each such account, book or
other document of the Registrant at its principal executive offices,
except for those maintained by the Registrant's Custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, and the Registrant's Transfer Agent and Dividend Paying Agent,
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739.
Item 31. Management Services
Furnish a summary of the substantive provisions of any
management-related service contract not discussed in Part I of this
Form (because the contract was not believed to be material to a
purchaser of securities of the Registrant) under which services are
provided to the Registrant, indicating the parties to the contract,
the total dollars paid and by whom, for the last three fiscal years.
None.
Item 32. Undertakings
Registrant undertakes to furnish to each person to whom a prospectus
is delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
C-10
<PAGE> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 24th day of
February, 1998.
REGISTRANT: AIM ADVISOR FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/S/ CHARLES T. BAUER Chairman & Director 2/24/98
-----------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Director & President 2/24/98
----------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Director 2/24/98
-----------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Director 2/24/98
-----------------------------
(Owen Daly II)
/s/ JACK FIELDS Director 2/24/98
-----------------------------
(Jack Fields)
/s/ CARL FRISCHLING Director 2/24/98
-----------------------------
(Carl Frischling)
/s/ JOHN F. KROEGER Director 2/24/98
-----------------------------
(John F. Kroeger)
/s/ LEWIS F. PENNOCK Director 2/24/98
-----------------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Director 2/24/98
-----------------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Director 2/24/98
-----------------------------
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President & 2/24/98
----------------------------- Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 166
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1(c) Articles Supplementary, dated February 14, 1996, to the
Articles of Incorporation
1(d) Articles Supplementary to the Articles of Incorporation dated
August 13, 1996
5(i) Sub-Advisory Agreement between A I M Advisors, Inc. and
INVESCO Global Asset Management, Inc. dated August 4, 1997
6(d) Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers
6(e) Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks
7(c) Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors
8(b) Custodian Contract, dated August 4, 1997, between Registrant
and State Street Bank and Trust Company
9(d)(1) Remote Access and Related Services Agreement, dated as of
December 23, 1994, between the Registrant and The Shareholder
Services Group, Inc.
9(d)(2) Amendment No. 1, dated October 4, 1995, to the Remote Access
and First Data Investor Services Group, Inc. (formerly The
Shareholder Services Group, Inc.)
9(d)(3) Addendum No. 2, dated October 12, 1995, to the Remote Access
and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group,
Inc.
9(d)(4) Amendment No. 3, dated as of February 1, 1997, to the Remote
Access and Related Services Agreement, dated December 23, 1994,
between the Registrant and First Data Investor Services Group,
Inc.
9(d)(5) Exhibit 1, effective as of August 4, 1997, to the Remote Access
and Related Services Agreement, dated December 23, 1994,
between the Registrant and First Data Investor Services Group,
Inc.
9(d)(6) Preferred Registration Technology Escrow Agreement, dated
September 10, 1997, between Registrant and First Data Investor
Services Group, Inc.
11(a) Consent of Price Waterhouse LLP
11(b) Consent of Ballard Spahr Andrews & Ingersoll
14(a) Forms of Registrant's IRA Documents
14(b) Forms of Registrant's Simplified Employee Pension Plan and
Salary Reduction Simplified Employee Pension Plan Documents
14(c) Forms of Registrant's Money Purchase Pension and Profit Sharing
Plan Document, Trust Agreement, Adoption Agreements, Summary
Plan Descriptions and Applications
</TABLE>
<PAGE> 167
<TABLE>
<S> <C>
14(d) Forms of Registrant's 403(b) Plan Documents
14(e) Forms of Registrant's SIMPLE IRA
14(f) Forms of Registrant's Roth IRA
15(d) Form of Shareholder Service Agreement
15(e) Form of Bank Shareholder Service Agreement
15(f) Form of Variable Group Annuity Contractholder Service Agreement
15(g) Form of Service Agreement of Bank Trust Departments and for
Brokers for Bank Trust Departments
16. Schedule of Performance Quotations
27. Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1(c)
INVESCO Advisor Funds, Inc.
ARTICLES SUPPLEMENTARY
FILED PURSUANT TO SECTION 2-208.1
OF THE MARYLAND GENERAL CORPORATION LAW
INVESCO Advisor Funds, Inc., a Maryland corporation having its principal
Maryland office in the city of Baltimore in the State of Maryland (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
The Corporation is authorized to issue Ten Billion Seventy Million
(10,070,000,000) shares of Common Stock par value $.001 per share. The
aggregate par value of all shares which the Corporation is authorized to issue
is Ten Million Seventy Thousand Dollars ($10,070,000).
The authorized shares are classified as 10,000,000 shares of the
Equity Portfolio, 10,000,000 shares of the Income Portfolio, 10,000,000 shares
of the Flex Portfolio, 10,000,000 shares of the MultiFlex Portfolio, 10,000,000
shares of the Relative Return Bond Portfolio, 10,000,000 shares of the Real
Estate Portfolio, 10,000,000 shares of the International Value Portfolio, and
10,000,000,000 shares of the Cash Management Portfolio.
FIRST: The Board of Directors of the Corporation, at a meeting duly
convened and held on February 14, 1996, adopted a resolution (1) decreasing the
allocation of 10,000,000 shares of common stock, par value $.001 per share, to
the Relative Return Bond Portfolio series by 10,000,000 shares to zero (0)
shares authorized; and (2) increasing the allocation of 10,000,000 shares of
common stock, par value $.001
<PAGE> 2
per share to the Flex Portfolio series by 10,000,000 shares to 20,000,000
shares par value $.001 per share authorized.
The Corporation is authorized to issue Ten Billion Seventy Million
(10,070,000,000) shares of Common Stock par value $.001 per share. The
aggregate par value of all shares which the Corporation is authorized to issue
is Ten Million Seventy Thousand Dollars ($10,070,000).
The authorized shares are classified as 10,000,000 shares of the
Equity Portfolio, 10,000,000 shares of the Income Portfolio, 20,000,000 shares
of the Flex Portfolio, 10,000,000 shares of the MultiFlex Portfolio, 10,000,000
shares of the Real Estate Portfolio, 10,000,000 shares of the International
Value Portfolio, and 10,000,000,000 shares of the Cash Management Portfolio.
SECOND: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940.
THIRD: The total number of shares of capital stock that the
Corporation has the authority to issue has been reclassified by the Board of
Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law and pursuant to the authority contained in the charter of the
Corporation.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed by its duly authorized officers who acknowledge
that these Articles Supplementary are the act of the Corporation, that to the
best of their knowledge, information and belief, that matters and facts set
forth herein as to authorization and
<PAGE> 3
approval are true in all material respects and that this statement is made
under the penalties of perjury.
Dated this 14 day of February, 1996.
[CORPORATE SEAL] INVESCO ADVISOR FUNDS, INC.
By: /s/ HUBERT L. HARRIS
---------------------------------
Hubert L. Harris, Jr.
President
ATTEST:
By: /s/ TONY D. GREEN
-------------------------------
Tony D. Green
Secretary
<PAGE> 1
EXHIBIT 1(d)
INVESCO ADVISOR FUNDS, INC.
ARTICLES SUPPLEMENTARY
INVESCO ADVISOR FUNDS, INC., a Maryland corporation registered as an
open-end investment company under the Investment Company Act of 1940 and having
its principal office in the State of Maryland in Baltimore City, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, at a meeting duly
convened and held on August 13, 1996, adopted a resolution to increase the
Corporation's authorized capital of Common Shares and to classify such
additional Common Shares as additional shares of its series designated
Multiflex Portfolio, and to further classify all its authorized Common Shares
as Class A shares and Class C shares, as described in Article THIRD, below.
SECOND: As of immediately prior to such increase in authorized capital
of the Corporation and classification of its authorized shares into Class A
shares and Class C shares, the total number of shares of all series that the
Corporation was authorized to issue was ten billion seventy million
(10,070,000,000) Common Shares of the par value of $0.001 per share and having
aggregate par value of ten million seventy thousand dollars ($10,070,000),
classified as follows:
<TABLE>
<CAPTION>
Name of Series Number of Shares Allocated
(all of one class)
<S> <C>
Equity Portfolio 10,000,000
Income Portfolio 10,000,000
Flex Portfolio 20,000,000
Multiflex Portfolio 10,000,000
Real Estate Portfolio 10,000,000
International Value Portfolio 10,000,000
Cash Management Portfolio 10,000,000,000
</TABLE>
THIRD: As increased and further classified by these Articles
Supplementary, the total number of shares of all classes that the Corporation
is authorized to issue is ten billion seventy-five million (10,075,000,000)
Common Shares, par value $0.001 per share and having an aggregate par value of
ten million seventy-five thousand dollars ($10,075,000), classified as follows:
<PAGE> 2
<TABLE>
<CAPTION>
Name of Series Number of Shares Allocated
Class A Class C
<S> <C> <C>
Equity Portfolio 5,000,000 5,000,000
Income Portfolio 5,000,000 5,000,000
Flex Portfolio 7,500,000 12,500,000
Multiflex Portfolio 5,000,000 10,000,000
Real Estate Portfolio 5,000,000 5,000,000
International Value Portfolio 5,000,000 5,000,000
Cash Management Portfolio 5,000,000,000 5,000,000,000
</TABLE>
FOURTH: The shares of the Corporation authorized and classified
pursuant to these Articles Supplementary have been so authorized and classified
by the Board of Directors under the authority contained in the charter of the
Corporation. The number of Shares of capital stock of the various classes that
the Corporation has authority to issue has been increased by the Board of
Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law. The Corporation is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act").
FIFTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the series and classes of Common Shares described
in Article THIRD hereof shall be as set forth in the Corporation's charter and
shall be subject to all provisions of the charter relating to shares of the
Corporation generally, including those set forth in Article IV of such charter.
IN WITNESS WHEREOF, INVESCO Advisor Funds, Inc. has caused these
Articles Supplementary to be signed in its name on its behalf by its authorized
officers who acknowledge that these Articles Supplementary are the act of the
Corporation, that to the best of their knowledge, information and belief, all
matters and facts set forth herein relating to the authorization and approval
of these Articles Supplementary are true in all material respects and that this
statement is made under the penalties of perjury.
Date: August 13, 1996 INVESCO ADVISOR FUNDS, INC.
By: /s/ HUBERT L. HARRIS
------------------------------
Hubert L. Harris
President
[Corporate Seal]
ATTEST: /s/ Tony D. Green
-----------------------------
Tony D. Green
Secretary
<PAGE> 1
EXHIBIT 5(i)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 4th day of August, 1997, by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Global Asset
Management Limited, a Bermuda company (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, AIM Advisor Funds, Inc. (the "Fund"), is engaged in business
as a diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") which is divided into various series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with
the Fund (the "AIM Investment Advisory Agreement"), pursuant to which AIM is
required to provide investment and advisory services to the Fund's series, and,
upon receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to one of those Fund's series, the AIM Advisor International Value
Fund, hereinafter referred to as the "Series"), on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, AIM and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below, subject
to the broad supervision of AIM and the Board of Directors of the Fund, for the
period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such assignment and agrees during such period, at
its own expense, to render such services and to assume the obligations herein
set forth for the compensation provided for herein. The Sub-Adviser shall for
all purposes herein be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized herein, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund. The Sub-Adviser hereby agrees to manage the investment operations of the
Fund's Series, subject to the supervision of the Fund's directors (the
"Directors") and AIM. Specifically, the Sub-Adviser agrees to perform the
following services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolios securities;
<PAGE> 2
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, and in
any Prospectus and/or Statement of Additional Information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund or
AIM, and to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analysis and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the
Sub-Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the
Sub-Adviser is authorized to employ such brokers or dealers as may, in the
Sub-Adviser's best judgment, implement the policy of the Fund to obtain prompt
and reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Sub-Adviser is
authorized to consider the full range and quality of a broker's services which
benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Sub-Adviser effects securities transactions on behalf
of the Fund may be used by the Sub-Adviser in servicing all of its accounts,
and not all such services may be used by the Sub-Adviser in connection with the
Fund. In the selection of a broker or dealer for execution of any negotiated
transaction, the Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable negotiated commission rate for such
transaction, or to select any broker solely on the basis of its purported or
"posted" commission rate for such transaction, provided, however, that the
Sub-Adviser shall consider such "posted" commission rates, if any, together
with any other information available at the time as to the level of commissions
known to be charged on comparable transactions by other qualified brokerage
firms, as well as all other relevant factors and circumstances, including the
size of any contemporaneous market in such securities, the importance to the
Fund of speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Sub-Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable best
price and execution on a particular transaction, the Sub-Adviser may consider
the sale of Fund shares by a broker or dealer in selecting among qualified
broker-dealers.
2
<PAGE> 3
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the extent
expressly assumed by the Sub-Adviser herein and except to the extent required
by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay all costs
and expenses in connection with the operations of the Fund's Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses
assumed by the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed
daily and paid as of the last day of each month, using for each daily
calculation the most recently determined net asset value of the Fund's Series,
as determined by a valuation made in accordance with the Fund's procedures for
calculating its net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser shall
be computed at the annual rates indicated in Schedule A hereto. During any
period when the determination of the Series' net asset value is suspended by
the Directors of the Fund, the net asset value of a share of the Fund's Series
as of the last business day prior to such suspension shall, for the purpose of
this Article III, be deemed to be the net asset value at the close of each
succeeding business day until it is again determined. However, no such fee
shall be paid to the Sub-Adviser with respect to any assets of the Fund's
Series which may be invested in any other investment company for which the
Sub-Adviser serves as investment adviser or sub adviser. The fee provided for
hereunder shall be prorated in any month in which this Agreement is not in
effect for the entire month. The Sub-Adviser shall be entitled to receive fees
hereunder only for such periods as the AIM Investment Advisory Agreement
remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to
be exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, AIM and their affiliates are or may become
interested in the Fund as directors, officers and employees.
3
<PAGE> 4
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund's Series, neither the Sub-Adviser nor any of its
directors, officers or employees will either act as a principal or agent for
any party other than the Fund's Series or receive any commissions. The
Sub-Adviser will comply with all applicable laws in acting hereunder including,
without limitation, the Investment Company Act; the Investment Advisers Act of
1940, as amended; and all rules and regulations duly promulgated under the
foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement having been approved by a majority of the outstanding
voting securities of the Series, shall become effective as of the date so
written above, and shall remain in force for an initial term of two years from
the date of execution, and from year to year thereafter until its termination
in accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Fund, or by
the vote of a majority of the outstanding voting securities of the Fund's
Series, and (ii) a majority of those Directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated as to any services at any time,
without the payment of any penalty, by AIM, by the Fund by vote of the
Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Fund's Series, or by the Sub-Adviser. A termination by AIM or
the Sub-Adviser shall require sixty days' written notice to the other party and
to the Fund, and a termination by the Fund shall require such notice to each of
the parties. This Agreement shall automatically terminate in the event of its
assignment to the extent required by the Investment Company Act and the rules
thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged,
but may only be modified by an instrument in writing signed by the Sub-Adviser
and AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or interested
4
<PAGE> 5
persons of any such party, cast in person at a meeting called for the purpose
of voting on such amendment, and (2) the vote of a majority of the outstanding
voting securities of any of the Fund's Series as to which such amendment is
applicable (other than an amendment which can be effective without shareholder
approval under applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Texas and the applicable provisions of the Investment Company Act. To
the extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the size, extent or intent of this Agreement or any provision
hereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
----------------------------------
President
ATTEST:
/s/ OFELIA M. MAYO
- ---------------------------------
Assistant Secretary
INVESCO GLOBAL ASSET MANAGEMENT
LIMITED
By: /s/ ILLEGIBLE
----------------------------------
Director
ATTEST:
/s/ ILLEGIBLE
- ---------------------------------
Assistant Secretary
6
<PAGE> 7
SCHEDULE A
TO
IGAM SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Global Asset Management Limited ("IGAM"), fees
payable thereunder to IGAM shall be calculated by applying the following annual
rates to the average daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor International Value Fund 0.35% on assets to $50 million;
0.30% on assets over $50 million to $100
million;
0.25% on assets in excess of $100
million.
</TABLE>
7
<PAGE> 1
EXHIBIT 6(d)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole discretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
concession as disclosed in the CDSC Fund's then current prospectus. With
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
7/97
<PAGE> 2
6 Sales and exchanges of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concession
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospectus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representation, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
7/97
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Fund Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Fund Yes No
</TABLE>
2/98
<PAGE> 5
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Cash Reserve Shares, AIM Limited Maturity Treasury Fund, AIM
Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
2/98
<PAGE> 1
EXHIBIT 6(e)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
7/97
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 100, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Fund Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Fund Yes No
</TABLE>
2/98
<PAGE> 4
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Cash Reserve Shares, AIM Limited Maturity Treasury Fund, AIM
Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
2/98
<PAGE> 1
EXHIBIT 7(c)
DEFERRED COMPENSATION AGREEMENT
SUMMARY
Your Deferred Compensation Agreement (the "Agreement") allows
you to defer some or all of your annual trustee's fees otherwise payable by the
Funds. Deferred fees are deemed invested in certain mutual funds selected by
you. The deferral is pre-tax, and the deferred amount and the credited gains,
losses and income are not subject to tax until paid out to you.
Your deferrals (and investment experience) are posted to a
bookkeeping account maintained by the Funds in your name. In order for you to
enjoy the tax deferral, the payments due under the Agreement will be paid from
the Funds' general assets, and you are considered a general unsecured creditor
of the Funds; you may not transfer your right to receive payments under the
Agreement to any other person, nor may you pledge that right to secure any debt
or other obligation; finally, an election to defer must be made in writing
before the first day of the calendar year for which the fees are earned (the
"Election Date") and elections can be changed only prospectively, effective for
the next calendar year.
An important change has been made to your Agreement to give
you greater flexibility to select the time and method of payment of amounts
that you defer: for amounts previously deferred and for future elections you
now designate a specific Payment Date and payment method which generally may be
changed with at least one year's advance notice.
PAYMENT DATE ELECTION
Deferred fees (and the income, gains and losses credited
during the deferral period) generally will be paid out as elected by you in
installments or a single sum in cash within 30 days of the Payment Date
elected. (For payments in connection with your termination of service as a
trustee, see below.)
Deferrals must be for a minimum two year period (unless your
retirement date under the Retirement Plan is earlier). Thus, the Payment Date
may be the first day of any calendar quarter that follows the second
anniversary of the applicable Election Date or your retirement date. Thus, fees
previously deferred and fees payable for the calendar year beginning January 1,
1997 may be deferred to the first day of any calendar quarter in any year from
1999.
EXTENDING A PAYMENT DATE
At least one year prior to any Payment Date, you may extend
that Date, provided that the additional period of deferral is at least two
years. You may make this change in Payment Date only once.
-1-
<PAGE> 2
PAYMENT METHOD
The value of your deferrals (based on your election as to how
your deferral account is to be considered invested) will be paid in cash, in
one lump sum or in annual installments (over a period not to exceed 10 years)
as you select at the time you select your Payment Date. You may change this
election, but the change will not be given effect unless it is made at least
one year before your Payment Date or your ceasing to be a trustee (whichever
occurs first). This one year requirement is waived in the case of your death
(see Termination of Service, below).
TERMINATION OF SERVICE
Upon your death, your account under the Agreement will be paid
out as elected by you in installments or in a single sum in cash as soon as
practicable. Payment will be made to your designated Beneficiary or
Beneficiaries or to your estate if there is no surviving Beneficiary.
Upon termination of your service as trustee for any reason
other than death or your retirement (as defined in the Retirement Plan), your
account will be paid to you as a single sum (or in installments if you had
timely elected that method) in cash within three months following the end of
the fiscal year in which you terminate, regardless of the Payment Dates you
elected.
-2-
<PAGE> 3
DEFERRED COMPENSATION AGREEMENT
-------------------------------
AGREEMENT, made on this __ day of _______, 19__, by and
between the registered open-end investment companies listed on Appendix A
hereto (the "Funds"), and
________________________________________________________________ (the
"Director") residing at ___________________________________________________.
WHEREAS, the Funds and the Director have entered into
agreements pursuant to which the Director will serve as a director/trustee of
the Funds; and
WHEREAS, if the Funds and the Director have previously entered
into an additional agreement whereby the Funds will provide to the Director a
vehicle under which the Director can defer receipt of directors' fees payable
by the Funds and now desire to amend and restate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Funds and the Director hereby
agree as follows:
1. DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions. Unless a different meaning is plainly implied by
the context, the following terms as used in this Agreement shall have the
following meanings:
(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 4.3 hereof to receive benefits after the death
of the Director.
(b) "Boards of Directors" shall mean the respective
Boards of Directors of the Funds.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of directors'
fees paid by each of the Funds to the Director during a Deferral Year prior to
reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or
amounts of the Director's Compensation deferred under the provisions of Section
3 of this Agreement.
-1-
<PAGE> 4
(f) "Deferral Accounts" shall mean the accounts
maintained to reflect the Director's Compensation Deferrals made pursuant to
Section 3 hereof (or pursuant to any prior agreement) and any other credits or
debits thereto.
(g) "Deferral Year" shall mean each calendar year during
which the Director makes, or is entitled to make, Compensation Deferrals under
Section 3 hereof.
(h) "Retirement" shall have the same meaning as set forth
under the Retirement Plan.
(i) "Retirement Plan" shall mean the "AIM Funds
Retirement Plan for Eligible Directors/Trustees."
(j) "Valuation Date" shall mean the last business day of
each calendar year and any other day upon which the Funds makes valuations of
the Deferral Accounts.
1.2 Plurals and Gender. Where appearing in this Agreement the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.
1.3 Directors and Trustees. Where appearing in this Agreement,
"Director" shall also refer to "Trustee" and "Board of Directors" shall also
refer to "Board of Trustees."
1.4 Headings. The headings and sub-headings in this Agreement are
inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is drafted,
and shall be construed, as a separate agreement between the Director and each
of the Funds.
2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED
--------------------------------------------------------
2.1 Commencement of Compensation Deferrals. The Director may
elect, on a form provided by, and submitted to, the Presidents of the
respective Funds, to commence Compensation Deferrals under Section 3 hereof for
the period beginning on the later of (i) the date this Agreement is executed or
(ii) the date such form is submitted to the Presidents of the Funds.
2.2 Termination of Deferrals. The Director shall not be eligible
to make Compensation Deferrals after the earliest of the following dates:
(a) The date on which he ceases to serve as a Director of
all of the Funds; or
(b) The effective date of the termination of this
Agreement.
-2-
<PAGE> 5
3. COMPENSATION DEFERRALS
----------------------
3.1 Compensation Deferral Elections.
(a) On or prior to the first day of any Deferral Year,
the Director may elect, on the form described in Section 2.1 hereof, to defer
the receipt of all or a portion of his Compensation for such Deferral Year.
Such writing shall set forth the amount of such Compensation Deferral (in whole
percentage amounts). Such election shall continue in effect for all subsequent
Deferral Years unless it is canceled or modified as provided below.
(b) Compensation Deferrals shall be withheld from each
payment of Compensation by the Funds to the Director based upon the percentage
amount elected by the Director under Section 3.1(a) hereof.
(c) The Director may cancel or modify the amount of his
Compensation Deferrals on a prospective basis by submitting to the Presidents
of the Funds a revised Compensation Deferral election form. Such change will
be effective as of the first day of the Deferral Year following the date such
revision is submitted to the Presidents of the Funds.
3.2 Valuation of Deferral Account.
(a) Each Fund shall establish a bookkeeping Deferral
Account to which will be credited an amount equal to the Director's
Compensation Deferrals under this Agreement made with respect to Compensation
earned from each such Fund. Compensation Deferrals shall be allocated to the
Deferral Accounts on the first business day following the date such
Compensation Deferrals are withheld from the Director's Compensation. As of
the date of this Agreement, the Deferral Accounts also shall be credited with
the amounts credited to the Director under each other outstanding elective
deferred compensation agreement entered into by and between the Funds and the
Director which is superseded by this Agreement pursuant to Section 6.11 hereof.
The Deferral Accounts shall be debited to reflect any distributions from such
Accounts. Such debits shall be allocated to the Deferral Accounts as of the
date such distributions are made.
(b) As of each Valuation Date, income, gain and loss
equivalents (determined as if the Deferral Accounts are invested in the manner
set forth under Section 3.3, below) attributable to the period following the
next preceding Valuation Date shall be credited to and/or deducted from the
Director's Deferral Accounts.
3.3 Investment of Deferral Account Balances.
(a) (1) The Director may select, from various options
made available by the Funds, the investment media in which all or part of his
Deferral Accounts shall be deemed to be invested.
-3-
<PAGE> 6
(2) The Director shall make an investment
designation on a form provided by the Presidents of the Funds which shall
remain effective until another valid direction has been made by the Director as
herein provided. The Director may amend his investment designation by giving
written direction to the Presidents of the Funds in such manner and at such
time as the Funds may permit, but no less frequently than quarterly on thirty
(30) days' notice prior to the end of a calendar quarter. A timely change to a
Director's investment designation shall become effective as soon as practicable
following receipt by the Presidents of the Funds.
(3) The investment media deemed to be made
available to the Director, and any limitation on the maximum or minimum
percentages of the Director's Deferral Accounts that may be invested any
particular medium, shall be the same as from time-to-time communicated to the
Director by the Presidents of the Funds.
(b) Except as provided below, the Director's Deferral
Accounts shall be deemed to be invested in accordance with his investment
designations, provided such designations conform to the provisions of this
Section. If -
(1) the Director does not furnish the Presidents
of the Funds with complete, written investment instructions, or
(2) the written investment instructions from the
Director are unclear,
then the Director's election to make Compensation Deferrals hereunder shall be
held in abeyance and have no force or effect until such time as the Director
shall provide the Presidents of the Funds with complete investment
instructions. Notwithstanding the above, the Boards of Directors, in their
sole discretion, may disregard the Director's election and determine that all
Compensation Deferrals shall be deemed to be invested in a fund determined by
the Boards of Directors. In the event that any fund under which any portion of
the Director's Deferral Accounts is deemed to be invested ceases to exist, such
portion of the Deferral Accounts thereafter shall be held in the successor to
such fund, subject to subsequent deemed investment elections.
The Fund shall provide an annual statement to the Director
showing such information as is appropriate, including the aggregate amount in
the Deferral Accounts, as of a reasonably current date.
-4-
<PAGE> 7
4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS
------------------------------------
4.1 Payment Date and Methods.
(a) Designation of Date. Each deferral direction given
pursuant to Section 3.1 shall include designation of the Payment Date for the
value of the amount deferred. Such Payment Date shall be the first day of any
calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(b) Extension Date. At least one year before the Payment
Date initially designated pursuant to paragraph 4.1(a) above, the Participant
may irrevocably elect to extend such Payment Date to the first day of any
calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(c) Limitation. The Director shall select a Payment Date
(or extended Payment Date) that is no sooner than the earlier of (i) the
January 1 that follows the second anniversary of the Participant's deferral
election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the
year after the Participant's Retirement.
(d) Methods of Payment. Distributions from the
Director's Deferral Accounts shall be paid in cash in a single sum unless the
Participant elects, at the time a Payment Date is selected pursuant to
paragraph 4.1(a) or 4.1(b), to receive the amount payable in generally equal
quarterly installments over a period not to exceed ten (10) years. In
addition, as least one year before the Payment Date, a Director may change the
method of payment previously selected.
(e) Irrevocability. Except as provided in paragraph
4.1(b) and 4.1(d), a designation of a Payment Date and an election of
installment payments shall be irrevocable; provided, however, that payment
shall be made or begin on a different date as follows:
(1) Upon the Director's death, payment shall be
made in accordance with Section 4.2,
(2) Upon the Director's ceasing to serve as a
director of all of the Funds for reasons other than death or Retirement,
payment shall be made or begin within three months after the end of the
calendar year in which such termination occurs in accordance with the method
elected by the Director pursuant to paragraph 4.1(d) provided the designation
of such method had been made at least one year before such termination occurred,
except that the Boards of Directors, in their sole discretion, may accelerate
the distribution of such Deferral Accounts,
(3) Upon termination of this Agreement, payment
shall be made in accordance with Section 5.2, and
-5-
<PAGE> 8
(4) In the event of the liquidation, dissolution
or winding up of a Fund or the distribution of all or substantially all of a
Fund's assets and property relating to one or more series of its shares to
the shareholders of such series (for this purpose a sale, conveyance or
transfer of a Fund's assets to a trust, partnership, association or
corporation in exchange for cash, shares or other securities with the
transfer being made subject to, or with the assumption by the transferee of,
the liabilities of the Fund shall not be deemed a termination of the Fund or
such a distribution), all unpaid balances of the Deferral Accounts related to
such Fund as of the effective date thereof shall be paid in a lump sum on
such effective date.
4.2 Death Prior to Complete Distribution of Deferral Accounts.
Upon the death of the Director prior to the commencement of the distribution of
the amounts credited to his Deferral Accounts, the balance of such Accounts
shall be distributed to his Beneficiary in accordance with the method of
payment selected pursuant to paragraph 4.1(d), commencing as soon as practicable
after the Director's death. In the event of the death of the Director after
the commencement of such distribution, but prior to the complete distribution
of his Deferral Accounts, the balance of the amounts credited to his Deferral
Accounts shall be distributed to his Beneficiary over the remaining period
during which such amounts were distributable to the Director under Section 4.1
hereof. Notwithstanding the above, the Boards of Directors, in their sole
discretion, may accelerate the distribution of the Deferral Accounts.
4.3 Designation of Beneficiary. For purposes of Section 4.2
hereof, the Director's Beneficiary shall be the person or persons so designated
by the Director in a written instrument submitted to the Presidents of the
Funds. In the event the Director fails to properly designate a Beneficiary,
his Beneficiary shall be the person or persons in the first of the following
classes of successive preference Beneficiaries surviving at the death of the
Director: the Director's (1) surviving spouse or (2) estate.
4.4 Payments Due Missing Persons. The Funds shall make a
reasonable effort to locate all persons entitled to benefits under this
Agreement. However, notwithstanding any provisions of this Agreement to the
contrary, if, after a period of five (5) years from the date such benefit shall
be due, any such persons entitled to benefits have not been located, their
rights under this Agreement shall stand suspended. Before this provision
becomes operative, the Funds shall send a certified letter to all such persons
to their last known address advising them that their benefits under this
Agreement shall be suspended. Any such suspended amounts shall be held by the
Funds for a period of three (3) additional years (or a total of eight (8) years
from the time the benefits first become payable) and thereafter, if unclaimed,
such amounts shall be forfeited.
-6-
<PAGE> 9
5. AMENDMENTS AND TERMINATION
--------------------------
5.1 Amendments.
(a) The Funds and the Director may, by a written
instrument signed by, or on behalf of, such parties, amend this Agreement at
any time and in any manner.
(b) The Funds reserve the right to amend, in whole or in
part, and in any manner, any or all of the provisions of this Agreement by
action of their Boards of Directors for the purposes of complying with any
provision of the Code or any other technical or legal requirements, provided
that:
(1) No such amendment shall make it possible for
any part of the Director's Deferral Accounts to be used for, or diverted to,
purposes other than for the exclusive benefit of the Director or his
Beneficiaries, except to the extent otherwise provided in this Agreement;
and
(2) No such amendment may reduce the amount of
the Director's Deferral Accounts as of the effective date of such amendment.
5.2 Termination. The Director and the Funds may, by written
instrument signed by, or on behalf of, such parties, terminate this Agreement
at any time. In the event of the termination of this Agreement, the Boards of
Directors, in their sole discretion, may choose to pay out the Director's
Deferral Accounts prior to the designated Payment Dates. Otherwise, following
a termination of this Agreement, such Accounts shall continue to be maintained
in accordance with the provisions of this Agreement until the time they are
paid out.
6. MISCELLANEOUS.
--------------
6.1 Rights of Creditors.
(a) This Agreement is unfunded. Neither the Director nor
any other persons shall have any interest in any specific asset or assets of
the Funds by reason of any Deferral Accounts hereunder, nor any rights to
receive distribution of his Deferral Accounts except and as to the extent
expressly provided hereunder. The Funds shall not be required to purchase,
hold or dispose of any investments pursuant to this Agreement; however, if in
order to cover their obligations hereunder the Funds elect to purchase any
investments the same shall continue for all purposes to be a part of the
general assets and property of the Funds, subject to the claims of their
general creditors and no person other than the Funds shall by virtue of the
provisions of this Agreement have any interest in such assets other than an
interest as a general creditor.
-7-
<PAGE> 10
(b) The rights of the Director and the Beneficiaries to
the amounts held in the Deferral Accounts are unsecured and shall be subject to
the creditors of the Funds. With respect to the payment of amounts held under
the Deferral Accounts, the Director and his Beneficiaries have the status of
unsecured creditors of the Funds. This Agreement is executed on behalf of the
Funds by an officer, or other representative, of the Funds as such and not
individually. Any obligation of the Funds hereunder shall be an unsecured
obligation of the Funds and not of any other person.
6.2 Agents. The Funds may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as it deems
necessary to perform their duties under this Agreement. The Funds shall bear
the cost of such services and all other expenses they incur in connection with
the administration of this Agreement.
6.3 Liability and Indemnification. Except for their own gross
negligence, willful misconduct or willful breach of the terms of this
Agreement, the Funds shall be indemnified and held harmless by the Director
against liability or losses occurring by reason of any act or omission of the
Funds or any other person.
6.4 Incapacity. If the Funds shall receive evidence satisfactory
to them that the Director or any Beneficiary entitled to receive any benefit
under the Agreement is, at the time when such benefit becomes payable, a minor,
or is physically or mentally incompetent to receive such benefit and to give a
valid release therefor, and that another person or an institution is then
maintaining or has custody of the Director or Beneficiary and that no guardian,
committee or other representative of the estate of the Director or Beneficiary
shall have been duly appointed, the Funds may make payment of such benefit
otherwise payable to the Director or Beneficiary to such other person or
institution, including a custodian under a Uniform Gifts to Minors Act, or
corresponding legislation (who shall be an adult, a guardian of the minor or a
trust company), and the release of such other person or institution shall be a
valid and complete discharge for the payment of such benefit.
6.5 Cooperation of Parties. All parties to this Agreement and any
person claiming any interest hereunder agree to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Agreement or any of its provisions.
6.6 Governing Law. This Agreement is made and entered into in the
State of Texas and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Texas.
6.7 Nonguarantee of Directorship. Nothing contained in this
Agreement shall be construed as a contract or guarantee of the right of the
Director to be, or remain as, a director of any of the Funds or to receive any,
or any particular rate of, Compensation from any of the Funds.
-8-
<PAGE> 11
6.8 Counsel. The Funds may consult with legal counsel with
respect to the meaning or construction of this Agreement, their obligations or
duties hereunder or with respect to any action or proceeding or any question of
law, and they shall be fully protected with respect to any action taken or
omitted by them in good faith pursuant to the advice of legal counsel.
6.9 Spendthrift Provision. The Director's and Beneficiaries'
interests in the Deferral Accounts may not be anticipated, sold, encumbered,
pledged, mortgaged, charged, transferred,
alienated, assigned nor become subject to execution, garnishment or
attachment and any attempt to do so by any person shall render the Deferral
Accounts immediately forfeitable.
6.10 Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, or by nationally recognized overnight delivery service providing for a
signed return receipt, addressed to the Director at the home address set forth
in the Funds' records and to the Funds at the address set forth on the first
page of this Agreement, provided that all notices to the Funds shall be
directed to the attention of the Presidents of the Funds or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
6.11 Entire Agreement. This Agreement contains the entire
understanding between the Funds and the Director with respect to the payment of
non-qualified elective deferred compensation by the Fund to the Director.
Effective as of the date hereof, this Agreement replaces, and supersedes, all
other non-qualified elective deferred compensation agreements by and between
the Director and the Funds.
6.12 Interpretation of Agreement. Interpretations of, and
determinations (including factual determinations) related to, this Agreement
made by the Funds in good faith, including any determinations of the amounts of
the Deferral Accounts, shall be conclusive and binding upon all parties; and
the Funds shall not incur any liability to the Director for any such
interpretation or determination so made or for any other action taken by it in
connection with this Agreement in good faith.
6.13 Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the Funds and their successors and assigns
and to the Director and his heirs, executors, administrators and personal
representatives.
6.14 Severability. In the event any one or more provisions of this
Agreement are held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof and such other provisions shall remain in full force and
effect unaffected by such invalidity or unenforceability.
-9-
<PAGE> 12
6.15 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
-10-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
The Funds
________________________ By:_________________________
Witness Name:
Title:
________________________ ____________________________
Witness Director
-11-
<PAGE> 14
APPENDIX A
----------
AIM ADVISOR FUNDS, INC.
AIM EQUITY FUNDS, INC.
AIM FUNDS GROUP
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT SECURITIES FUNDS
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM VARIABLE INSURANCE FUNDS, INC.
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
<PAGE> 15
DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, I hereby make the following elections:
Deferral of Compensation
------------------------
Starting with Compensation to be paid to me with respect to
services provided by me to the AIM Funds after the date this election Form is
received by the AIM Funds, I hereby elect that 50 percent (50%) of my
Compensation (as defined under the Agreement) be reduced and that the Fund
establish a bookkeeping account credited with amounts equal to the amount so
reduced (the "Deferral Account"). The Deferral Account shall be further
credited with income equivalents as provided under the Agreement. I understand
that this election will remain in effect with respect to Compensation I earn in
subsequent years unless I modify or revoke it. I further understand that such
modification or revocation will be effective only prospectively and will apply
commencing with the Compensation I earn in the calendar year that begins after
the change is received by you.
Payment Date
------------
I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least two years
after the year this election is made) as the Payment Date for the amounts
credited to my Deferral Account pursuant to the election made above. If my
Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check
the appropriate box) want payment of such amounts to commence effective the
January 1 following my Retirement. I understand that amounts credited to my
Deferral Account may be paid to me prior to the Payment Date as provided in the
Agreement.
-5-
<PAGE> 16
Payment Method
--------------
I hereby elect to receive the amounts credited to my Deferral
Account in (check one)
o a single payment in cash
o quarterly installments for a period of ____ years (select no more
than 10 years)
o annual installments for a period of ____ (select no more than 10
years)
beginning within 30 days following the payment date selected above.
I understand that the amounts credited to my Deferral Account
shall remain the general assets of the AIM Funds and that, with respect to the
payment of such amounts, I am merely a general creditor of the AIM Funds. I
may not sell, encumber, pledge, assign or otherwise alienate the amounts
credited to my Deferral Account.
I hereby agree that the terms of the Agreement are
incorporated herein and are made a part hereof. Dated as of the day and year
first above written.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-6-
<PAGE> 17
DEFERRED COMPENSATION AGREEMENT
BENEFICIARY DESIGNATION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of _____________ by and between the undersigned and the
AIM Funds, I hereby make the following beneficiary designations:
I. Primary Beneficiary
-------------------
I hereby appoint the following as my Primary Beneficiary(ies)
to receive at my death the amounts credited to my Deferral Account under the
Agreement. In the event I am survived by more than one Primary Beneficiary,
such Primary Beneficiaries shall share equally in such amounts unless I
indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
-1-
<PAGE> 18
II. Secondary Beneficiary
---------------------
In the event I am not survived by any Primary Beneficiary, I
hereby appoint the following as Secondary Beneficiary(ies) to receive death
benefits under the Agreement. In the event I am survived by more than one
Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless
I indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
I understand that I may revoke or amend the above designations
at any time. I further understand that if I am not survived by a Primary or
Secondary Beneficiary, my Beneficiary shall be as set forth under the
Agreement.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-2-
<PAGE> 1
EXHIBIT 8(b)
CUSTODIAN CONTRACT
Between
AIM ADVISOR FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in U.S. Securities System . . . . . . . . . . . . . . . . . . . . . . . . 7
2.11 Fund Assets Held in the Custodian's Direct Paper System . . . . . . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.15 Communications Relating to Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . 10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Appointment of Foreign Sub-Custodians. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Foreign Securities Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Agreements with Foreign Banking Institutions . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Access of Independent Accountants of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Transactions in Foreign Custody Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Liability of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Reimbursement for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 Monitoring Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
3.13 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.14 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6. Actions Permitted Without Express Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. Opinion of Fund's Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11. Reports to Fund by Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . 17
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. Effective Period, Termination and Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15. Successor Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
19. Prior Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
20. Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
21. Shareholder Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 4
CUSTODIAN CONTRACT
This Contract between AIM Advisor Funds, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046, hereinafter
called the "Fund", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in seven
series, the AIM Advisor Cash Management Series, AIM Advisor Flex Fund, AIM
Advisor Income Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap
Value Fund, AIM Advisor MultiFlex Fund and AIM Advisor Real Estate Fund (such
series together with all other series subsequently established by the Fund and
made subject to this Contract in accordance with paragraph 17, being herein
referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the
assets of the Portfolios of the Fund, including securities which the Fund, on
behalf of the applicable Portfolio desires to be held in places within the
United States ("domestic securities") and securities it desires to be held
outside the United States ("foreign securities") pursuant to the provisions of
the Articles of Incorporation. The Fund on behalf of the Portfolio(s) agrees to
deliver to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by the Portfolio(s) from time to time,
and the cash consideration received by it for such new or treasury shares of
capital stock of the Fund representing interests in the Portfolios, ("Shares")
as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall on behalf of the applicable Portfolio(s) from
time to time employ one or more sub-custodians, located in the United States
but only in accordance with an applicable vote by the Board of Directors of the
Fund on behalf of the applicable Portfolio(s), and provided that the Custodian
shall have no more or less responsibility or liability to the Fund on account
of any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable
<PAGE> 5
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian in the United States
2.1 Holding Securities . The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to be held
by it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which am maintained pursuant to Section
2.10 in a clearing agency which acts as a securities depositary or in a
book-entry system authorized by the U.S. Department of the Treasury and certain
federal agencies (each, a "U.S. Securities System") and (b) commercial paper of
an issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian (the "Direct Paper System") pursuant to
Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a U.S.
Securities, System account of the Custodian or in the Custodian's Direct Paper
book entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from the Fund on behalf of the applicable Portfolio, which
may be continuing instructions when deemed appropriate by the parties, and only
in the following cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with, the provisions of Section
2.10 hereof;
4) To the depository agent in connection with tender or
other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or
other consideration is to be delivered to the Custodian;
2
<PAGE> 6
6) To the issuer thereof, or its agent, for transfer into
the name of the Portfolio or into the name of any nominee
or nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units; provided that in any such case, the new securities
are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities
prior to receiving payment for such securities except as
may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of interim
receipts or temporary securities for definitive
securities; provided that in any such case, the now
securities and cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of securities
made by the Portfolio, but only against receipt of
adequate collateral as agreed upon from time to time by
the Custodian and the Fund on behalf of the Portfolio,
which may be in the form of cash or obligations issued by
the United States government, its agencies or
instrumentalities, except that in connection with any
loans for which collateral is to be credited to the
Custodian's account in the book-entry system authorized
by the U.S. Department of the Treasury, the Custodian
will not be held liable or responsible for the delivery
of securities owned by the Portfolio prior to the receipt
of such collateral;
11) For delivery as security in connection with any
borrowings by the Fund on behalf of the Portfolio
requiring a pledge of assets by the Fund on behalf of the
Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the
3
<PAGE> 7
Securities Exchange Act of 1934 (the "Exchange Act") and
a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any
similar organization or organizations, regarding escrow
or other arrangements in connection with transactions by
the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding amount deposits
in connection with transactions by the Portfolio of the
Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in connection
with distributions in kind, as may be described from time
to time in the currently effective prospectus and
statement of additional information of the Fund, related
to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, hut only upon
receipt of, in addition to Proper Instructions from the
Fund on behalf of the applicable Portfolio, a certified
copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be
delivered, setting forth the purpose for which such
delivery is to be made., declaring such purpose to be a
proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Domestic securities hold by the
Custodian (other than bearer securities) shall be registered in
the name of the Portfolio or in the name of any nominee of the
Fund on behalf of the Portfolio or of any nominee of the Custodian
which nominee shall be assigned exclusively to the Portfolio,
unless the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment
companies having the same investment Adviser as the Portfolio, or
in the name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form.
If, however, the Fund directs the Custodian to maintain securities
in "street name", the Custodian shall utilize its best efforts
only to timely collect income due the Fund on such securities and
to notify the Fund on a best efforts basis only of relevant
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<PAGE> 8
corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the
Portfolio, other than cash maintained by the Portfolio in a bank
account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940, Funds held by the Custodian
for a Portfolio may be deposited by it to its credit as Custodian
in the Banking Department of the Custodian or in such other banks
or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be approved
by vote of a majority of the Board of Directors of the Fund. Such
funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the
Fund on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Portfolio, make federal funds available to such
Portfolio as of specified times agreed upon from time to time by
the Fund and the Custodian in the amount of checks received in
payment for Shares of such Portfolio which are deposited into the
Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3,
the Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held
hereunder to which each Portfolio shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for payment
all coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities
loaned pursuant to the provisions of Section 2.2(10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
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<PAGE> 9
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of a Portfolio in the following
cases only:
1) Upon the purchase of domestic securities, options,
futures contracts or options on futures contracts for the
account of the Portfolio but only (a) against the
delivery of such securities or evidence of title to such
options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm or
trust company doing business in the United States or
abroad which is qualified under the Investment Company
Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this
purpose) registered in the name of the Portfolio or in
the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, (b) in
the case of a purchase effected through a U.S.
Securities System, in accordance with the conditions set
forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between the
Fund on behalf of the Portfolio and the Custodian, or
another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt
evidencing purchase by the Portfolio of securities owned
by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities
from the Portfolio or (e) for transfer to a time deposit
account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt
of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as
defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section
2.2 hereof,
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by
the Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest,
taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund whether or not
such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing documents of
the Fund;
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<PAGE> 10
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on
behalf of the Portfolio, a certified copy of a resolution
of the Board of Directors or of the Executive Committee
of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring
such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase of
domestic securities for the account of a Portfolio is made by the
Custodian in advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund on behalf
of such Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the Investment
Company Act of 1940, as amended, to act as a custodian, as its
agent to carry out such of the provisions of this Article 2 as the
Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian
may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the book-entry
system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a
U.S. Securities System provided that such securities are
represented in an account ("Account") of the Custodian in
the U.S. Securities System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
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<PAGE> 11
2) The records of the Custodian with respect to securities
of the Portfolio which are maintained in a U.S.
Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from
the U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio upon (i) receipt of advice from
the U.S. Securities System that payment for such
securities has been transferred to the Account and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the
account of the Portfolio shall identify the Portfolio, be
maintained for the Portfolio by the Custodian and be
provided to the Fund at its request. Upon request,the
Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio in the form of a written advice
or notice and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting
each day's transactions in the U.S. Securities System for
the amount of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio
with any report obtained by the Custodian on the U.S.
Securities System's accounting system, internal
accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf
of the Portfolio the initial or annual certificate, as
the cast may be, required by Article 14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the Fund
for the benefit of the Portfolio for any loss or damage to
the Portfolio resulting from use of the U.S. Securities
System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of
any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such
rights as it may have against the U.S. Securities System;
at the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to
any claim against the U.S. Securities System or any other
person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or
damage.
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<PAGE> 12
2.11 Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to
the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are
represented in an account ("Account") of the Custodian in
the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities
of the Portfolio which are maintained in the Direct Paper
System shall identify by book-entry those securities
belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such payment and
transfer of securities to the account of the Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio, in the form of a written advice
or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal
accounting control as the Fund may reasonably request
from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and
on behalf of each such Portfolio, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section
2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD (or any futures commission
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<PAGE> 13
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating
cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio,
(iii) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666,
or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies and (iv) for other
proper corporate purposes, but only, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions from the Fund
on behalf of the applicable Portfolio, a certified copy of a
resolution of the Board of Directors or of the Executive
Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes
to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of
income or other payments with respect to domestic securities of
each Portfolio held by it and in connection with transfers of
securities.
2.14 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a
nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly
to the Fund for each Portfolio all written information
(including, without limitation, pendency of calls and maturities
of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written
by the Fund on behalf of the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio) received by
the Custodian from issuers of the securities being held for the
Portfolio. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Portfolio all written
information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the
Portfolio
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<PAGE> 14
shall notify the Custodian at least three business days prior to
the date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property the Fund Held
Outside of the United States.
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes
and instructs the Custodian to employ as sub-custodians for the
Portfolio's securities and other assets maintained outside the
United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as
defined in Section 5 of this Contract, together with a certified
resolution of the Fund's Board of Directors, the Custodian and
the Fund may agree to amend Schedule A hereto from time to time
to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Custodian to
cease the employment of any one or more such sub-custodians for
maintaining custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign
sub-custodians to: (a) "foreign securities", as defined in
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act
of 1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to
effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund,
the foreign securities of the Fund held by each foreign
sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the
Portfolios shall be maintained in a clearing agency which acts as
a securities depository or in a book-entry system for the central
handling of securities located outside of the United States (each
a "Foreign Securities System") only through arrangements
implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities
Systems and U.S. Securities Systems are collectively referred to
herein as the "Securities Systems"). Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 [Reserved.]
3.5 Agreements with Foreign Banking Institutions. Each agreement with
a foreign banking institution shall provide that: (a) the assets
of each Portfolio will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the
foreign banking institution or its creditors or agent, except a
claim of payment for their safe custody or administration; (b)
beneficial ownership for the assets of each Portfolio will be
freely transferable without
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<PAGE> 15
the payment of money or value other than for custody or
administration; (c) adequate records will be maintained
identifying the assets as belonging to each applicable Portfolio;
(d) officers of or auditors employed by, or other representatives
of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund,
will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement
with the Custodian; and (e) assets of the Portfolios held by the
foreign sub-custodian will be subject only to the instructions of
the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of
the Fund, the Custodian will use its best efforts to arrange for
the independent accountants of the Fund to be afforded access to
the books and records of any foreign banking institution employed
as a foreign sub-custodian insofar as such books and records
relate to the performance of such foreign banking institution
under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of
the securities and other assets of the Portfolio(s) held by
foreign sub-custodians, including but not limited to an
identification of entities having possession of the Portfolio(s)
securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account
maintained by a foreign banking institution for the Custodian on
behalf of each applicable Portfolio indicating, as to securities
acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis
mutandis to the foreign securities of the Fund held outside the
United States by foreign sub-custodians. (b) Notwithstanding any
provision of this Contract to the contrary, settlement and
payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for
the account of each applicable Portfolio may be effected in
accordance with the customary established securities trading or
securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser
or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution
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<PAGE> 16
to exercise reasonable care in the performance of its duties and
to indemnify, and hold harmless, the Custodian and each Fund from
and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's performance
of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claims against a foreign banking institution as a
consequence of any such loss, damage, cost, expense, liability or
claim if and to the extent that the Fund has not been made whole
for any such loss, damage, cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the
acts or omissions of a foreign banking institution to the same
extent as set forth with respect to sub-custodians generally in
this Contract and, regardless of whether assets are maintained in
the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated
by paragraph 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting
from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in delegating
custody duties to State Street London Ltd., the Custodian shall
not be relieved of any responsibility to the Fund for any loss
due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other
losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God,
nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised reasonable
care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the
Custodian or its nominee shall incur or be assessed any taxes,
charges; expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as
may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at
any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolios assets to the
extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually
to the Fund, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such
information shall be similar in kind and scope to that furnished
to the Fund in connection with the initial approval of this
Contract. In addition, the Custodian will promptly inform the
Fund in the event that the Custodian learns of a material adverse
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<PAGE> 17
change in the financial condition of a foreign sub-custodian or
any material loss of the assets of the Fund or in the case of any
foreign sub-custodian not the subject of an exemptive order from
the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial
likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each
case computed in accordance with generally accepted U.S.
accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody
of the Portfolios assets are maintained in a foreign branch of a
banking institution which is a "bank" as defined by Section
2(a)(5) of the Investment Company Act of 1940 meeting the
qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of this Contract. (b) Cash held for each
Portfolio of the Fund in the United Kingdom shall be maintained in
an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability
for any obligations now or hereafter imposed on the Fund or the
Custodian as custodian of the Fund by the tax law of the United
States of America or any state or political subdivision thereof.
It shall be the responsibility of the Fund to notify the
Custodian of the obligations imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of jurisdictions other
than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard
to such tax law shall be to use reasonable efforts to assist the
Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such
information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the
Fund
The Custodian shall receive from the distributor for the Shares
or from the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund on behalf of each such Portfolio and
the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.
From such funds as may be available for the purpose but subject
to the limitations of the Articles of Incorporation and any applicable votes of
the Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of
14
<PAGE> 18
Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall honor
checks drawn on the Custodian by a holder of Shares, which checks have been
furnished by the Fund to the holder of Shares, when presented to the Custodian
in accordance with such procedures and controls as are mutually agreed upon
from time to time between the Fund and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract includes the
following:
(a) a writing signed or initialed by one or more person or persons
as the Board of Directors shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type or transaction
involved, including a specific statement of the purpose for which such action
is requested;
(b) communications effected directly between electro-mechanical or
electronic devices provided that the Board of Directors and the Custodian are
satisfied that procedures relating to the use of such electro-mechanical and
electronic devices afford adequate safeguards for the Portfolios' assets and
have been followed. The Fund shall provide a Certificate of the Secretary or the
Assistant Secretary as to the authorization for use of electro-mechanical or
electronic devices by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Fund's Board of Directors;
(c) oral instructions will be considered Proper Instructions if
the Custodian reasonably believes them to have been given by a person authorized
to give such instructions with respect to the transaction involved. The Fund
shall cause all oral instructions to be confirmed in writing or through
electro-mechanical or electronic devices; or
(d) Proper Instructions in connection with a segregated asset
account which has been established pursuant to Section 2.12, hereof, shall
include instructions received by the Custodian in accordance with the
provisions of any three-party agreement, to which the Fund and the Custodian are
each a party, governing such account or accounts.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority
from the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to
its duties under this Contract, provided that all such
payments shall be accounted for to the Fund on behalf of
the Portfolio;
15
<PAGE> 19
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Portfolio except as
otherwise directed by the Board of Directors of the
Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Directors of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or
of any action by the Board of Directors pursuant to the Articles of
Incorporation as described in such vote, and such vote may be considered as in
full force and effect until receipt by the Custodian of written notice to the
contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of Directors of
the Fund to keep the books of account of each Portfolio and/or compute the net
asset value per share of the outstanding shares of each Portfolio or, if
directed in writing to do so by the Fund on behalf of the Portfolio, shall
itself keep such books of account and/or compute such net asset value per share.
If so directed, the Custodian shall also calculate daily the net income of the
Portfolio as described in the Fund's currently effective prospectus related to
such Portfolio and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an officer of
the Fund to do so, shall advise the Transfer Agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per share and the daily income of each Portfolio shall be made at
the time or times described from time to time in the Fund's currently effective
prospectus related to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31 thereof
16
<PAGE> 20
and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of
the Fund and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include certificate numbers
in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on
behalf of each applicable Portfolio may from time to time request, to obtain
from year to year favorable opinions from the Fund's independent accountants
with respect to its activities hereunder in connection with the preparation of
the Fund's Form N-1A, and Form N-SAR or other annual reports to the Securities
and Exchange Commission and with respect to any other requirements of such
Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for
its services and expenses as Custodian, as agreed upon from time to time
between the Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title, validity
or genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept
17
<PAGE> 21
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or
willful misconduct or the negligence or willful misconduct of a sub-custodian
or agent, the Custodian shall be without liability to the Fund for any loss,
liability, claim or expense resulting from or caused by; (i) events or
circumstances beyond the reasonable control of the Custodian or any
sub-custodian or Securities System or any agent or nominee of any of the
foregoing, including, without limitation, nationalization or expropriation,
imposition of currency controls or restrictions, the interruption, suspension
or restriction of trading on or the closure of any securities market, power or
other mechanical failures or interruptions, communications disruptions, acts of
war or terrorism, riots, revolutions, work stoppages, natural disasters or other
similar events or acts; (ii) errors by the Fund or the Investment Advisor in
their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by
a Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system that is not an affiliate of the Custodian to deliver to the Custodian's
sub-custodian or agent securities purchased or in the remittance or payment
made in connection with securities sold; (v) any delay or failure of any
company, corporation, or other body in charge of registering or transferring
securities in the name of the Custodian, the Fund, the Custodian's
sub-custodians, nominees or agents or any consequential losses arising out of
such delay or failure to transfer such securities including non-receipt of
bonus, dividends and rights and other accretions or benefits; (vi) delays or
inability to perform its duties due to any disorder in market infrastructure
with respect to any particular security or Securities System; and (vii) any
provision of any present or future law or regulation or order of the United
States of America, or any state thereof, or any other country, or political
subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of
a foreign banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to
take any action with respect to securities, which action involves the payment
of money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries
or agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) for the benefit of a Portfolio or in the event that the Custodian
or
18
<PAGE> 22
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any
time held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio,
as required by Rule 17f-4 under the Investment Company Act of 1940, as amended
and that the Custodian shall not with respect to a Portfolio act under Section
2.11 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors has approved
the initial use of the Direct Paper System by such Portfolio; provided further
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and further provided, that the Fund on behalf
of one or more of the Portfolios may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Directors of the Fund, the
Custodian shall, upon termination; (i) deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder; (ii)
transfer to an account of the successor custodian all of the securities of each
such Portfolio held in a Securities System; and (iii)
19
<PAGE> 23
transfer to the successor custodian all records created and maintained by the
Custodian with respect to each such Portfolio pursuant to Section 9.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Directors shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as deemed in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to
transfer to an account of such successor custodian all of the securities of
each such Portfolio held in any Securities System, Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain
in the possession of the Custodian after the date of termination hereof owing
to failure of the Fund to procure the certified copy of the vote referred to or
of the Board of Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian
and the Fund on behalf of each of the Portfolios, may from time to time agree
on such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation
of the Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of
Shares in addition to the AIM Advisor Cash Management Fund, AIM Advisor Flex
Fund, AIM Advisor Income Fund, AIM Advisor International Value Fund, AIM
Advisor Large Cap Value Fund, AIM Advisor MultiFlex
20
<PAGE> 24
Fund and AIM Advisor Real Estate Fund with respect to which the Fund desires to
have the Custodian render services as custodian under the terms hereof, it
shall so notify the Custodian in writing, and if the Custodian agrees in
writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof,
all prior contracts between the Fund on behalf of each of the Portfolios and
the Custodian relating to the custody of the Fund's assets.
20. Reproduction of Documents
This Contract and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process. The
parties hereto all/each agree that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding,
whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
21. Shareholder Communications
Securities and Exchange Commission Rule l4b-2 requires banks
which hold securities for the account of customers to respond to requests by
issuers of Securities for the names, addresses and holdings of beneficial
owners, of securities of that issuer held by the bank unless the beneficial
owner has expressly objected to disclosure of this information. In order to
comply with the rule, the Custodian needs the Fund to indicate whether the Fund
authorizes the Custodian to provide the Fund's name, address, and share
position to requesting companies whose stock the Fund owns. If the Fund tells
the Custodian "no", the Custodian will not provide this information to
requesting companies. If the Fund tells the Custodian "yes" or do not check
either "yes" or "no" below, the Custodian is required by the rule to treat the
Fund as consenting to disclosure of this information for all securities owned
by the Fund or any funds or accounts established by the Fund. For the Fund's
protection, the Rule prohibits the requesting company from using the Fund's
name and address for any purpose other than corporate communications. Please
indicate below whether the Fund consent or object by checking one of the
alternatives below.
21
<PAGE> 25
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
No [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.
22
<PAGE> 26
IN WITNESS WHEREOF, each of the parties has caused this instrument
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 4th day of August 1997.
ATTEST AIM ADVISOR FUNDS, INC.
OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
- ----------------------- -----------------------------
Name: Ofelia M. Mayo Name: Robert H. Graham
Title: President
ATTEST STATE STREET BANK AND TRUST
COMPANY
/s/ THOMAS M. LENZ By: /s/ RONALD E. LOGUE
- ----------------------- ----------------------------
Thomas M. Lenz Ronald E. Logue
Executive Vice President
<PAGE> 27
SCHEDULE A
TO CUSTODIAN CONTRACT BETWEEN
AIM ADVISOR FUNDS, INC. AND
STATE STREET BANK AND TRUST COMPANY
The following foreign sub-custodians have been approved by the Board of
Directors of AIM Advisor Funds, Inc. for use as sub-custodians for the
securities and other assets of AIM Advisor Flex Fund, AIM Advisor International
Value Fund, AIM Advisor Large Cap Value Fund, AIM Advisor MultiFlex Fund, and
AIM Advisor Real Estate Fund:
Country Sub-Custodian Approved
- ------- -------------
Argentina Citibank, N.A. X
Australia Westpac Banking Corporation X
Austria GiroCredit Bank Aktiengesellschaft X
der Sparkassen
Bahrain The British Bank of the Middle East
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank X
Belgium Generale Bank X
Bermuda The Bank of Bermuda Limited
Botswana Barclays Bank of Botswana Limited
Brazil Citibank, N.A. X
Canada Canada Trustco Mortgage Company X
Chile Citibank, N.A. X
People's Republic The Hongkong and Shanghai Banking X
of China Corporation Limited, Shanghai and
Shenzhen branches
Colombia Cititrust Colombia S.A. X
Sociedad Fiduciaria
Cyprus Barclays Bank PLC X
Cyprus Offshore Banking Unit
Czech Republic Ceskoslovenska Obchodni Banka A.S. X
1
<PAGE> 28
Country Sub-Custodian Approved
- ------- ------------- --------
Denmark Den Danske Bank X
Ecuador Citibank, N.A.
Egypt National Bank of Egypt X
Finland Merita Bank Limited X
France Banque Paribas X
Germany Dresdner Bank AG X
Ghana Barclays Bank of Ghana Limited
Greece National Bank of Greece S.A. X
Hong Kong Standard Chartered Bank X
Hungary Citibank Budapest Rt. X
India Deutsche Bank AG X
The Hongkong and Shanghai Banking X
Corporation Limited
Indonesia Standard Chartered Bank X
Ireland Bank of Ireland X
Israel Bank Hapoalim B.M. X
Italy Banque Paribas X
Ivory Coast Societe Generale de Banques
en Cote d Ivoire
Japan The Daiwa Bank, Limited
The Fuji Bank, Limited
The Sumitomo Trust & Banking Co., Ltd. X
Jordan The British Bank of the Middle East
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited
Republic of Korea SEOULBANK X
2
<PAGE> 29
Country Sub-Custodian Approved
- ------- ------------- --------
Lebanon The British Bank of the Middle East
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Malaysia Standard Chartered Bank Malaysia Berhad X
Mauritius The Hongkong and Shanghai Banking
Corporation Limited
Mexico Citibank Mexico, S.A. X
Morocco Banque Commerciale du Maroc
Netherlands MeesPierson N.V. X
New Zealand ANZ Banking Group (New Zealand) Limited X
Norway Christiania Bank og Kreditkasse X
Oman The British Bank of the Middle East
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG X
Peru Citibank, N.A. X
Philippines Standard Chartered Bank X
Poland Citibank Poland S.A. X
Portugal Banco Comercial Portugues X
Russia Credit Suisse First Boston, Zurich X
via Credit Suisse First Boston Limited, Moscow
Singapore The Development Bank of Singapore Ltd. X
Slovak Republic Ceskoslovenska Obchodna Banka A.S. X
South Africa Standard Bank of South Africa Limited X
Spain Banco Santander, S.A. X
Sri Lanka The Hongkong and Shanghai Banking X
Corporation Limited
Swaziland Barclays Bank of Swaziland Limited
3
<PAGE> 30
Country Sub-Custodian Approved
- ------- ------------- --------
Sweden Skandinaviska Enskilda Banken X
Switzerland Union Bank of Switzerland X
Taiwan - R.O.C. Central Trust of China X
Thailand Standard Chartered Bank X
Turkey Citibank, N.A. X
United Kingdom State Street Bank and Trust Company X
Uruguay Citibank, N.A. X
Venezuela Citibank, N.A. X
Zambia Barclays Bank of Zambia Limited
Zimbabwe Barclays Bank of Zimbabwe Limited
Certified:
/s/ OFELIA M. MAYO
- ---------------------------------
Ofelia M. Mayo
Assistant Secretary
Date: November 7, 1997
4
<PAGE> 31
PAYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 4th day of August, 1997, by
and among AIM Advisor Funds, Inc., a Maryland corporation (the "Fund"), A I M
Advisors, Inc., a Delaware corporation ("AIM"), and State Street Bank and Trust
Company, a Massachusetts trust company ("State Street").
BACKGROUND
The Fund and AIM have entered into an Operating Services Agreement
dated as of August 4, 1997 (as amended or supplemented from time to time, the
"Operating Agreement"), pursuant to which AIM has agreed to provide, or arrange
for others to provide, certain operational services which are necessary for the
day-to-day operations of the series portfolios (the "Series") of the Fund. Such
operational services include, among other things, the provision or arranging for
the provision, at AIM's expense, of custodial services for the Series.
The Fund and State Street have entered into a Custodian Contract dated
as of August 4, 1997 (as amended or supplemented from time to time, the
"Custodian Agreement"), pursuant to which State Street is providing custodial
services for the Series. Pursuant to the Operating Agreement, AIM is responsible
for payments owed to State Street under the Custodian Agreement.
The parties hereto desire to enter into this Agreement to establish AIM
as the party responsible for payments owed to State Street under the Custodian
Agreement.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. PAYMENT OBLIGATIONS.
The Fund hereby assigns to AIM all payments, fees, charges and other
expenses owed by the Fund or any Series to State Street from time to time
pursuant to Section 12 of the Custodian Agreement (the "Payment Obligations"),
and AIM hereby assumes such Payment Obligations. AIM shall discharge such
Payment Obligations in accordance with the terms of the Custodian Agreement.
State Street hereby accepts such assignment and assumption and shall credit
payments made by AIM pursuant to this Agreement against Payment Obligations
outstanding under the Custodian Agreement.
Notwithstanding the foregoing assignment and assumption, State Street
shall send to the Fund all invoices and other expense statements relating to
Payment Obligations owed to it under the Custodian Agreement.
2. NO OTHER OBLIGATIONS.
The obligations of the Fund and the Series assigned to and assumed by
AIM under this Agreement are limited to the Payment Obligations, and AIM shall
not be liable to the Fund, any Series or State Street for the performance of any
other obligations of the Fund or any Series under the Custodian Agreement.
<PAGE> 32
3. TERM OF AGREEMENT.
This Agreement shall remain in effect until such time as the Fund and
AIM have jointly notified State Street in writing that the Operating Agreement
has been terminated.
This Agreement shall automatically terminate upon the termination of
the Custodian Agreement and the satisfaction by the parties of all obligations
accrued thereunder as of the date of termination of such Custodian Agreement.
4. MISCELLANEOUS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and any party may execute any counterpart, all of which,
when taken together, shall constitute one and the same instrument.
A facsimile signature of any party hereto shall constitute the legal,
valid and binding execution of this Agreement by such party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AIM ADVISOR FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
----------------------------
President
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------------
President
STATE STREET BANK AND TRUST
COMPANY
By: /s/ ILLEGIBLE
----------------------------------
2
<PAGE> 1
EXHIBIT 9(d)(1)
REMOTE ACCESS
-------------
AND
---
RELATED SERVICES AGREEMENT
--------------------------
AGREEMENT dated as December 23, 1994 between each registered investment
company listed on the signature pages hereof, either for itself or, with respect
to each such company that is a series investment company, on behalf of each of
the series or class named on the signature pages hereof (the "Fund") and THE
SHAREHOLDER SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with
principal offices at One Exchange Place, Boston, Massachusetts 02109.
W I T N E S S E T H
-------------------
That for and in consideration of the mutual promises hereinafter set forth,
the Fund and TSSG agree as follows:
1. Appointment of TSSG. The Fund appoints TSSG as servicing agent to provide
and support remote terminal access through dedicated transmission lines to
its computerized data processing record keeping system for Fund shareholder
accounting more fully described on the attached Schedule A (the "TSSG
System") installed on TSSG computer hardware and using TSSG software ("TSSG
Facilities") to provide and support remote terminal access to the TSSG
System and the TSSG Facilities for the maintenance of Fund shareholder
records, processing of information and generation of information with
respect thereto. TSSG hereby accepts such appointment for the compensation
described below.
2. Oral and Written Instructions. "Written Instructions" shall mean a written
communication signed by a person reasonably believed by TSSG to be a person
named on the list of authorized persons as it may be amended by amendment
provided by the Fund to TSSG from time to time ("Schedule B"). "Oral
Instructions" shall mean instructions, other than Written Instructions,
actually received by TSSG from a person reasonably believed by TSSG to be
an Authorized Person listed on Schedule B. Written communication shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original or
other process.
3. Compensation.
(a) The Fund will compensate TSSG for the performance of its obligations
hereunder in accordance with the Fee Schedule attached hereto as
Schedule C. Such fees may be adjusted from time to time by attaching
to or substituting for Schedule C a revised Fee Schedule, dated and
signed by an authorized officer of each party hereto.
<PAGE> 2
(b) In addition to the fees payable pursuant to Schedule C, the Fund will
pay all out-of-pocket expenses incurred by TSSG in performing its
duties hereunder. Out-of-pocket expenses shall include the items
specified in the written schedule of out-of-pocket charges attached
hereto as Schedule D. Upon written approval of the Fund, Schedule D
may be modified by TSSG. The Fund agrees to approve all reasonable
changes in Schedule D. Unscheduled out-of-pocket expenses shall be
limited to those out-of-pocket expenses directly related to TSSG's
performance of its obligations hereunder.
(c) TSSG will provide an invoice as soon as practicable after the end of
each calendar month detailed in accordance with Schedule C and
Schedule D. The Fund will pay to TSSG the amount so billed within
fifteen (15) days after the Fund's receipt of the invoice.
4. Duties of TSSG.
(a) Subject to the provisions of this Agreement, the Fund hereby agrees to
use or employ the TSSG System and the TSSG Facilities to maintain
certain Fund shareholder records and generate output with respect to
the Fund's shareholders, and subject to the provisions of this
Agreement, TSSG will provide the use of the TSSG System and the TSSG
Facilities to maintain Fund shareholder records and generate such
output with respect to the Fund's shareholders.
(b) TSSG agrees to provide to the Fund at its facility located at Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046 or at such other
location as may be mutually agreed upon in writing by TSSG and the
Fund (the "Fund Facility") remote access to the use of information
processing capabilities of the TSSG System as it may be modified from
time to time by TSSG.
5. Changes and Modifications.
(a) During the term of this Agreement, TSSG will make available for Fund
use, without additional costs, all modifications and improvements to
the TSSG System (excluding those modifications and improvements TSSG
views as additional products and/or those developed exclusively for
other TSSG clients) made in the ordinary course of business. In
addition, TSSG will use its best efforts to make reasonable changes to
the TSSG System requested by the Fund, subject to payment of
additional fees as mutually agreed upon in writing and as reflected in
Schedule C.
(b) TSSG shall have the right, at any time, and from time to time, to
alter and modify any systems, programs, procedures or facilities used
or employed in performing its duties and obligations hereunder (a
"System Modification"), provided that no
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<PAGE> 3
System Modification shall, without the consent of the Fund, materially
adversely change or affect the operations and procedures of the Fund
in using or employing the TSSG System or the TSSG Facilities
hereunder. TSSG will use its best efforts to notify the Fund in
writing at least five business days prior to implementing any System
Modification which impacts or effects AFS' day to day operations, and
in any event by 8 a.m. CST the following business day.
(c) TSSG agrees to make any System Modifications necessary to meet
federal, state or local government or self-regulatory organization
requirements ("Regulatory Adherence Enhancements") in a timely
fashion. TSSG agrees to advise the Fund promptly upon notification of
any change in or receipt of any information or advice concerning any
change in the requirements of any federal, state, local or
self-regulatory organization which might require such System
Modifications. The Fund shall obtain any additional software required
to comply with such changes in federal, state, and local government or
self regulatory organization requirements. Regulatory Adherence
Enhancements shall be limited to technically and commercially
practical System modifications which are within the scope of the
functions, capabilities and any database of the TSSG System. TSSG will
provide Regulatory Adherence Enhancements only after final
specification, agreed upon by TSSG, the Fund and affected third
parties, have been established and delivered to TSSG.
(d) During the term of this Agreement TSSG shall expend no less than
$1,000,000 (one million dollars) per calendar year for the enhancement
and maintenance of TSSG's recordkeeping and associated system that are
utilized by TSSG to provide services to the Fund under this Agreement
(or a successor Remote Service Agreement). At least once each calendar
year, TSSG shall provide the Fund with a schedule of the enhancements
planned by the TSSG for the succeeding 12 month period.
6. Duties of the Fund.
(a) The Fund will transmit all information and data required by TSSG
hereunder to the TSSG Facilities in the format and form specified by
TSSG, so that the output produced by the Fund shall be complete and
accurate when it is generated by the TSSG System and the TSSG
Facilities. The Fund shall be responsible and liable for the costs and
expenses of regenerating any output if the Fund provides nonconforming
or erroneous data or shall have failed to transmit any such data or
information or verify any such data and information when it is
generated by the TSSG System and the TSSG Facilities.
(b) In the event the Fund shall erroneously transmit information or shall
transmit incorrect information or data to the TSSG System or the TSSG
Facilities, the Fund
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<PAGE> 4
shall correct such information and data and retransmit the same to the
TSSG System or to the TSSG Facilities. Upon consent of the Fund, which
shall not be unreasonably withheld, TSSG shall take the necessary
steps at Fund expense to correct any files affected by the original
incorrect transmission.
(c) In the event the TSSG System malfunctions or a TSSG programming error
(other than programming changes made pursuant to paragraph 5(a)
above), causes an error or mistake in any of the output generated by
the TSSG System under the terms of this Agreement, TSSG will, at its
expense, correct and retransmit such output so long as the Fund has
notified TSSG of such error or mistake within five (5) business days
of its discovery and the data used to generate such output is
available as set forth in Schedule E attached hereto.
If such data is available as set forth in Schedule E, the Fund shall
take reasonable necessary steps to manually correct any records due to
a TSSG system malfunction or programming error that TSSG is unable to
correct systematically and the parties shall mutually agree upon the
allocation of expenses related to such manual processing.
7. System Access and Training.
(a) TSSG shall provide the Fund on-line access as provided for and set
forth in the attached Schedule F, and agrees to meet the performance
standards set forth therein. Additional access to the TSSG System may
be arranged by mutual agreement of the parties.
(b) The Fund will reimburse TSSG for any reasonable costs and expenses
incurred for training hereunder. All travel and other out-of-pocket
expenses incurred by Fund personnel in connection with and during the
training periods shall be borne by the Fund.
8. Indemnification. TSSG shall not be responsible for and the Fund shall
indemnify and hold TSSG harmless from and against any and all claims,
costs, expenses (including reasonable attorneys' fees), losses, damages,
charges, payments and liabilities of any sort or kind which may be asserted
against TSSG or for which TSSG may be held to be liable (a "Claim")
arising out of or attributable to any of the following:
(a) Any actions of TSSG required to be taken pursuant to this Agreement
unless such Claim resulted from a negligent act or omission to act or
bad faith by TSSG in the performance of its duties hereunder.
(b) The Fund's failure to use and employ the TSSG System and the TSSG
Facilities in accordance with the procedures set forth in any on-line
documentation made
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<PAGE> 5
available to the Fund, the Fund's failure to utilize the control
procedures set forth and described in the on-line user documentation,
or the Fund's failure to verify promptly reports or output received
through use of the TSSG System and the TSSG Facilities.
(c) The Fund's errors and mistakes in the use of the TSSG System, TSSG
Facilities and control procedures.
(d) TSSG's reasonable reliance on, or reasonable use of information, data,
records and documents received by TSSG from the Fund in the
performance of TSSG's duties and obligations hereunder.
(e) The reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of the Fund.
(f) The Fund's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the Fund's negligence or
misconduct or the breach of any representation or warranty of the Fund
made herein.
(g) Unavailability of communications or utilities facilities or other
equipment failures provided TSSG has maintained such equipment
appropriately, Acts of God, acts of the public enemy,
governmentally-mandated priorities in allocating its services, labor
disputes, fires, floods, strikes, riots or war or other causes beyond
its control.
9. Standard of Care.
(a) TSSG shall at all times act in good faith and agrees to use its best
efforts within commercially reasonable standards to insure the
accuracy of all services performed under this Agreement, but assumes
no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or
willful misconduct or that of its employees.
(b) Notwithstanding the foregoing Section 9(a) or anything else contained
in this Agreement to the contrary, TSSG's liability hereunder shall,
in no event exceed four million dollars ($4,000,000.00).
The parties agree to review the limitation of liability provision set
forth in this Section 9(b) on an annual basis.
10. Instructions. TSSG may apply at any time to a person listed as an
Authorized Person identified on Schedule B for instructions with respect to
any matter arising in connection with this Agreement. TSSG may also consult
with legal counsel for the Fund or, at
5
<PAGE> 6
TSSG's expense, its own legal counsel with respect to actions to be taken
hereunder. TSSG shall not be liable for, and shall be indemnified by the
Fund against, any Claim arising from any action taken or omitted to be
taken by TSSG in good faith in reliance upon such instruction from the
Fund or upon the advice of such legal counsel.
11. Consequential Damages. In no event and under no circumstances shall either
party under this Agreement be liable to the other party for consequential
or indirect loss of profits, reputation or business or any other special
damages under any provision of this Agreement or for any act or failure to
act hereunder.
12. Covenants of TSSG.
(a) TSSG shall maintain the appropriate computer files of all required
information and data transmitted to the TSSG Facilities by the Fund,
provided, however, that TSSG shall not be responsible or liable for
any damage, alterations, modifications thereto or failure to maintain
the same if the Fund made, or TSSG made at the Fund's request, such
changes, alterations or modifications or if the Fund causes the
failure. It is expressly understood that all such shareholder records
transmitted by the Fund and maintained by TSSG remain the exclusive
property of the Fund.
(b) All information furnished by the Fund to TSSG is confidential and TSSG
agrees that it shall not disclose such information to any third party
except pursuant to Written or Oral Instructions received from the Fund
or to the extent that TSSG is required by law to make such disclosure.
13. Covenants of the Fund. The Fund shall utilize and employ all reasonable
control procedures available under the TSSG System of which the Fund may be
advised. The Fund will promptly advise TSSG of any errors or mistakes in
the data or information transmitted to the TSSG Facilities or in the
records maintained by TSSG or output generated hereunder. The Fund will
verify the accuracy of all output it receives consistent with industry
custom and practice by utilizing proper auditing procedures.
All information furnished to or obtained by the Fund pertaining to the TSSG
Facilities, the TSSG System, or TSSG procedures, data bases and programs is
confidential and proprietary to TSSG. The Fund shall not disclose such
information to any third party except to the extent that the Fund is
required by law to make such disclosures.
14. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above and shall continue in effect through December 31, 1997 ("Initial
Term").
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<PAGE> 7
(b) Unless it is the intention of either party for this Agreement to
terminate upon the expiration of the Initial Term, within six (6)
months prior to the end of the Initial Term but no later than such
date, AIM and TSSG will negotiate diligently and in good faith and
either (i) enter into an agreement extending the term of this
Agreement; or (ii) enter into a new agreement for TSSG to provide
remote services substantially similar to those contemplated hereunder.
(c) Notwithstanding the foregoing, if a party hereto is guilty of a
material failure to perform its duties and obligations hereunder
(a "Defaulting Party") the other party (the "Non-Defaulting Party")
may give written notice thereof to the Defaulting Party, and if such
material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written notice of
such termination to the Defaulting Party. If TSSG is the
Non-Defaulting Party, its termination of this Agreement shall not
constitute a waiver of any other rights or remedies of TSSG with
respect to services performed prior to such termination or rights of
TSSG to be reimbursed for out-of-pocket expenses. In all cases,
termination by the Non-Defaulting Party shall not constitute a
waiver by the Non-Defaulting Party of any other rights it might have
under this Agreement or otherwise against the Defaulting Party.
15. Post-Termination Procedures. Upon termination for any reason by either
party to this Agreement TSSG shall promptly, at the Fund's expense, provide
immediate and full access to the Fund data files on magnetic tape in
machine readable form and shall cooperate with the Fund in its efforts to
transfer all such data files to another person chosen by the Fund. In
addition, TSSG agrees to return, at the expense of the terminating party,
all backup tapes and other storage media upon which Fund data is then
stored.
16. Amendment. This Agreement may only be amended or modified by written
agreement executed by both parties.
17. Assignment. This Agreement and any interest hereunder shall inure to
the benefit of and be binding upon the Parties and their respective
successors, legal representatives and permitted assigns including the
successor entity in any merger or reorganization of the Funds. Except as
otherwise expressly provided for in this Agreement, neither Party may
assign or delegate this Agreement or any of its rights or obligations
without the other Party's prior approval which shall not be unreasonably
withheld. Upon prior notice to the Fund, TSSG may assign this Agreement to
(i) any person in connection with the merger or consolidation of TSSG into
such person, or the sale of all or substantially all of the assets of TSSG
to such person or (ii) any direct or indirect subsidiary of First Data
Corporation in connection with any corporate reorganization. Any attempt to
assign, delegate or otherwise transfer this Agreement in violation of this
Section will be voidable by the other party.
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<PAGE> 8
18. Subcontracting. TSSG may subcontract to agents the services required to be
performed pursuant to this Agreement and the Schedules hereto, if any. The
appointment of any such agent shall not relieve TSSG of its
responsibilities hereunder.
19. Use of TSSG's Name. The Fund shall not use TSSG's name in any Prospectus,
Statement of Additional Information, Shareholders's Report, sales
literature or other material relating to the Fund without TSSG's prior
written approval unless such use is required by law or merely refers in
accurate terms to the services rendered hereunder. Any reference to TSSG
shall include a statement to the effect that it is an indirect, wholly
owned subsidiary of First Data Corporation.
20. Use of the Fund's Name. Except as provided herein, TSSG shall not use the
name of the Fund, its Advisor or material relating to any of them on any
documents or forms (other than internal documents) without the Fund's prior
written approval unless such use is required by law or merely refers in
accurate terms to the services rendered hereunder.
21. Security.
(a) TSSG will provide the Fund with a User Identifier (also known as
"User I.D.") and a User Password. TSSG will also assign the initial
Operator Password to each of the Fund's employees who are authorized
to access the TSSG System. The Operator Passwords may be changed at
any time in the discretion of the Fund without any notice to or
knowledge of TSSG by using procedures set forth in the user manual.
(b) The Fund agrees that it is responsible for selection, use and
protection of the confidentiality of passwords; however, TSSG may for
security reasons at any time and from time to time, upon seven days
written notice to the Fund (or immediately upon notice by telephone,
confirmed in writing, in the event of an emergency), deny access to
the TSSG System until one or more User I.D.s is changed by the Fund.
(c) TSSG will provide the Fund with online procedures enabling the Fund to
reset passwords, correct password violations and add/change/delete
User I.D.s within existing security profiles.
(d) TSSG will use its best efforts to ensure that the Fund's data files
which are input into the TSSG System will remain confidential and
protected from unauthorized access by third persons. Specifically,
TSSG will adhere to its normal security procedures for protection of
computer-stored files or programs from unauthorized access. It is
agreed that such procedures will be subject to review by the Fund and
audit by its independent accountants and that TSSG will take under
advisement
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<PAGE> 9
recommendations of such independent accountants concerning changes to
such procedures.
(e) The Fund or duly authorized independent auditors will have the right
upon 5 business days' notice under this Agreement to perform on-site
audits of records and accounts directly pertaining to Fund shareholder
accounts serviced by TSSG facilities in accordance with reasonable
procedures and at reasonable frequencies.
(f) The parties agree that all tapes, books, user manuals, instructions,
records, information and data pertaining to the business of the other
party, the TSSG System and the Fund clients services by the Fund which
are exchanged or received pursuant to the negotiation of or carrying
out of this Agreement shall remain confidential except to the extent
required by applicable laws, and shall not be voluntarily disclosed to
any other person and that all such tapes, books, reference manuals,
instructions, records, information and data in the possession of each
of the parties hereto shall be returned to the party from whom it was
obtained upon the termination or expiration of this Agreement.
(g) The Fund acknowledges that TSSG has proprietary rights in and to the
TSSG System and any other TSSG programs, data basis, supporting
documentation or procedures ("TSSG Protected Information") of which
the Fund or its employees or agents become aware as a result of the
Fund's access to the TSSG System or TSSG Facilities and that the TSSG
Protected Information constitutes confidential material and trade
secrets of TSSG. The Fund agrees to maintain the confidentiality of
the TSSG Protected Information. The Fund acknowledges that any
unauthorized use, misuse, disclosure or taking of TSSG Protected
Information which is confidential or which is a trade secret, whether
residing or existing internally or externally to a computer, computer
system or computer network, or the knowing and unauthorized accessing
or causing to be accessed of any computer, computer system or computer
network, may be subject to civil liabilities and criminal penalties
under applicable law. The Fund will advise all of its employees and
agents who have access to any TSSG Protected Information or to any
computer equipment capable of accessing TSSG Facilities of the
foregoing.
22. Additional Funds. In the event that additional funds, within the same family
as the Funds, are established ("Additional Funds") and such Additional Funds
desire to avail themselves of the benefits of and become a party to this
Agreement, the Additional Funds shall notify TSSG in writing, and if TSSG agrees
in writing, such Additional Funds shall become a party to this Agreement.
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<PAGE> 10
23. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or TSSG shall be
sufficiently given if addressed to that party and received by it at
its office set forth below or at such other place as it may from time
to time designate in writing.
To: AIM Family of Funds
c/o John Caldwell, President
AIM Fund Services, Inc.
Eleven Greenway Plaza, Suite 1919
Houston, Texas 77046
Attention: William Kleh, Secretary
with a copy to:
Fund Legal Department at the same address
Attention: Carol Relihan, VP and General Counsel
To: The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to:
General Counsel at the same address
(b) Successors. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors upon the parties
hereto, and their respective successors and assigns; provided,
however, that this Agreement may not be assigned without the written
consent of the other party.
(c) Governing Law. This Agreement shall be governed exclusively by and
interpreted in accordance with the internal substantive laws of the
Commonwealth of Massachusetts without reference to the choice of the
law provisions thereof.
(d) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
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<PAGE> 11
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
of which together will constitute only one instrument.
(f) Captions. The captions of this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(g) Sole Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof.
(h) Specific Performance. Each of the parties hereto agrees that the other
party would be irreparably damaged by breaches of this Agreement
relating to confidential or proprietary information and accordingly
each agrees that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of the
provisions of this Agreement relating to such information.
(i) It is understood and agreed that all services performed hereunder by
TSSG shall be as an independent contractor and not as an employee,
joint venturer, or partner of the Fund. This Agreement is between the
Fund and TSSG, and there are no third party beneficiaries hereto.
(j) Limitation of Shareholder Liability. Notice is hereby given that the
Declaration of Trust of each Fund which is a Delaware business trust,
is on file with the Secretary of State of Delaware, and this Agreement
was executed on behalf of each such Trust by a duly authorized officer
thereof acting as such and not individually. The obligations of this
Agreement are not binding upon any of the Trustees, officers or
Shareholders of any such Trust individually but are binding only upon
the assets and property of the respective portfolio of each such Trust
for the benefit of which the Trustees have caused this Agreement to be
executed.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
AIM EQUITY FUNDS, INC.
on behalf of the Retail Classes of its AIM Charter
Fund, AIM Constellation Fund, AIM Weingarten Fund
and AIM Aggressive Growth Fund Portfolios
By: /s/ ROBERT H. GRAHAM
------------------
Title: President
---------------
AIM FUNDS GROUP,
on behalf of the Class A and Class B Shares of its
AIM Balanced Fund, AIM Government Securities Fund,
AIM Growth Fund, AIM High Yield Fund, AIM Income
Fund, AIM Municipal Bond Fund, AIM Utilities Fund
and AIM Value Fund portfolios and on behalf of the
Class A, Class B and Class C Shares of its AIM
Money Market Fund Portfolio
By: /s/ ROBERT H. GRAHAM
------------------
Title: President
---------------
AIM INTERNATIONAL FUNDS, INC.,
on behalf of the Class A and Class B shares of its
AIM International Equity Fund, AIM Global
Aggressive Growth Fund, AIM Global Growth Fund and
AIM Global Income Fund Portfolios
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
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<PAGE> 13
AIM INVESTMENT SECURITIES FUNDS,
on behalf of its AIM Adjustable Rate Government
Fund portfolio and the AIM Limited Maturity
Treasury Shares class of its Limited Maturity
Treasury Portfolio
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt Cash Fund and AIM
Tax-Exempt Bond Fund of Connecticut portfolios and
the AIM Tax-Free Intermediate Shares class of its
Intermediate Portfolio
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
THE SHAREHOLDER SERVICES GROUP, INC.
By: /s/ JACK PUTNER
----------------
Title: EVP - COO
-------------
13
<PAGE> 14
SCHEDULE A
SYSTEM FEATURES AND CAPABILITIES
The FSR System consists of computer hardware, operating system software and
application software which contains functions as defined below. The operating
environment configuration consists of IBM-compatible mainframe computers
running on an MVS operating system. The configuration includes controllers,
direct access storage devices, tape drives, security access software and other
operating system hardware and software that enable TSSG to meet the contractual
commitments herein.
The Transfer Agent Application includes Job Control Language (JCL), Catalog
Procedures (PROCS) and program modules written primarily in COBOL.
The FSR Transfer Agency System supports the following subsystems and third
party systems:
NSCC (National Securities Clearing Corporation) support:
- FundSERV
- Networking
- Commissions
- Exchanges
- ACATS (Automated Customer Account Transfer System)
- TNET
Cost basis accounting
UNISYS Interface
Sales file download
Price Waterhouse Blue Sky download
File downloads to support DDA (Demand Deposit Account) Reconciliation
<PAGE> 15
Year-End Statements and Tax Reporting:
- 1099D
- 1099R
- 1042S
- 5498
- 1099B
Transmission send/receive functionality for broker/dealers and other third
parties
Electronic Funds Transfer processing to move in and out of funds using automated
clearing house facilities
KMS Microfilm Interface
Third part interfaces with:
Applied Mailing Systems for print/mail support
Microdata for checkbook production
Mellon and Texas Commerce for banking services
Other third party software packages i.e. ACE/DISC
<PAGE> 16
SCHEDULE B
AIM FAMILY OF FUNDS - LIST OF AUTHORIZED PERSONS
/s/ ROBERT H. GRAHAM
-----------------------
Robert Graham
President, A I M Management Group Inc.
/s/ JOHN CALDWELL (JACK)
------------------------
Jack Caldwell
President, A I M Fund Services, Inc.
/s/ CAROL F. RELIHAN
-----------------------
Carol Relihan
Secretary and General Counsel,
A I M Management Group Inc.
/s/ NANCY MARTIN
-----------------------
Nancy Martin
Counsel, A I M Management Group Inc.
<PAGE> 17
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The fund shall pay the following fees
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
December 31, 1997, the Fund shall pay TSSG an annualized fee of $3.60 per
shareholder account that is open during any monthly period ("Open Account
Fee"). The Fund also shall pay TSSG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and the Closed Account Fees hereafter collectively referred
to as "Shareholder Account Fees"). The Shareholder Account Fees shall be billed
by TSSG monthly in arrears on a prorated basis of 1/12 of the annualized fee
for all such accounts.
In addition, beginning on the one year anniversary date of this Agreement, and
on each yearly anniversary date thereafter, the Shareholder Account fees may be
increased by TSSG in an amount equal to the lesser of (i) the cumulative
percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U)
U.S. City Average, All Items (unadjusted -- (1982-84 + 100), published by the
U.S. Department of Labor, or (ii) seven percent (7%) of the Shareholder Account
Fees charged by TSSG to the Fund for the preceding twelve (12) month period.
II. FEES FOR DEDICATED PROGRAMMING SUPPORT
TSSG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. At the Fund's
expense, TSSG agrees to use reasonable efforts to make dedicated programming
support available for all projects required by the Fund. The amount of the
resources required and the projects to be worked on shall be determined jointly
based upon joint periodic review of project requirements; however, the Fund
will decide the priorities which will be assigned to each project and will
determine what projects the dedicated resources are to work on. Such resources
will be charged to the Fund at the rates set forth below. All enhancement,
improvements, modifications or new features added to the TSSG System shall be,
and shall remain, the confidential, exclusive property of, and proprietary to,
TSSG. Request for software changes may be initiated by those representatives of
the Fund identified in Exhibit 1 of this Schedule C. The Fund will use its best
efforts to notify TSSG in writing of requests for software changes within 72
hours of an initial verbal request. TSSG reserves the right to stop work on a
request for which written specifications have not been received.
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<PAGE> 18
a. SUPPORT TO BE PROVIDED TO THE FUND FREE OF CHARGE. TSSG will provide
the following support at no additional cost to the fund:
1. Coding to correct deficiencies in the system, unless such deficiencies
are included in item (II)(b)(9) below in which event the Fund will be
charged for such services. A system deficiency is defined as a system
process which does not operate according to the design of the computer
application or system specifications. To correct system deficiencies,
TSSG will, at its own expense, expend whatever resources are necessary
to analyze the deficiency and apply an appropriate remedy, in the form
of corrected application code as expeditiously as possible. An
alternate process, in the form of a functional work around, may be a
suitable substitute for the actual system fix, if the level of effort
to develop the system fix is deemed to be impractical or the elapsed
time to develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be mutually agreed
upon by the parties.
TSSG will evaluate all reported referrals, to validate deficiency
status or reclassify as a system enhancement, based on the above
definition.
2. Simple Maintenance determined to be core processing.
3. TSSG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes; provided,
however, TSSG will only make such changes to the extent that they are
technically and commercially practical and are within the scope of the
software functions, capabilities and database.
b. SUPPORT TO BE PROVIDED TO THE FUND, BUT WHICH WILL BE BILLED AS
"DEDICATED PROGRAMING SUPPORT": The following activities are examples
of "dedicated programming support" which will be billed to the Fund:
1. Customized form output (i.e., statements, confirmation statements,
commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial funds
being live.
(continued on next page)
2
<PAGE> 19
8. Clean-up/Recovery project resulting from Fund error or causes beyond
the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to code
developed, and currently maintained by the dedicated teams.
10. Customization of existing functions specific to the Fund.
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. Such
exclusivity would extend for a period of nine (9) months from the date the
enhancement is placed into the production libraries. Software exclusivity
would be waived if the Fund accepts either of the following conditions:
a). If prior to implementation, TSSG or other TSSG clients agree to share
in the expense of the enhancements.
b). At any time during the 9 months following implementation, TSSG or
other TSSG clients agree to share the expense for the enhancements.
Access and Capability. The Funds' dedicated programmers will have access
and capability to update any part of the System. However, depending on the
skill set of the programmers, as well as the scope of the requested
enhancement, it may be in the best interest of both the Fund and TSSG to
utilize non-dedicated programmers to address certain enhancements. In
addition, because many programs are shared by multiple clients, some
enhancements may require approval from those clients. These enhancements
should be handled on an item by item basis.
c. FEES FOR DEDICATED PERSONNEL WHICH WILL BE BILLED TO THE FUND. TSSG
will bill the Fund monthly in arrears on a prorated basis of 1/12 of
the following annualized charges for each person dedicated to the
following positions:
<TABLE>
<S> <C>
Manager $100,000
Programmer $ 90,000
Business System Analyst/Tester $ 85,000
Non-dedicated programmer-hourly charge $100 per hour
</TABLE>
TSSG may adjust these salaries on the anniversary date of this agreement to
reflect salary increases, provided that they do not exceed seven percent (7%)
of the fees charged to the Fund for the identical positions during the
immediately preceding twelve (12) month period.
3
<PAGE> 20
SCHEDULE C
EXHIBIT 1
AIM FAMILY OF FUNDS
AUTHORIZED PERSONS REQUESTING
SYSTEM MODIFICATIONS
/s/ JOHN CALDWELL
-------------------------
John Caldwell
/s/ RICHARD SNYDER
---------------------
Richard Snyder
/s/ JOSEPH CHARPENTIER
----------------------
Joseph Charpentier
/s/ MARC VARGAS
---------------------
Marc Vargas
4
<PAGE> 21
SCHEDULED
OUT-OF-POCKET EXPENSES
The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Telephone and telecommunication cost, including all lease, maintenance
and line costs
- NSCC transaction charges at $.15/per financial transaction
- Shipping, Certified and Overnight mail and insurance
- Year-End form production and mailings
- Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
- Duplicating services, as per-approved by the Fund
- Courier services
- Due Diligence Mailings
- Rendering fees as billed
- Overtime, as pre-approved by the Fund
- Temporary staff, as pre-approved by the Fund
- Travel and entertainment, as pre-approved by the Fund
- Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
- Third party audit review
- All conversion costs: including System start up costs, but excluding
costs associated with conversations between TSSG systems.
- Such other miscellaneous expenses reasonably incurred by TSSG in
performing its duties and responsibilities under this Agreement. Such
expenses incurred with consent of the Fund, not to be unreasonably
withheld.
- The costs associated with the Year-End Support Services set forth on
the attached Exhibit 1 of this Schedule D.
- The costs associated with the Broker Dealer Support Services set forth
on the attached Exhibit 2 of this Schedule D.
<PAGE> 22
EXHIBIT 1 OF SCHEDULE D
Year-End Support Services: Flat rate of $.12/per shareholder account open as of
December 31, 1994.
The services listed below will be performed by TSSG for the Fund in support of
reporting for tax year 1994 and compliance mailings for calendar year 1994.
TSSG assumes responsibility for performing the services in compliance with
current IRS rules and regulations.
(a) Up-front year-end planning and communication of year-end related system
modifications.
(b) Production of IRS required tax forms and amended/corrected tax forms as
requested by the Fund.
(c) Production of IRS required 1099 magnetic tape filings.
(d) Production of tax forms on microfiche.
(e) Maintenance of year-end data files and the handling of transaction code
updates to those files.
(f) Submission of year-end jobs.
(g) B-notice processing as follows:
- receipt of B-notice listing from IRS or
- AFS upload of data entry of all accounts to B-Notice subsystem
- execution and generation of B-Notice defense reports
- analysis of B-Notice Defense Reports to ensure accurate coding
- coordination of mailings with vendor, including generation of vendor
tapes
- notification to Client Services of anticipated and actual mailing
dates, including volume, sample letters and confirmation of the date
backup withholding will be imposed if no response is received
- systematic upload of W-9 responses as volumes warrant
(h) Correction processing resulting from the monthly review of the year-end
files - "balancing."
(i) Production of cost basis information on 1099B forms.
(j) All required state filings as requested by the Fund.
(k) All IRS required mailings requested by the Fund: B-Notice, Safe Harbor,
W-9, TEFRA election, IRS Penalty Notice, and TIN solicitation.
<PAGE> 23
EXHIBIT 1 OF SCHEDULE D (cont'd)
(1) C-Notice processing as follows:
o receipt of C-Notice; imposition and release letters as received
from Fund or IRS
o performance of search function to identify all accounts associated
with the notice
o provide written instructions to Fund for proper account coding
(m) Initialization of Fund File in support of balancing tax reporting data
<PAGE> 24
EXHIBIT 2 OF SCHEDULE D
Broker/Dealer Support: Annualized fee of $.03/per shareholder account open
during any monthly period.
(a) NSCC Testing
(b) Back-up for NSCC redemption release
(c) Research and Problem Resolution
(d) Compliance and Support
<PAGE> 25
SCHEDULE E
DATA RETENTION AND RECOVERY STANDARDS
Data files included in the System are backed up according to a defined
retention schedule. This ensures availability of data for processing and
application recovery as well as compliance with regulatory requirements.
Critical files that are included in the retention process:
Shareholder Master
Shareholder History
Fund File
Dealer File
Global File
Certificate File
Broker/Client Cross Reference File
Additional Address File
Maintenance History File
Blue Sky Master
Price File
Rate File
Order Clearance File
These files are backed up as follows: daily and retained for six generations;
weekly and retained for 5 generations. The Shareholder Master, Shareholder
History and Fund Files are also backed up annually and retained for 7
generations.
In addition, the Acceptance File containing post-processing daily activity, and
the Daily File containing pre-processing transaction input, are backed up daily
and retained for six generations.
<PAGE> 26
SCHEDULE F
SYSTEM AVAILABILITY STANDARDS
These systems standards shall apply on business days.
<TABLE>
<S> <C>
o On-line systems availability between 7:00 a.m. and 7:00 p.m. CST - 95% measured monthly.
o Average response time (7:00 a.m. to 7:00 p.m. CST) of 3 seconds or less, in response to the system
employed by A I M Fund Services, Inc. as of September 1. 1994 - 95% measured monthly.
o Daily report bundles in queue for transmission no later than 7:00 a.m. CST each business day - 95%
measured monthly each bundle measured separately.
o Daily job PFSRXOED containing the Acceptance File download in queue for transmission no later than 4:00
a.m. CST each business day - 95% measured monthly.
o Daily job PFSRXCAD containing the Cap Stock File download in queue for transmission no later than 6:30
a.m. CST each business day - 95% measured monthly.
o Weekly job PFSXOHW containing the Dealer File download in queue for transmission no later than 9:00
a.m. CST each Saturday - 95% measured quarterly.
</TABLE>
<PAGE> 1
EXHIBIT 9(d)(2)
AMENDMENT NUMBER 1 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
This Amendment Number 1 effective October 4, 1995 is made to the
Remote Access and Related Services Agreement dated December 23, 1994 (the
"Remote Agreement") by and between each registered investment company listed on
the signature pages hereof, either for itself or, with respect to each such
company that is a series investment company, on behalf of each of the series or
class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER
SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal
offices at One Exchange Place, Boston, Massachusetts 02109.
WHEREAS, the Fund desires to incorporate any changes or deletions to
those registered investment companies listed on the signature page of the
Remote Agreement as set forth on the signature page hereof;
WHEREAS, the Fund in connection with its access to the TSSG System,
desires to access and use TSSG's proprietary software known as the Structured
Query Language Application Programming Interface Product Release 5.0 (the
"SQL/API Product"); and
WHEREAS, TSSG desires to provide such access to the Fund solely in
conjunction with the Fund's use of the TSSG System.
In consideration of their mutual promises contained herein, the Fund
and TSSG agree to modify the Remote Access and Related Services Agreement (the
"Remote Agreement") as follows:
1. TSSG grants to the Fund a non-transferable and non-exclusive license
to access and use TSSG's SQL/API Product, maintained on the TSSG
System at the TSSG Facility, solely to process data with respect to
the Fund's internal business. The Fund is authorized to use the
SQL/API product only in connection with the Fund's remote use of the
TSSG System. The Fund shall be prohibited from the further sale,
lease, transfer, license or sub-license, assignment or marketing in
any manner of the SQL/API Product, or any other proprietary software
used in conjunction with the TSSG System. The Fund shall also be
prohibited from the sale, lease, transfer, license, sub-license,
assignment, or marketing in any manner of any software product
developed in conjunction with the SQL/API Product.
2. It is acknowledged that the Fund acquires only the right to use the
SQL/API Product while the Remote Agreement is in effect between the
parties and such right and said license shall terminate upon
termination of the Remote Agreement. The Fund acknowledges that it
does not acquire any rights of ownership in the SQL/API Product. This
Agreement and the license granted pursuant hereto may not be assigned,
sublicensed or transferred.
<PAGE> 2
3. The Fund shall not have the right to use the SQL/API Product other
than in connection with the use of the TSSG System in compliance with
the Remote Agreement. The Fund may use the SQL/API Product to access
the TSSG System using only TSSG Proprietary Software or software
developed internally by the Fund.
4. EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS AMENDMENT, TSSG MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO THE FUND OR ANY
OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING
QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR
USAGE OF TRADE) OR ANY SERVICES PROVIDED UNDER THIS AGREEMENT.
5. Infringement Indemnity TSSG shall defend, at its expense, any action
brought against the Fund to the extent that is based on a claim that
the SQL/API Product infringes a United States copyright or duly issued
patent, or misappropriates the trade secrets of a third party. TSSG
shall indemnify and hold harmless the Fund against damages and costs
(including penalties, interest and reasonable attorney's fees) finally
awarded against the Fund directly attributable to such claim provided
that the Fund gives TSSG prompt written notice of such claim,
reasonable assistance and sole authority to defend or settle such
claim. If the SQL/API Product becomes, or in TSSG's opinion is likely
to become, the subject of such a claim then TSSG may, at its option:
(a) procure for the Fund the right to use the SQL/API Product free of
any liability for infringement or (b) replace or modify the SQL/API
Product to make it noninfringing. If TSSG is unable or determines
that it is commercially impracticable to undertake clause (a) or (b)
of this Section 5, the Fund will cease to use the directly affected
portion of the SQL/API Product, and if such SQL/API Product is in the
Fund's control, the Fund shall return or destroy it, and (c) TSSG will
grant to the Fund a pro-rata credit for the annual maintenance fee
that the Fund paid computed by dividing such fee by the total number
of months in the then current term of the license for the SQL/API
Product and multiplying the result by the number of months left in the
unexpired license term for the SQL/API Product.
TSSG shall have no obligation under this Section 5 if the alleged
infringement or violation is based upon the use of the SQL/API Product
in combination with other equipment or other software not furnished by
TSSG or if such claim arises from TSSG's compliance with the Fund's
designs, specifications or instructions or from the Fund's
modification of the SQL/API Product.
THIS SECTION STATES THE ENTIRE LIABILITY OF TSSG CONCERNING PATENT,
COPYRIGHT, TRADE SECRET OR OTHER PROPRIETARY RIGHTS INFRINGEMENT.
2
<PAGE> 3
6. Notwithstanding anything in this Amendment to the contrary, the Fund's
license to use the SQL/API Product will automatically terminate upon
termination of the Remote Agreement. This Amendment will terminate
automatically in the event of a breach of the sublicense.
7. TSSG shall take reasonable measures to enforce appropriate compliance
with the foregoing restrictions up to and including the institution
and diligent prosecution of proper legal proceedings.
8. The Fund will agree to compensate TSSG for all fees as referenced on
the attached Schedule #1 to this Amendment, and such other schedules
as may be agreed upon between the parties from time to time.
The Agreement as modified by this Amendment ("Modified Agreement") constitutes
the entire agreement between the parties with respect to the subject matter
hereof. The Modified Agreement supersedes all prior and contemporaneous
agreements between the parties in connection with the subject matter hereof.
No officer, employee, servant or other agent of either party is authorized to
make any representation, warranty or other promise not expressly contained
herein with respect to the subject matter hereof.
<PAGE> 4
The parties to this Amendment have caused it to be executed by their
duly authorized officers as of the date and year referenced above.
<TABLE>
<S> <C>
AIM EQUITY FUNDS, INC. AIM INVESTMENT SECURITIES FUNDS,
on behalf of the Class A and B Shares of on behalf of its AIM Limited Maturity
the Retail Classes of its AIM Charter Fund Treasury Shares
and AIM Weingarten Fund, and on behalf of the
Class A Shares of the Retail Classes
of AIM Constellation Fund and AIM By: /s/ ROBERT H. GRAHAM
Aggressive Growth Fund Portfolios -----------------------------------------------
Title: President
By: /s/ ROBERT H. GRAHAM ---------------------------------------------
-----------------------------------------------
Title: President AIM TAX-EXEMPT FUNDS, INC.,
--------------------------------------------- on behalf of its AIM Tax-Exempt Cash Fund and AIM
Tax-Exempt Bond Fund of Connecticut Portfolios and
the AIM Tax-Free Intermediate Shares of its
AIM FUNDS GROUP, Intermediate Portfolio
on behalf of the Class A and Class B
Shares of its AIM Balanced Fund, AIM
Intermediate Government Fund, AIM Growth By: /s/ ROBERT H. GRAHAM
Fund, AIM High Yield Fund, AIM Income -----------------------------------------------
Fund, AIM Municipal Bond Fund, AIM Global
Utilities Fund and AIM Value Fund Portfolios Title: President
and on behalf of the Class A, Class B and Class C ---------------------------------------------
Shares of its AIM Money Market Fund Portfolio
By: /s/ ROBERT H. GRAHAM THE SHAREHOLDER SERVICES
----------------------------------------------- GROUP, INC.
Title: President
--------------------------------------------- By: /s/ JACK P. KUTNER
------------------------------------------------
AIM INTERNATIONAL FUNDS, INC., Title: EVP - COO
of its AIM International Equity Fund, AIM Global ---------------------------------------------
Aggressive Growth Fund, AIM Global Growth Fund and
AIM Global Income Fund Portfolios
By: /s/ ROBERT H. GRAHAM
-----------------------------------------------
Title: President
---------------------------------------------
</TABLE>
4
<PAGE> 5
SCHEDULE #1 TO AMENDMENT NUMBER 1
SQL/API FEES
Listed below are TSSG's License Fees for the SQL/API Product
o One Time License Fee $30,000
o Annual Maintenance Fee(1) billed $15,000
quarterly in advance beginning the
first month of the Agreement
o On-Going Development Cost(2) $ 125 per hour
o Out of Pocket Expenses Per the existing
Remote Agreement
dated 12/23/94.
The Fund and TSSG intend to implement initially Release 5.0 of the SQL/API
Product on 150 Workstations. For additional workstations beyond the 150
licensed, the Fund shall pay TSSG the then-current license, usage and support
fees for each additional Workstation
__________________________________
(1) The increase in the maintenance fee after the first year will be
equal to the lesser of (i) the previous year's 12 month average increase in the
Consumer Price Index (CPI) or (ii) seven percent (7%) of the maintenance fee
charged by TSSG for the preceding twelve month period.
(2) Development work includes product installation, customization and
enhancements requested by the Fund.
<PAGE> 1
EXHIBIT 9(d)(3)
ADDENDUM NUMBER 2 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
This Amendment Number 2 effective October 12, 1995 is made to the
Remote Access and Related Services Agreement dated December 23, 1994 (the
"Remote Agreement") by and between each registered investment company listed on
the signature pages hereof, either for itself or, with respect to each such
company that is a series investment company, on behalf of each of the series or
class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER
SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal
offices at One Exchange Place, Boston, Massachusetts 02109.
WHEREAS, the Fund desires to incorporate any changes or deletions to
those registered investment companies listed on the signature page of the
Remote Agreement as set forth on the signature page hereof;
WHEREAS, the Fund desires to use an additional product to the TSSG
System known as the Price Rate Capture System (the "PRAT Application"); and
WHEREAS, TSSG desires to provide the PRAT Application to the Fund
solely in conjunction with the Fund's use of the TSSG System;
In consideration of their mutual promises contained herein, the Fund
and TSSG agree to modify the Remote Access and Related Services Agreement (the
"Remote Agreement") as follows:
1. Modify Schedule D to include the attached Exhibit 3 to Schedule D
The Agreement as modified by this Addendum ("Modified Agreement")
constitutes the entire agreement between the parties with respect to the
subject matter hereof. The Modified Agreement supersedes all prior and
contemporaneous agreements between the parties in connection with the subject
matter hereof. No officer, employee, servant or other agent of either party is
authorized to make any representation, warranty or other promise not expressly
contained herein with respect to the subject matter hereof.
The parties to this Addendum have caused it to be executed by their
duly authorized officers as of the date and year referenced above.
<TABLE>
<CAPTION>
<S> <C>
AIM EQUITY FUNDS, INC. AIM FUNDS GROUP,
on behalf of the Class A and B Shares of the Retail on behalf of the Class A and Class B Shares of its
Classes of its AIM Charter Fund and AIM AIM Balanced Fund, AIM Intermediate Government
Weingarten Fund, and on behalf of the Class A Fund, AIM Growth Fund, AIM High Yield Fund,
Shares of the Retail Classes of AIM Constellation AIM Income Fund, AIM Municipal Bond Fund,
Fund and AIM Aggressive Growth Fund Portfolios AIM Global Utilities Fund and AIM Value Fund
Portfolios and on behalf of the Class A, Class B and
BY:/s/ Robert H. Graham Class C Shares of its AIM Money Market Fund Portfolio
--------------------------
Title: President By:/s/ Robert H. Graham
----------------------- --------------------------
Title: President
----------------------
AIM INTERNATIONAL FUNDS, INC.
on behalf of the Class A and Class B Shares of its
AIM International Equity Fund, AIM Global
Aggressive Growth Fund, AIM Global Growth Fund
and AIM Global Income Fund Portfolios
By:/s/ Robert H. Graham
--------------------------
Title: President
-----------------------
</TABLE>
<PAGE> 2
AIM INVESTMENT SECURITIES FUNDS,
on behalf of its AIM Limited Maturity Treasury
Shares
By:/s/ Robert H. GRAHAM
--------------------------
Title: President
-----------------------
AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt Cash Fund and
AIM Tax-Exempt Bond Fund of Connecticut
Portfolios and the AIM Tax-Free Intermediate Shares
of its Intermediate Portfolio
By:/s/ Robert H. GRAHAM
--------------------------
Title: President
-----------------------
THE SHAREHOLDER SERVICES GROUP,
INC.
By:/s/ JACK PUTNER
--------------------------
Title: COO - EVP
-----------------------
<PAGE> 3
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and entertainment, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversations between TSSG
systems.
o Such other miscellaneous expenses reasonably incurred by TSSG in
performing its duties and responsibilities under this Agreement.
Such expenses incurred with consent of the Fund, not to be
unreasonably withheld.
o The costs associated with the Year-End Support Services set
forth on the attached Exhibit 1 of this Schedule D.
o The costs associated with the Broker Dealer Support Services set
forth on the attached Exhibit 2 of this Schedule D.
o The costs associated with the Price Rate Transmission Services
set forth on the attached Exhibit 3 of this Schedule D.
<PAGE> 4
EXHIBIT 3 TO SCHEDULE D
Price Rate Capture System Services (PRAT)
- - -----------------------------------------
The PRAT Application will accept prices and dividend rates from the Fund
Accounting Department of A I M Advisors, Inc. electronically and post them to
the TSSG Pricing System. The PRAT Application will run interconnected via
Local Area Network hardware and software.
The fees for the PRAT Service shall be as follows:
o One Time Set Up Fee $5,000.
o Annual Fee* $7,500.
*The annual fee provides system and personnel resources required to support a
maximum average of 50 transmissions per month. A charge of $30.00 per
transmission will be assessed for all transmissions incurred in excess of the
average 2 per day per month.
<PAGE> 1
EXHIBIT 9(d)(4)
AMENDMENT NUMBER 3 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of February 1, 1997 is made to the Remote
Access and Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on the attached
Exhibit 1 hereof, (the "Fund") and The Shareholder Services Group, Inc., now
known as First Data Investor Services Group, Inc. ("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree that as of the date first referenced above, the
Agreement shall be amended as follows:
1. All references to "THE SHAREHOLDER SERVICES GROUP, INC." are hereby
deleted and replaced with "FIRST DATA INVESTOR SERVICES GROUP, INC." and all
references to "TSSG" are hereby deleted and replaced with "FDISG".
2. Delete the second sentence from Section 3(c) and replace with the
following:
"The Fund will pay to FDISG the amount so billed by Federal Funds Wire
within fifteen (15) business days after the Fund's receipt of the
invoice."
3. Section 4(b) of the Agreement is hereby deleted in its entirety and
replaced with the following new Section 4(b):
"FDISG agrees to provide to the Fund at its facilities located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046, 12 Greenway Plaza,
Houston, Texas 77046, 301 Congress Street, Suite 1700, Austin, Texas
78701 and 12503 East Euclid Drive, Suite 250, Englewood, CO 80111 or
at such other locations as may be mutually agreed upon in writing by
FDISG and the Fund (the "Fund Facility") remote access to the use of
information processing capabilities of the FDISG System as it may be
modified from time to time by FDISG."
4. Section 12 of the Agreement is hereby amended by adding the following
new Sections 12(c), through 12(i):
"(c) FDISG shall retain title to and ownership of the FDISG System,
including any and all data bases, computer programs, screen
formats, report formats, interactive design techniques,
derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents,
copyrights, trade secrets, and
<PAGE> 2
other related legal rights utilized in connection with the
services provided by FDISG to the Fund hereunder other than
shareholder account and transaction information which shall
remain the exclusive property of the Fund.
(d) FDISG hereby grants to the Fund and the Fund accepts a limited
license to the FDISG System for the sole and limited purpose
of having FDISG provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or
interpreted otherwise and subject to Section 15 such license
shall immediately terminate with the termination of this
Agreement.
(e) The transmission of account inquiry and transaction
information, including but not limited to maintenances,
exchanges, purchases and redemptions, shall be limited to
direct entry to the FDISG System by means of on-line mainframe
terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of
information to the FDISG System is strictly prohibited without
the prior written consent of FDISG.
(f) FDISG warrants that the FDISG System shall include, at no
additional cost to the Fund, design and performance
capabilities so that prior to, during, and after the calendar
year 2000, the FDISG System will not malfunction, produce
invalid or incorrect results, or abnormally cease to function
due to the year 2000 date change. In connection with the
foregoing, FDISG agrees to provide the Fund with periodic
quarterly updates with respect to FDISG compliance with this
provision.
(g) Other than CPU Authorization Passwords, FDISG represents and
warrants to the Fund the software products provided by FDISG
hereunder (the "Products") do not contain any "back door" or
concealed access devices, any block or protection feature
which prevents the Fund from making additional copies of such
Products as permitted by this Agreement or any "self-help"
code, "Unauthorized Code", "software locks" or any other
similar devices which, upon the occurrence of a certain date
or event, the passage of a certain amount of time, or taking
of any action (or failure to take action) by or on behalf of
FDISG, will cause such Products or any software or system with
such Products are used to be destroyed, erased, damaged, or
otherwise made inoperable. "Unauthorized Code" shall mean any
virus, Trojan horse, worm, or other software routines designed
to permit unauthorized access: to disable, or otherwise harm
software, hardware, or data; or to perform any other such
actions.
(h) Provided the Fund gives FDISG reasonable written notice,
reasonable assistance, including assistance from the Fund's
employees, agents, affiliates and to the extent possible
independent contractors (collectively, "FUND'S AGENTS"), and
sole authority to defend or settle the action, then FDISG
shall do the following ("INFRINGEMENT INDEMNIFICATION"): (a)
defend or settle, at its expense, any action brought against
the Fund or the Fund's Agents to the extent the action is
based on a claim that the Fund's use of the FDISG System
infringes a duly issued United
<PAGE> 3
States' patent or copyright or violates a third party's
proprietary trade secrets or other similar intellectual
property rights ("INFRINGEMENT"); and (b) pay damages and
costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no
Infringement Indemnification obligation if the alleged
Infringement is based upon the Fund's use of the FDISG System
with equipment or software not furnished or approved by FDISG
or if such claim arises from FDISG's compliance with the Fund's
designs, or from the Fund's modifications of the Software.
The Infringement Indemnification states FDISG's entire
liability for Infringement and shall be the Fund's sole and
exclusive remedy for such claims.
(i) Within sixty (60) days after the execution of this Amendment,
FDISG and the Fund shall enter into an escrow agreement
relating to the source code for (i) the FDISG proprietary
software used in connection with the FDISG System (as defined
in Section 1 of the Agreement: (ii) the "Software" (as that
term is defined in Schedule G), including the Third Party
Software set forth in Sections 2.1.1 and 2.1.2 of Exhibit 1 of
Schedule G; and (iii) the "FDISG Software" as that term is
defined in Schedule H (collectively, the "Source Code")
substantially in the form attached as Exhibit 2 of this
Amendment Number 3 ("Exhibit 2"). Promptly after signing the
escrow agreement, FDISG shall forward the agreement to the
escrow agent with a copy of the Source Code to be deposited
into escrow. FDISG agrees to update the Source Code held by
the escrow agent on a quarterly basis. The Fund shall be
responsible and pay for all fees of the escrow agent. The
Source Code may be released to the Fund only if (i) FDISG
ceases to do business, makes an assignment for the benefit of
creditors, becomes insolvent (as revealed by its books and
records or otherwise), is generally unable to pay its debts as
such debts become due, or commences, or has commenced against
it a case under any chapter of state or federal bankruptcy
laws; and FDISG fails to cure any such event within sixty (60)
days after receiving notice from the Fund; and (ii) the Fund
has paid all amounts due to FDISG under this Agreement. Upon
receipt of the Source Code from the escrow agent, the Fund
shall a have license to use the Software solely as set forth
herein for the remaining current term of the Agreement subject
to Section 15, which use shall be expanded to include the
right to modify the software solely in connection with support,
maintenance and operation of the software and not for any
other purpose or person."
5. Sections 14(a) and (b) of the Agreement are hereby deleted from the
Agreement and replaced with the following new Sections 14(a) and (b):
(a) This Agreement which became effective as of December 23, 1994
is hereby extended effective February 1, 1997 and shall
continue through January 31, 2000 (the "Initial Term"). Upon
the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or FDISG provides
written notice to the other of its intent not to
<PAGE> 4
renew. Such notice must be received not less than one-hundred
and eighty (180) days prior to the expiration of the Initial
Term or the then current Renewal Term.
(b) Notwithstanding the foregoing Section 14(a), in the event the
Fund provides notice of its intent to terminate as set forth in
Section 14(a), the Fund may extend the term of the Agreement
for up to an additional one-hundred and eighty (180) days (the
"Extension Period") by providing FDISG with written notice of
its intent to do so. Such notice must be received no later
than one-hundred and eighty (180) days prior to the expiration
of the Initial Term. During the Extension Period, the Fund may
terminate this Agreement at any time on thirty (30) days
written notice.
6. Section 15 is hereby amended by adding the following sentence to the
end of the paragraph:
"FDISG agrees to provide reasonable, supervised system access until
the Fund's conversion to another provider is complete".
7. Section 23(a) is hereby amended by deleting the information regarding
notices and inserting the following
To: The AIM Family of Funds
c/o A I M Fund Services, Inc.
Eleven Greenway Plaza, Suite 100
Houston, Texas 77046
Attention: John Caldwell, President
with copy to:
Fund Legal Counsel at same address
Attention: Carol F. Relihan, Senior Vice President &
General Counsel
To: First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 02109
Attention: President
with copy to : General Counsel (same address)
8. Section 23 is hereby amended by adding the following new sub-section
(k):
"(k) Notwithstanding the indemnity provided by the Fund in Section
8(g), FDISG agrees to use commercially reasonable efforts to
maintain a Disaster Recovery Plan, at no cost to the Fund,
designed to minimize the impact of any unforeseen business
interruption or outage that renders the FDISG System or FDISG
Facility inoperable, a summary of which is attached hereto as
Schedule I."
<PAGE> 5
9. Schedule C is hereby deleted in its entirety and replaced with the
attached revised Schedule C.
10. Exhibit 1 and Exhibit 2 of Schedule D are hereby deleted in their
entirety.
11. Schedule F is hereby deleted in its entirety and replaced with the
attached revised Schedule F.
12. Addendum Number 2 to the Agreement is hereby deleted in its entirety
and the new revised Schedule D - Out of Pocket Expenses as referenced in
Section 3(b) is hereby added to the Agreement.
13. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary IMPRESS Plus software and system in
accordance with the terms of and as more fully described in IMPRESS Plus
Software and Support Terms annexed hereto as Schedule G and incorporated
herein.
14. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary Accounting Control Environment +
("ACE +") software in accordance with the terms of and as more fully described
in the ACE + Software and Support Terms annexed hereto as Schedule H and
incorporated herein.
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant or other agent of either
party is authorized to make any representation, warranty, or other promises not
expressly contained herein with respect to the subject matter hereof.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 attached hereto as may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
-------------------------------------
Title: President
----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ GERALD G. KOKOS
-------------------------------------
Title: Executive Vice President
----------------------------------
<PAGE> 7
EXHIBIT 1
LIST OF FUNDS
<TABLE>
<S> <C>
AIM EQUITY FUNDS, INC.
Portfolios: Classes:
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
AIM FUNDS GROUP
Portfolios: Classes:
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B, and
AIM Cash Reserve Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes:
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
AIM INVESTMENT SECURITIES FUNDS
Portfolios: Classes:
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes:
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 8
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number __________
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this ______ day of _____ 1997, by and among
Data Securities International, Inc. ("DSI"), a Delaware corporation, First Data
Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 9
Agreement, DSI shall request the initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
2
<PAGE> 10
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of
3
<PAGE> 11
one or more of its officers, selected by DSI, whose identity shall be
available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
4
<PAGE> 12
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction means an officer of Depositor
warrants that a release condition has not occurred or has been cured.
DSI shall send a copy of the instruction by certified mail or
commercial express mail service to Preferred Registrant. DSI shall
notify both Depositor and Preferred Registrant that there is a dispute
to be resolved pursuant to Section 25. Upon receipt of Contrary
Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to
Section 25, order by a court of competent jurisdiction, or termination
by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit,
5
<PAGE> 13
to the Preferred Registrant filing for release following receipt of
any fees due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
6
<PAGE> 14
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not
7
<PAGE> 15
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement. For any
service not listed on the Fee and Services Schedule, DSI shall provide
a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
8
<PAGE> 16
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By: FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name:
------------------------------- By:
Title: ---------------------------------
------------------------------ Name:
-------------------------------
Title:
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
</TABLE>
<PAGE> 17
SCHEDULE A
LIST OF FUNDS
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
</TABLE>
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 18
EXHIBIT A
DESIGNATED CONTACT
Account Number: __________
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
[Company Name/Address] ------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
Invoice Contact:
- ---------------------------------------- --------------------------------
Designated Contact:
---------------------
Telephone:
------------------------------
Facsimile:
------------------------------
State of Incorporation:
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO:
-----------------------------------------------
First Data Investor Services Group, Inc.
4400 Computer Drive -----------------------------------------------
Westborough, MA 01581
-----------------------------------------------
-----------------------------------------------
Designated Contact: Invoice Contact:
--------------------- -------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 19
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number:
--------------------------------------------------------
Depositor Company Name:
--------------------------------------------------------
DEPOSIT TYPE:
Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS:
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS:
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler:
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: Version:
----------------- ------------------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By: By:
--------------------------------------- ---------------------------------------
Print Name: Print Name:
------------------------------- -------------------------------
Date: Date of Acceptance:
------------------------------------- -----------------------
ISE: EXHIBIT B#:
--------- ---------------
</TABLE>
<PAGE> 20
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following fees:
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
January 31, 2000, the Fund shall pay FDISG an annualized fee for shareholder
accounts open during any monthly period ("Open Account Fee") as follows:
<TABLE>
<CAPTION>
Account Volume Fee
<S> <C>
1-1.5 million $3.60/shareholder account
Exceeding 1.5 million $2.25/shareholder account
</TABLE>
The Fund also shall pay FDISG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and Closed Account Fees hereafter collectively referred to as
"Shareholder Account Fees"). The Shareholder Account Fees shall be billed by
FDISG monthly in arrears on a prorated basis of 1/12 of the annualized fee for
all such accounts.
FDISG will provide a credit to the Shareholder Account Fees of one million
dollars in the years 1998 and 1999. The credit shall be applied as a reduction
of $83,333.33 on each monthly fee bill in 1998 and 1999.
In addition, on January 1 of the years 1998, 1999, and 2000 the Shareholder
Account fees may be increased by FDISG in an amount equal to the lesser of (i)
the cumulative percentage increase in the Consumer Price Index for all Urban
Consumers (CPI-U) U.S. City Average, All Items (unadjusted - (1982-84 + 100),
published by the U.S. Department of Labor, or (ii) seven percent (7%) of the
Shareholder Account Fees charged by FDISG to the Fund for the preceding twelve
(12) month period.
In return for the Shareholder Account Fees, FDISG agrees to provide the
following to the Fund:
o Remote Access to FDISG's FSR System
o License for 512 IMPRESS Plus software installations valued at 2.5
million dollars. Includes six weeks of technical and user training
(train-the-trainer).
o License for up to 10 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H
o Dedicated Programming Support equivalent to I Systems Manager, 4
Programmers, and 2 Business Systems Analysts
o Implementation of a Separate FSR processing cycle by September 15,
1997, as more fully described in the attached Exhibit 3 of this
Schedule C.
o Implementation of the core TA system functionality identified in
Exhibit 1 of this Schedule C.
<PAGE> 21
o Implementation of IWT functionality as identified in Exhibit 2 of this
Schedule C
o Continued use of FDISG's Price/Rate Transmission (PRAT) application.
The PRAT Application will accept prices and dividend rates from the
Fund Accounting Department of the Fund electronically and post them to
the FDISG Pricing System. The PRAT application will run interconnected
via Local Area Network hardware and software.
II. DEDICATED PROGRAMMING SUPPORT
FDISG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. FDISG agrees to
use reasonable efforts to make dedicated programming support available for all
projects required by the Fund. The amount of the resources required and the
projects to be worked on shall be determined jointly based upon joint periodic
review of project requirements; however, the Fund will decide the priorities
which will be assigned to each project and will determine what projects the
dedicated resources are to work on. All enhancements, improvements,
modifications or new features added to the FDISG System shall be, and shall
remain, the confidential, exclusive property of, and proprietary to, FDISG. The
parties agree to use best efforts to ensure that all enhancements to FDISG's
System, whether made by the Dedicated Team or otherwise, shall be made in a
manner that will not adversely effect the operational efficiency or
functionality of the FDISG System. Request for software changes may be
initiated by those representatives of the Fund identified in Exhibit 4 of this
Schedule C. The Fund will use its best efforts to notify FDISG in writing of
requests for software changes within 72 hours of an initial verbal request.
FDISG reserves the right to stop work on a request for which written
specifications have not been received.
a. SUPPORT PROVIDED TO THE FUND PERFORMED IN GROUPS OTHER
THAN THE DEDICATED PROGRAMMING TEAM
1. Coding to correct deficiencies in the system, unless such
deficiencies are included in item (II)(b)(9) below in which
event the Fund will be charged for such services. A system
deficiency is defined as a system process which does not
operate according to the design of the computer application or
system specifications. To correct system deficiencies, FDISG
will, at its own expense, expend whatever resources are
necessary to analyze the deficiency and apply an appropriate
remedy, in the form of corrected application code as
expeditiously as possible. An alternate process, in the form
of a functional work around, may be a suitable substitute for
the actual system fix, if the level of effort to develop the
system fix is deemed to be impractical or the elapsed time to
develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be
mutually agreed upon by the parties.
FDISG will evaluate all reported referrals, to validate
deficiency status or reclassify as a system enhancement, based
on the above definition.
2. Simple Maintenance determined to be core processing.
<PAGE> 22
3. FDISG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes;
provided, however, FDISG will make such changes to the extent
that they are technically and commercially practical and are
within the scope of the software functions, capabilities and
database. FDISG agrees to use good faith in determining
whether such changes are technically and commercially
reasonable and agrees to negotiate with the Fund in good faith
to resolve any such issues.
b. EXAMPLES OF ACTIVITY TO BE PROVIDED TO THE FUND WHICH WILL
BE PERFORMED BY THE DEDICATED PROGRAMMING TEAM:
1. Customized form output (i.e., statements, confirmation
statements, commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial
funds being live.
8. Clean-up/Recovery project resulting from Fund error or causes
beyond the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to
code developed and currently maintained by the dedicated
teams.
10. Customization of existing functions specific to the Fund
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. Such
exclusivity would extend for a period of nine (9) months from the date
the enhancement is placed into the production libraries. Software
exclusivity would be waived if the Fund accepts either of the
following conditions:
a) If prior to implementation, FDISG or other FDISG clients agree
to share in the expense of the enhancements.
b) At any time during the 9 months following implementation,
FDISG or other FDISG clients agree to share the expense for
the enhancements.
Access and Capability. The Funds' dedicated programmers will have
access and capability to update any part of the System. However,
depending on the skill set of the programmers, as well as the scope of
the requested enhancement, it may be in the best interest of both the
Fund and FDISG to utilize non-dedicated programmers to address
<PAGE> 23
certain enhancements. In addition, because many programs are shared by
multiple clients, some enhancements may require approval from those
clients. These enhancements should be handled on an item by item
basis.
III. ADDITIONAL FEES
a. If the Fund chooses to use resources in addition to the
Dedicated Programming Team to accomplish work as outlined in
Section II.b, the following rates will apply:
<TABLE>
<CAPTION>
Annual Hourly
------ ------
<S> <C> <C>
Programmer $100,000 $135/hr
Business Systems Analyst $ 90,000 $100/hr
Acceptance Tester $ 85,000 $ 90/hr
</TABLE>
These rates apply to development and customization on all
software covered under this agreement (i.e. core TA system,
IMPRESS Plus, ACE+).
b. IMPRESS Plus Maintenance and Support Fees - The Fund will be
billed a monthly fee of $64,000 (fee based on $1500 per
workstation per year for 512 workstation license). Billing to
commence on the earlier of a) first production usage of
IMPRESS Plus software or b) August 1, 1997. Maintenance and
Support Fees include:
o All third party software maintenance charges from
software licensed in Exhibit 1 of Schedule G
o Full IMPRESS Plus applications support (bug fixes,
application assistance, etc.)
o Remote Dial-in IMPRESS Plus application support (if
needed)
o Subsequent interim and major releases for all
licensed IMPRESS Plus products
o 7x24 Help Desk Support for IMPRESS Plus applications
o Full support through First Data for third party
applications licensed in Exhibit 1 of Schedule G
o Participation in IMPRESS Plus User Group
c. IMPRESS Plus Installation Fees - Billable to the Fund at
$135/hr. (Estimate for 512 IMPRESS Plus workstations is 1100
hours). Installation includes:
o IMPRESS Plus application installation
o IMPRESS Plus third party software installation
o Network Design Assistance
o Hardware Configuration Assistance
o Workflow analysis
<PAGE> 24
o Project Management
o Post Installation Support
d. On each anniversary date of this Agreement, FDISG may adjust
the hourly and annual rates to reflect salary increases
and/or to maintain competitive rates in attracting qualified
personnel. Such annual increase will not exceed seven percent
(7%).
e. IMPRESS Plus Maintenance and Support and EMPRESS Plus
Installation Fees do not include the following:
o Hardware
o Network and Server Software not listed in Exhibit 1
of Schedule G
o Customization or application integration
o Support for IMPRESS Plus applications customized or
built by the Fund (see Section 3 of Exhibit 3 of
Schedule G)
o Installation, Integration and On-going Support of
hardware, network, and software components not
included in Schedule G
o Travel Expenses for install and support staff for
on-site visits (billed separately per Schedule D)
o Application Source Code
f. IMPRESS Plus Maintenance and Support and IMPRESS Plus
Installation Fees for Separate Test or Training System.
Maintenance and Support Fees - The Fund will be billed a
monthly fee of $2,666.66 (based on $1000 per workstation per
year with a minimum 32 workstation license). Billing to
commence on first production usage of IMPRESS Plus software in
the Training or Test environment. Maintenance and Support
includes items listed in Section III.b above.
Installation Fees - Billable to the Fund at $135/hr. (Estimate
for 32 IMPRESS Plus workstations is 200 hours). Installation
includes items listed in Section III.c above.
<PAGE> 25
g. Fees for IMPRESS Plus workstations in excess of 512:
<TABLE>
<CAPTION>
o Number of workstations ordered One-time License Fee
<S> <C>
32 $1300/workstation
64 $1000/workstation
128 waived
256 waived
</TABLE>
o Maintenance and Support - $1500 per workstation per
year; billable on first production usage of IMPRESS
Plus software; includes items listed in Section III.b
above
o Installation Fees - Billable to the Fund at $135/hr;
includes items listed in Section III.c above
The Fund agrees to pay a minimum of 18 months Maintenance and
Support for each workstation in excess of 512.
<PAGE> 26
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOI SYSTEMMATIC Specs
1 26610 DEFAULT/RECALCULATION PROBLEM Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
*Recalc does not include all
purchases applied to the LOI.*
Dealer comm credit not posted in
recalc.* No adjustment code to
adjust underwriter. * Trades
outside LOI period included in
recalc.* No ability to turn off
systematic recalc.
====================================================================================================================================
====================================================================================================================================
PRODUCE CHECKS ON NT2 ACCOUNTS Specs
2 19164 WITH DIRECT REDEMPTIONS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Checks should be produced for
direct reds on NT2 accounts.
Transactions post to history, yet
no checks are produced. Update
DRDM0750 to allow.
====================================================================================================================================
====================================================================================================================================
3 25276 WIRE ORDER PROCESSING PROBLEM Specs
Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Wire order cancel/replacements
(OPR/OPC) do not update master
controls if not double Qc'd. If not
double Qc'd both trades appear
as new purchase orders.
====================================================================================================================================
====================================================================================================================================
Specs
4 24262 CERTIFICATE REPORT MISSING DATA Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
PFSR135D-R12 does not include
the work of several days in 1996.
Unable to reconcile certificate
issues without adhocs to identify
missing data.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 27
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NSCC REPORT PNSC802D - Specs
INCORRECT COMMISSIONS ON Received
5 26768 SPLIT REPS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
This report overestimates the
commission paid to split reps.
NSCC regulation requires
settlement by this report,
resulting in overpayments.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC REJECT REPORT PNSCSPSD- Specs
R01 - MULTI PAGE REJECT RECEIVED
6 26769 DELETIONS AND TRUNCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC rejects for a dealer that
run for more than one page are
dropping accounts, resulting in
inconsistancies from one page to
the next. Also truncation pro-
blems with Settlement Value,
Commission Amount and Fund Owes
Dealer amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ONLINE EDIT PREVENTING USE OF Specs
7 26772 CDSC EXEMPT OPTION 3. Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Exempt option 3 grosses up
CDSC on SWiPs, ensuring
consistent dollar amount
swips. For funds allowing
CDSC-free SWIPs, edit pre-
venting a shareholder
redeeming an amount
greater than 12% annually
from having a SWIP with a set
dollar amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 28
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOIMNT DELETING Specs
BROKER CLIENT Received
8 23849 NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Systematic completion
of an LOI removes the
Broker Client Number
form the account in
error. Absence of the
BRCN causes problems
for the dealer.
Maintenance journals
are reviewed to
identify these accounts
and re-add the BRCN.
====================================================================================================================================
====================================================================================================================================
NET INDICATOR NOT Specs
CARRYING TO QC SCREEN Received
9 26155 AND NO MISMATCH WARNING
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When entering a wire
order redemption as a
"net" amount trade, the
net indicator is not
carried forward in the
QC process, and does not
provide a mismatch
warning. The trade then
processes as "gross",
the default.
====================================================================================================================================
====================================================================================================================================
ASSIGNMENT OF CLOSED Specs
11 26770 ACCOUNTS ON QA RECORD Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
If a QA record is
manually created and
the master account is
not designated, FSR
assigns the first
account entered. If
this account is
closed, a consolidated
statement will not
print. Results in
additional phone calls
andduplicate statement
requests.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REASSIGNMENT OF MASTER ACCOUNT Specs
12 26771 NUMBER Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When a master account closes
AIM would like the master
account status to be reassigned
systematically to an open account
within the QA cluster. Currently
this is a time consuming manual
process.
====================================================================================================================================
====================================================================================================================================
Specs
13 26611 DIVIDEND CONTROL REPORT PROBLEMS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
The Dividend and Capital Gain
reports do not match the
summary reports.
====================================================================================================================================
====================================================================================================================================
DUPLICATE STATEMENTS BY DBR NOT Specs
14 26612 AVAILABLE Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
AFS would like the ability to
request duplicate statements by
dealer, dealer/branch,
dealer/branch/rep. Current
functionality is by fund/account.
====================================================================================================================================
====================================================================================================================================
PAC'S NOT RUNNING ON CAPITAL Specs
16 26154 DEVELOPMENT ACCOUNTS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts opened via merger
subscription with converted PAC
information, when the PAC is
turned on, do not run. Deletion
and reestablishment of the PAC
data does not resolve the issue.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 30
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUNDSERV REDEMPTION SHOWS
INCORRECT SHARE AMOUNT ON Specs
17 25763 HISTORY Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Several examples of FundSERV
reds where the less than the
full amount of shares appear
redeemed in the line of
history, but the account is
left with a zero balance. The
correct amount is paid through
the NSCC. Control balancing
problems result.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
EXHIBIT 2 OF SCHEDULE C
IWT FUNCTIONALITY
<TABLE>
<CAPTION>
- ---------------------------- ----------------------------
NEW ACCOUNT FINANCIALS
- ---------------------------- ----------------------------
<S> <C>
CASHIERING REPORT
- ---------------------------- ----------------------------
ACCOUNT OPTIONS EXCEPTION WAIVER
- ---------------------------- ----------------------------
AUTO EXCHANGE ENHANCED QC
- ---------------------------- ----------------------------
BANK ADDRESS
- ---------------------------- ----------------------------
AIP FINANCIAL QC
- ---------------------------- ----------------------------
BANK WIRE IMBALANCE REPORT
- ---------------------------- ----------------------------
BENEFICIARY INTERNAL ASSET MOVE
- ---------------------------- ----------------------------
CHECKWRITING EXCHANGE
- ---------------------------- ----------------------------
DIVIDENDS/CAPGAIN TRANSFER
- ---------------------------- ----------------------------
SWP PURCHASES
- ---------------------------- ----------------------------
TELEPHONE RED REDEMPTIONS
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
ACCOUNT SEARCH
- ---------------------------- ----------------------------
ACCOUNT SETUP
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
DEALER
- ---------------------------- ----------------------------
DEALER OFFICE REP LIST
- ---------------------------- ----------------------------
DEALER ALPHA SEARCH
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
FINANCIAL INQUIRY
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
GROUP MASTER ADD
- ---------------------------- ----------------------------
LOI/ROA
- ---------------------------- ----------------------------
ACCOUNT LINK/UNLINK
- ---------------------------- ----------------------------
IWT ACCOUNT LIST
- ---------------------------- ----------------------------
PROCESSED ITEM LIST
- ---------------------------- ----------------------------
</TABLE>
<PAGE> 32
EXHIBIT 3 OF SCHEDULE C
AIM SEPARATE CYCLE OVERVIEW
This project removes AIM from all FSR regions, files, jobstreams, control
cards, etc. and establishes them with their own. It will allow AIM to have more
control over their processing and removes any unexpected complications caused
by dependency on the activities of other management companies.
VOLUME
o 1700+ Jobstreams (JCL, Procs, and Control Cards) to evaluate
o Approximately 70% of these will qualify for processing
(create new AIM and modify FSR)
o * Files to convert
o * GDGs
o * additional Tapes/Cartridges
o * additional DASD required
o * additional Tape Mounts
* These figures are currently being researched.
AFFECTED AREAS/DEPARTMENTS
o AIM Client Services - John Corey
o Atest - Kathy McNeil, Steve Carlson
o BOSS Application - Tom Farnsworth (B)
o Capacity Planning - Ron Larue
o Corporate Actions - Joe Viens
o DASD - John Dryer, Janet Rose (B)
o Database Administration (DBA) for On-line - Steve Powers (B)
o DCX - Linda Messore, Ann Stadtherr
o ESG - Connie Ciulla, Arthur Roy
o Express Delivery - Don Morgan
o FSR - Tom Woislow, Bill VonHandorf, Bill Quigley, Bob Reilly,
Ray Bennison
o NSCC - Carl Damelio
o Print Mail - Helene Grunes (B)
o Tape Operations - Don Chappell
o SCE - Ed Oelerich, Ellen Rhode
o Tax/CBA - Ed Boyle
o Transmissions - Frank Pitzi
Because of the large volume of work to be done and the number of departments
involved we are developing a "phased in" development and implementation
approach. This will cause the least impact to both our client and our own
internal departments. It will require tight project management and dedicated
point people both from AIM and our own departments. Each phase will migrate up
through test, acceptance and production.
<PAGE> 33
PHASE 1 - START-UP FILES
The foundation of this approach is to create six basic files with an AIM
high-level qualifier on a daily basis from the FSR system which can be used by
jobs which read them but not update them (see Phase 2). They would be deleted
at the beginning of the next day's cycle and recreated by the FSR cycle. These
files are:
P03AIM.PRIV.MASTER.DATE
P03AIM.PRIV.BATCH.DATE
P03AIM.PRIV.MASTER.FUND
P03AIM.PRIV.BATCH.FUND
P03AIM.PRIV.TRANS.ACCEPT1
P03AIM.PRIV.TRANS.DIVIDEND
The first four files would be copied from FSR files to AIM files in a new
temporary AIM job which would run daily.
The last two files, trans.accept1 and trans.dividend, currently exist with
different names in FSR. Job PFSR13DD (FSR/FED WIRE) now creates
P03FSR.TEMP.XMITOUT.ACCEPT1.AIM which contains all accept records for AIM. Job
PFSR13ED (FSR/FED WIRE) now creates P03FSR.TEMP.XMITOUT.DIV.AIM which contains
all dividend records for AIM. These files are input to AIM transmission jobs
(PFSRXCGD and PFSRXCLD) and the FSR/POST BACKUPS job (PFSR71HD).
We would rename P03FSR.PRIV.TRANS.ACCEPT1 and P03FSR.PRIV.TRANS.DIVIDEND to
P03AIM.PRIV.TRANS.ACCEPT1 and P03AIM.PRIV.TRANS.DIVIDEND in jobs PFSR13DD and
PFSR13ED. We would rename the transmission jobs to PAIMxxxx modify them
replacing FSR references with AIM, set up the appropriate schedule and move
them up the regions. We would place an override in PFSR71HD which would now
reference the PO3AIM file for backup. Once tested and QA'd by us and AIM we
would replace the FSR transmission jobs with the new AIM jobs.
RESULT OF PHASE 1
We now have three production jobs running in the AIM region and we have set up
the 6 basic AIM files which will be the basis for Phase 2.
<PAGE> 34
PHASE 2 - REPORTS, TRANSMISSIONS, AND AIM-ONLY JOBS
This phase involves converting jobs which do not update any of the master files.
They may read them and create temporary files but updating will wait for phase
3. Phase 2 jobstreams will include mainly report and transmission jobs as well
as any AIM-only jobs. We will be adding new schedule entries (CA-7) for AIM and
modifying existing FSR schedules where needed paying special attention to
triggers, requirements and dependencies. We will add new Express Delivery
entries for AIM reports and delete the AIM entries from the FSR system.
The actual migration of reports and transmission files from the FSR cycle to
the AIM cycle will be on a specific schedule. As we introduce reports to the
AIM cycle they will be available in SAR from both FSR and AIM cycles for a week
to allow AIM to review them. They will then be turned off in SAR for FSR. We
will provide AIM with a report schedule each week to aid this process.
Transmission files will be tested using record counts and selective file
compares. AIM-only jobs will also parallel for a week where feasible.
An example of a Phase 2 job is PFSR143D (FSR/AUTOEX). This job reads the batch
fund file, the batch date file and the trans.accept1 file to produce reports.
All these files are available in the AIM region.
Phase 2 work to be done described in a programmer's template includes (but is
not limited to):
Copy and rename the JCL jobs.
Modify procs and/or control cards if necessary for the test/acpt/prod
regions.
Verify that JCL, procs and control cards follow our current standards.
Create high-level overrides for FSR read-only files.
Change Express Delivery for AIM output and set up the FSR RID entry to
be deleted in n days.
Schedule the new AIM jobs with the same requirements and dependencies
as the FSR jobs but using the appropriate high level qualifier. This
requires tight control on the status of all jobs.
Change the schedules of any jobs which are dependent upon the FSR job
to be dependent upon the new AIM job. Note: this will not be the case
with all AIM jobs.
Move it up the regions testing at appropriate points.
Review the output (First Data and AIM).
After a week inhibit AIM output from FSR jobs from going to SAR. Only
AIM output from AIM jobs will be available in SAR.
The key to the success of this phase is an aggressive implementation schedule
and active participation by AIM representatives in checking and validating the
output.
RESULT OF PHASE 2
We now have report-only jobs (not associated with the actual updating of
files), most of the transmission jobs and all AIM-only jobs which are not
associated with updating files in AIM production. All converted reports and
files have been signed off by AIM. These AIM activities are also being
processed in FSR. We have gone as far as possible without updating files.
<PAGE> 35
PHASE 3 - ANCILLARY FILES AND SYSTEMS
This phase includes updating ancillary files and their associated jobstreams.
Examples of this type may include Bluesky, history, cert or check files, etc.
These files are not mainstream and tend to be localized in how they are
updated. In order to qualify for Phase 3 the Management Company must be the
high order sort key field.
There are two approaches we will use depending upon the main file's on-line
considerations. The first approach involves converting the main file once along
with all associated jobs and the other involves splitting out AIM from FSR at
the start of the cycle, updating it in AIM jobs and merging it back in FSR at
the end. Either approach will involve multiple jobs per master file.
For example, The Bluesky File is only used by 3 jobs: PFSRS07D which creates
the batch file, PFSR190D which updates the file and does an AIM-only extract,
and PFSR194D which does reports. In this case, we would split the FSR Bluesky
File into AIM-only and all other. The FSR Bluesky subsystem would then be
cloned for AIM and the result would be two separate Bluesky subsystems. Online
would access the appropriate Bluesky file.
Other subsystems may be too routed in our core to fully separate out and would
be better served breaking out AIM at the beginning of its cycle, updating in
AIM-only jobs and remerging it at the end of the cycle. Any special jobs used
for splitting out files or merging them after update will have to be backed out
in Phase 4.
All activities described in Phase 2 apply here as well.
RESULT OF PHASE 3
We have now isolated and converted any subsystems not bound to core processing.
Most AIM reports and transmissions are being produced in the AIM region. We are
updating some master files and have done everything possible surrounding the
core without touching it. We are ready for Phase 4.
<PAGE> 36
PHASE 4 - THE CORE
This phase deals with updates to our core master files, our functional
processes, converting large volume files (ShareA and its splits, history, lots,
global, etc.) and includes all jobstreams that have not yet been converted.
Additionally, it includes backing out any special split or merge jobs as well
as special overrides introduced in earlier phases. This will be the largest
phase. On-line will now access all AIM-only files.
Many of the activities done in the previous phases will be performed here as
well. Because so many programs interact with the core modules there is no easy
way to break this activity up. As always we will need our AIM partners to help
in the QA activities for this hefty stage.
It is possible to combine Phases 3 and 4 if it were felt to be desirable.
However, it is our intention to have all peripheral completed before attacking
the core so there will be no unnecessary distractions. Additionally, for
development contention reasons, we would like to turn these modules over as
expeditiously as possible.
All AIM-related activities, programs, control cards, overrides, splits, merges,
etc. will be removed from all FSR jobs.
RESULT OF PHASE 4
All AIM processing is now contained in its own region and runs under its own
schedule. On-line accesses AIM-only files. FSR no longer has any AIM
processing relationship with the exception of any files which are to be merged
from both regions for transmission or system reasons.
<PAGE> 37
EXHIBIT 4 of SCHEDULE C
AUTHORIZED PERSONS REQUESTING SYSTEM MODIFICATIONS
---------------------------------------------------
John Caldwell
President, A I M Fund Services, Inc.
---------------------------------------------------
Joseph Charpentier
Assistant Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Tony D. Green
Senior Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Jean Miller, Director of Applications
Information Technology Services
A I M Advisors, Inc.
<PAGE> 38
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction,
$.10/per same day trade confirmations
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals
and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and related expenses, as pre-approved by the Fund
o System training, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversions between FDISG
systems
o Such other miscellaneous expenses reasonably incurred by FDISG
in performing its duties and responsibilities under this
Agreement
<PAGE> 39
SCHEDULE F
PERFORMANCE STANDARDS
I STANDARDS FOR RESOLUTION OF SYSTEM DEFICIENCIES
"SYSTEM DEFICIENCY" - A system process which does not operate according to the
design of the computer application or system specifications, and is not a
result of any act or failure to act by the Fund.
1. FIRE CALL - A System Deficiency with at least one of the following
characteristics:
1. Potential or real financial exposure in excess of $100,000, or
2. Causes the Fund to be out of compliance with a major
regulatory requirement, or
3. Causes incorrect transaction processing and/or shareholder
confirmations with no reasonable manual workaround available
either at the Fund or in FDISG's systems
FDISG Response: Analysis and resolution within 36 hours or 2 nightly
processing cycles
2. CRITICAL DEFICIENCY - A System Deficiency with at least one of the
following characteristics:
o Potential or real financial exposure estimated from
$25,000-$100,000 or,
o Manual workaround requires substantial manual effort and
carries a high potential for error
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within 5 business days of
initial notification; Problem resolution within an average of 30
business days of initial notification
3. NON-CRITICAL DEFICIENCY - All other System Deficiencies
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within an average of 15
business days of initial notification; Problem resolution and target
dates to be determined on an item-by-item basis jointly by the Fund
and FDISG.
<PAGE> 40
II STANDARDS FOR ON-LINE SYSTEMS AVAILABILITY AND RESPONSE TIME
These standards shall apply on business days of the Funds.
o On-line systems availability between 7:00 a.m. and 7:00 p.m
Central Time ("CT") - 99% of hours available measured monthly.
o Average response time (7:00 a.m. to 7:00 p.m. CT) of 3 seconds
or less, measured end-to-end, in response to the system
employed by A I M Fund Services, Inc. as of September 1, 1994
- 99% measured monthly.
III STANDARDS FOR DELIVERY OF SYSTEM REPORTS
o CRITICAL REPORTS - The following report bundles in queue and
ready to begin transmission no later than 7:00 a.m. CT each
business day - a cumulative of two late bundles permitted per
month:
EFSR047H
EFSR601H
Changes to critical report bundles must be jointly approved by
an FDISG Client Service Officer and an authorized requestor of
the Fund as listed in Exhibit 4 of Schedule C.
o All other nightly report bundles in queue and ready to begin
transmission no later than 7:00 a.m. CT each business day -
95% measured monthly.
<PAGE> 41
IV STANDARDS FOR DELIVERY OF FILE TRANSMISSIONS
o CRITICAL FILES - The following jobs in queue and ready to
begin transmission no later than 4:30 CT each business day of
the Fund - a cumulative of two late files permitted per month:
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCAD Daily Cap Stock File
PFSRXCYD Daily DISC Cap Stock File
PFSRXCTD Daily DISC ACH File
PFSRXCVD Daily DISC NSCC Green Sheets File
</TABLE>
o The following jobs in queue and ready to begin transmission no
later than 4:30 CT each business day of the Fund - 95%
measured monthly
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCGD Daily Acceptance File
PFSRXCKD Daily Dealer File
PFSRXCHD Daily Order File
PFSRXCID Daily ShareA Master File
PFSRXCJD Daily Fund File
PFSRXCMD Daily Lot History File
PFSRXCND Daily Lot Maintenance File
PFSRXCLD Periodic. Dividend Activity
</TABLE>
The standards will not apply on business days with the
following activity: Processing of Year-end Dividend and
Capital Gain Activity, Annual Trustee Fee Payment; Year-end
File Initialization.
V STANDARDS FOR THE FUND
All inbound transmissions (i.e. SIAC, various third parties) and fund prices in
receipt by FDISG by 8:00 p.m. CT
VI RIGHT TO AUDIT
The Fund shall have the option, on an annual basis, to audit the reports used
to measure the standards listed in this Schedule F. Notice of an audit will be
given 14 days in advance, and the audit will not last more than one day.
<PAGE> 42
VII PENALTIES/INCENTIVES
FDISG agrees to achieve the performance levels specified in Schedule F,
Sections II, III, and IV, and semiannually (as of each June 30th and December
31st) to adjust the monthly Account Fee Invoice to reflect any
penalties/incentives as outlined below. Penalties for a given business day will
be applied only if the Standards of the Fund in Section V are achieved.
ON-LINE SYSTEMS AVAILABILITY - MONTHLY
For each one-tenth of 1% under 99%, the monthly Account Fees will be reduced by
the same percentage. The monthly maximum percentage penalty reduction will be
3% of the monthly bill. For each one-tenth of 1% in excess of 99% up to a
maximum of 1%, the monthly Account Fees will be increased by the same
percentage.
ON-LINE SYSTEMS AVAILABILITY - DAILY
If systems availability on any given business day is less than 80%, the monthly
account Fees will be reduced by the percentage of systems availability below
80% for that day times 1/30 of the monthly Account Fees.
REPORT AVAILABILITY - CRITICAL REPORTS
Monthly Account Fees will be reduced by $250.00 for each late instance greater
than the allowable error rate, up to a maximum of $500.00 per day. For each
month within the allowable error rate, monthly Account Fees shall be increased
by $1,000.
FILE TRANSMISSIONS - CRITICAL FILES
Monthly Account Fees will be reduced by $500.00 for each late instance greater
than the allowable error rate with a maximum penalty of $10,000 per month. For
each month within the allowable error rate, monthly Account Fees shall be
increased by $1,000.
The Performance Standards and related penalties set forth in this Schedule F
shall not apply in the event of any occurrence defined in Section 8(g) of the
Agreement.
<PAGE> 43
SCHEDULE G
IMPRESS PLUS SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule G (the "Software"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibits 1 of Schedule G ("EXHIBIT 1")
and Exhibit 1.1 of Schedule G ("EXHIBIT 1.1") (collectively, the "SOFTWARE
EXHIBITS"). Subject to the terms and conditions set forth in this Schedule G,
FDISG grants to the Fund and the Fund accepts from FDISG the non-exclusive,
non-transferable license to use the Software during the term of the Agreement
("LICENSE"). Some software components ("THIRD PARTY SOFTWARE") required to be
used with the Software were developed by a third party ("THIRD PARTY VENDOR").
Third Party Software is licensed to the Fund only pursuant to: (a) shrink
wrapped or other agreements between the Third Party Vendor and the Fund and (b)
the specifically indicated terms and conditions in this Schedule G. The
Software Exhibits shall indicate which Third Party Software the Fund is
required to obtain and license from FDISG and which Third Party Software the
Fund shall be solely responsible to obtain and license. As part of the
Software, FDISG shall provide the Fund with the interfaces set forth in Exhibit
1, between the Software and Third Party Software ("INTERFACES"). FDISG shall
provide the software support services ("SOFTWARE SUPPORT") so designated in
Exhibit 3 of Schedule G ("EXHIBIT 3"). Software Support shall include a
License to error corrections, minor enhancements and interim upgrades to the
Software which are made generally available to FDISG client's of the Software
under Software Support, but shall not include a License to substantial added
functionality, new interfaces, new architecture, new platforms or other major
software development efforts, as determined solely by FDISG.
1.2 Ownership. FDISG or its licensors shall retain tide to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION"). FDISG
reserves all rights in the Proprietary Information not expressly granted to the
Fund in this Schedule G. Upon FDISG's reasonable request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") set forth in Exhibit 2.1 of Schedule G with respect to production
equipment and Exhibit 2.2 of Schedule G with respect to Test/Training equipment
(collectively, ("EXHIBIT 2"). Additional terms and conditions concerning the
Equipment are set forth in Exhibit 2. The Equipment identified in Exhibit 2
represents the minimum equipment configuration required to properly operate the
Software. FDISG disclaims responsibility for the performance of the Software in
the event that the Fund utilizes equipment different than that which is set
forth in Exhibit 2. FDISG and the Fund shall (a) within a reasonable time after
the Effective Date, agree upon the tasks required to implement the Software,
Third Party Software and Equipment ("SYSTEM") and the party responsible and
time frames for each task ("SCOPE OF WORK"); (b) perform their respective
assigned tasks according to the Scope of Work; and (c) if not the party
assigned to a task, cooperate with the responsible party. To the extent the
Scope of Work is incomplete, FDISG shall follow its reasonable and customary
practices. Upon prior notice by FDISG to the Fund, the Fund shall give
reasonable access to the System to FDISG, FDISG's employees. affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) and solely in connection with the Fund's use of the FDISG System and
only at the locations identified in the Agreement. If the Equipment is
inoperative due to malfunction, the license grant shall, upon written notice to
FDISG, be temporarily extended to authorize the Fund to use the Software on any
other equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph. Except as otherwise specifically stated
herein, the Fund shall not modify, re-engineer, decompile or reverse engineer
the Software or otherwise attempt to obtain any source code without FDISG's
prior written consent.
<PAGE> 44
1.5 Software Installation and Acceptance. FDISG shall advise the Fund that
the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
sixty (60) days after Software Installation Date or sixty (60) days after the
Fund's first use of any Software component to process live production data
("SOFTWARE ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
1.7 No-Export. The Software shall not be shipped or used by the Fund
outside the United States. The Fund shall comply with all applicable export and
re-export restrictions and regulations of the U.S. Department of Commerce or
other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule G which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software Warranties and Remedies. For the term of the Agreement, FDISG
warrants ("PERFORMANCE WARRANTY") that the Software shall perform on the
Equipment substantially in accordance with the Documentation and shall enable
the Funds to meet the requirements set forth in Section 240.17a-4 of the
Securities Exchange Act of 1934, except for Directly Obtained Third Party
Software as set forth in Section 2.2 below. The timely correction of errors
and deficiencies in the Software pursuant to Software Support shall be Fund's
sole and exclusive remedy for the Performance Warranty. FDISG warrants ("RIGHTS
WARRANTY") it has the right to license the Software in accordance with the
Agreement. Provided the Fund gives FDISG timely written notice, reasonable
assistance, including assistance from the Fund's employees, agents, independent
contractors and affiliates (collectively, "FUND'S AGENTS"), and sole authority
to defend or settle the action, then FDISG shall do the following
("INFRINGEMENT INDEMNIFICATION"): (a) defend or settle, at its expense, any
action brought against the Fund or the Fund's Agents to the extent the action is
based on a claim that the Software infringes a duly issued United States'
patent or copyright or violates a third party's proprietary trade secrets or
other similar intellectual property rights ("INFRINGEMENT"); and (b) pay
damages and costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Directly Obtained Third Party Software Warranties. All warranties for
the Directly Obtained Third Party Software identified Section 2.2 of Exhibit 1,
if any, are specifically set forth in the applicable agreements supplied by the
Third Party Vendors of such products.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and as
limited by applicable law, the Fund shall indemnify, defend and hold FDISG and
FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
<PAGE> 45
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("CONFIDENTIAL INFORMATION"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential Information, the other party may obtain injunctive relief, in
addition to its other remedies, inadequate monetary damages and irreparable
harm being acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System.
<PAGE> 46
EXHIBIT 1 OF SCHEDULE G
SOFTWARE
1. FDISG Software.
1.1 FDISG Software includes the following IMPRESS Plus products which are
further described in Exhibit 1.1 ("Specifications"):
IMPRESS Plus Workflow/Image Release 5.3
IMPRESS Plus Intelligent Workstations (IWT) Release 5.3 for FSR
IMPRESS Plus Customer Service System Release 5.3
1.2 Interfaces. Except as agreed in writing, FDISG shall not be required
to modify the Software or the Interfaces to accommodate changes made by the
Fund's vendor to its portion of the interface. If the Fund's vendor needs
information about the Software, then the vendor must first execute a
nondisclosure agreement in form and content reasonably acceptable to FDISG.
FDISG shall not be liable for any delay or degradation to the Software or
Equipment attributable to the Fund's use of Interfaces.
1.3 Customization. The listed products are licensed for IMPRESS Plus use
and customization only. Use of these tools to develop or customize non-IMPRESS
Plus applications is not permitted without the express written authorization of
FDISG.
2. Third Party Software.
2.1 FDISG Provided Third Party Software. The following Third Party
Software is licensed to the Fund directly by FDISG subject to the terms of the
Agreement:
2.1.1 BancTec Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory BancTec ("BancTec")
terms and conditions set forth in Attachment 1 of this Exhibit 1 of Schedule G
("Attachment 1"), attached and incorporated by reference. To the extent that
the terms of Attachment 1 conflict with or differ from the other terms and
conditions in the Agreement, the terms of Attachment 1 shall prevail with
respect to the following BancTec Software ("BancTec Software"):
Informix Multi-User with 512 maximum users
XDP Storage Manager Multi-User with 512 maximum users
FloWare Multi-User with 512 maximum users
Application Designer Single-User with 512 maximum users
2.1.2 Pegasystems Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory Pegasystems
("Pegasystems") terms and conditions set forth in Attachment 2 of this Exhibit
1 of Schedule G ("Attachment 2"), attached and incorporated by reference. To
the extent that the terms of Attachment 2 conflict with or differ from the
other terms and conditions in the Agreement, the terms of Attachment 2 shall
prevail with respect to the following Pegasystems Software ("Pegasystems
Software"):
Product Name Version Function
PegaSHARES RES 6.2 Workflow Engine
PegaENVIRONMENT ENV 4.2 Operating Shell
PegaPRISM Prism 5.1 Image Viewer
PegaStorage Manager Stor 2.1 Image Librarian
PegaREACH Real.0 Desktop Graphical Interface
2.2 Directly Obtained Third Party Software. The following Third Party,
Software is separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of any "shrink-wrapped" or
<PAGE> 47
other agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required: Optional:
<S> <C>
- - Microsoft DOS 6.2 or higher - ALCOM LanFax Redirector V2.15gl or greater
- - Microsoft Windows 95 or NT 4.0 (required if using fax)
- - Microsoft Office 95 or better - HiJaak PRO 2.0 or greater for Windows
- - Microsoft NT Server 3.5 (required if using fax)
- - Microsoft NTSQL Database 4.x and client - Word for Windows 6.Oc or greater (required if
Licenses using fax)
- - Microsoft TCP/IP Stack - Quarterdeck QEMM 7.X or greater (required if
- - Novell NetWare 3.11 or greater using fax)
- - SNA Server 3.0 or higher - CGS Computer Associates, Inc. Scanlib software
- - UNIX for selected Image Server platform (required for Ricoh scanners)
- - UNIX ESQL/C Compiler for selected - Powersoft PowerViewer (required for adhoc
UNIX platform reports)
- - MDI Gateway for DB2 by - 3270 Windows emulation package
MicroDecisionware Inc., A Sybase client (usually Rumba for Windows by WaUData)
- - Sybase Open Client NetLibrary for the
selected TCP/IP stack
</TABLE>
<PAGE> 48
ATTACHMENT 1 OF EXHIBIT 1 OF SCHEDULE G
TERMS AND CONDITIONS
BANCTEC
1. Each BancTec Software Package listed in Exhibit 1 of Schedule G
("Program") which is identified as "Multi-User Program" is licensed for
installation on a single network server computer which is supplied by BancTec,
FDISG, or a third party, and which is electronically linked with one or more
workstations having access to the Program. If Section 2.1.1 of Exhibit 1 of
Schedule G ("Exhibit 1") designates a maximum number of users authorized to
simultaneously access the Multi-User Program, no access will be permitted in
excess of such maximum number. In all other cases, Multi-User Program is
authorized to be accessed by all workstations which are configured to
communicate with that network server computer.
2. Each Program listed in Exhibit 1 identified as "Single-User Software"
is licensed for installation and use on a single computer.
3. Each Program listed in Exhibit 1 identified as an "Unlimited User
Program" is licensed for use by Client after ordering a copy of the Program.
Once ordered, the Fund may make unlimited copies of such Programs at no
additional charge.
4. Each Program listed in Exhibit 1 identified as a "Device Program" is
licensed for use solely to facilitate the operation of the corresponding
equipment device. If a Device Program is used for more than one device, the
license must be upgraded in accordance with Exhibit 1.
5. Each Program listed in Exhibit 1 identified as a "Development-User
Program" is licensed for installation and use on a single computer for
development and testing purposes. The license for Development-User Programs
also includes a license for production use on a single computer.
6. Each Program listed in Exhibit 1 identified as a "Production-User
Program" consists of necessary runtime modules and associated link libraries
for inclusion with custom software applications. Production-User Programs are
not licensed for use in the development of custom software applications and may
be either Multi-User or Single-User Programs.
7. Only a nontransferable, nonexclusive, perpetual license to use the
Programs and related BancTec documentation for its own internal use (including,
without limitation, providing processing services to third parties in a service
bureau or facilities management environment) is granted to the Fund.
8. BancTec or its vendors retain all title to the Programs, and all
copies thereof, and no title to the Programs, or any intellectual property in
the Programs, is being transferred; provided, however, nothing contained herein
shall give BancTec or its vendors any right, title or interest in the Software.
9. The Programs shall not be copied, except as specifically authorized
under an Exhibit to this Agreement and except for backup or archival purposes.
All such copies shall contain all copyright and other proprietary notices or
legends of BancTec or its vendors contained in the Programs delivered under
this Agreement.
10. The Programs shall not be modified, reverse assembled or decompiled by
the Fund. No attempt shall be made by the Fund to derive source code from the
Programs.
11. The Programs will not be shipped or used by FDISG or the Fund to
Africa or the Middle East. All applicable export and re-export restrictions and
regulations of the U.S. Department of Commerce or other U.S. agency or
<PAGE> 49
authority shall be complied with. The Programs shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
12. Each Program is copyrighted and contains proprietary and confidential
trade secret information of BancTec and its vendors. Each sublicensee of the
Programs shall protect the confidentiality of the Programs with at least the
same standard of care used to protect the Fund's own similar confidential
information.
13. BancTec and its vendors are each a direct and intended beneficiary of
the sublicenses granted for the Programs and may enforce such sublicenses
directly against sublicenses of the Programs.
14. Neither BancTec nor its vendors shall be liable to the Fund for any
general, special, direct, indirect, consequential, incidental, or other damages
arising out of the sublicense of the Programs.
15. The license granted to the Fund of the Programs may be terminated,
either immediately or after a notice period not exceeding thirty (30) days,
upon violation by the Fund of any of the terms or conditions of the Agreement,
including but not limited to Attachment 1.
16. Upon termination of the license grant to the Fund to use the Program
or the Agreement, the Fund shall return all copies of the Programs to FDISG.
<PAGE> 50
ATTACHMENT 2 OF EXHIBIT 1 OF SCHEDULE G
PEGASYSTEMS TERMS AND CONDITIONS
In addition to the terms of the Agreement, the following terms shall apply with
respect to the Pegasystems Software:
1. The Fund is prohibited from assigning, timesharing, renting, or
hypothecating any of the Pegasystems Software, without prior written approval
of Pegasystems.
2. The Fund is prohibited from passing or transferring any right, title,
or interest to the Pegasystems Software to any third party.
3. The Fund is prohibit from publicizing or disseminating any results of
any benchmark or other testing of the Pegasystems Software.
4. To the fullest extent permitted by applicable law, (i) Pegasystems
shall have no liability to the Fund for damages and claims, whether direct,
indirect, incidental, consequential, or punitive, and all attorneys' fees and
costs, arising from the Fund's use of the Pegasystems Software, and (ii) the
Fund shall have no rights to assert claims for damages against Pegasystems,
including claims against Pegasystems as a third party beneficiary of this
agreement.
5. Pegasystems, Inc. is a third party beneficiary of this agreement to
the extent permitted by applicable law.
<PAGE> 51
IMPRESSive Technology, IMPRESSive Results
EXHIBIT 1.1 OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. PRODUCT OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . Page 1
II. PRODUCT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . Page 3
III. TECHNICAL OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . Page 5
IV. HIGH LEVEL OVERVIEW OF IMPRESS Plus FUNCTIONALITY . . . . . . . Page 6
A. Workflow Management
B. Image Processing
C. Intelligent Workstation Processing
D. Customer Service System
</TABLE>
This item is the property of First Data Investor Services Group (First Data) of
Boston, Massachusetts, and contains confidential and trade secret information.
This item may not be transferred from the custody or control of First Data
except as authorized by, and then only by way of loan for limited purposes. It
must be returned to First Data upon request and, in all events, upon completion
of the purpose of the loan. Neither this item nor the information it contains
may be used or disclosed to persons not having a need for such use or
disclosure consistent with the purpose of the loan, without the prior written
consent of First Data.
Copyright First Data Investor Services Group
1994, 1995, 1996
ALL RIGHTS RESERVED
This media contains unpublished, confidential, and proprietary information of
First Data Investor Services Group. No disclosure or use of any portion of
these materials may be made without the express written consent of First Data
Investor Services Group.
<PAGE> 52
IMPRESSive Technology, IMPRESSive Results
I. PRODUCT OVERVIEW
IMPRESS Plus is First Data's workstation product. Designed to be a
cost-effective customer service and workflow management solution, it
takes an integrated approach to transfer agent service and processing
applications. IMPRESS Plus uses an open, three-tiered, client/server
architecture that provides both the flexibility and scalability to
address client's customization and growth needs.
IMPRESS Plus's valuable benefits include:
o Extensive management tools and employee empowerment via
intelligent workstation technologies.
o A lower cost of processing delivery through workflow routing
and document imaging.
o Efficient customer service through reduced research time,
automated inquiry tracking and correspondence tracking.
o State-of-the-art three-tiered client/server architecture
backed by relational databases and open systems.
o Client configurable screens, dialogue scripts, and workflow
rules for those components which use the Pegaysystems
technology.
o Automated correspondence generation.
IMPRESS Plus consists of these major components:
1.) A SOPHISTICATED MANAGEMENT WORKFLOW TOOL that contributes to
streamlining the flow of information on an enterprise-wide
basis. Automated workflow processes are systematically created
and the user's process is automatically documented at the same
time. Product users can continuously examine and redesign
their current processes, managing them interactively, focusing
on improving organizational productivity and quality.
2.) AN IMAGE PROCESSING SYSTEM that has the ability to scan
incoming documents, store them digitally and automatically
route them to the appropriate processing department thereby
eliminating paper from the workflow. This system also allows
for long term storage of documents and document retrieval.
Users can modify workflow and business rules on site.
3.) AN INTELLIGENT WORKSTATION APPLICATION (IWT) that improves
data entry speed and service quality by using graphical user
interface tools that seamlessly connect the user's desktop to
First Data's transfer agent processing systems, office
automation tools, correspondence/service tracking and
policy/procedure access systems.
4.) A CUSTOMER SERVICE SYSTEM that automates and enhances the
correspondence and customer servicing areas in mutual fund
operations. Customer Service staff can log all activity, such
as phone calls, letters, transactions, etc., while interacting
with customers. The system enables the service representative
to perform transactions over the phone, create "electronic
forms" consisting of instructions for other processors, and
dynamically sends work items to other staff electronically.
The Customer Service System is designed to enhance the quality
and efficiency of the service provided to customers through
the use of state-of-the-art client/server technology.
<PAGE> 53
IMPRESSive Technology, IMPRESSive Results
II. PRODUCT BENEFITS
o Allows clients to process transactions and customer
correspondence quickly and efficiently.
o Allows clients to be at the leading edge of technology to
maintain competitiveness and to effectively deliver quality
service.
o IMPRESS Plus enables the organization to:
- enhance service responsiveness and quality
- streamline workflow and improve document control by
eliminating paper
- increase employee productivity and participation
- have access to real-time production statistics
- enhance organization cohesion and effectiveness
- reduce manual tasks
- increase accuracy by using intelligent rules-based
applications
- reduce processing costs
- Tie Customer Service Reps to sales
o The IMPRESS Plus workflow tools allow business/operational
workflows to be set up. Automated workflow processes are
created and the user's process is automatically documented at
the same time. Product users can continuously examine and
redesign their business processes and manage them
interactively, focusing on improving organizational
productivity and quality.
o IMPRESS Plus is a scaleable and flexible solution that allows
the user to choose an enterprise-wide or a departmental
solution. It allows the client to determine an implementation
strategy that meets their strategic plans and goals.
o The IMPRESS Plus product platform allows the user to build
upon and utilize future First Data services such as
information delivery of shareholder/investor data, sales and
marketing data and customer service processing.
o IMPRESS Plus is modular to support increasing volumes,
increasing numbers of users and future advances in component
technologies. This allows for functional as well as
enterprise-wide solution.
o The IMPRESS Plus product's UNIX and NT-based platform allows
for the flexibility and growth needed to market position and
grow in the '90s to meet the demands of the mutual fund
industry.
o IMPRESS Plus is developed to run in an open systems
environment, so that the application has the ability to
incorporate diverse hardware choices, such as servers,
scanners and printers.
Additional benefits that can be provided through customization of
certain products include:
o Ability for AIM Funds operations associates to customize
interfaces, rules, scripts, etc. based on predefined "levels"
of operators. Levels may range from entire organization right
down to the individual CSR.
o Creation of an Integrated Service Backbone within the AIM
organization designed to allow consistent processing of
service items, documents, correspondence, etc. regardless of
where they originated. (Internet, scan mail, fax, phone,
etc.)
o Optional ability to link VRU to the desktop via CTI and
related technologies for more efficiency and quality in
servicing.
<PAGE> 54
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
o Ability for AIM Funds operations associates to change workflow rules,
scripts, menus, screens, etc. associated with the front end servicing
applications as they see fit to effectively run their business efficiently
and with highest regard to quality.
o Ability for AIM Funds to introduce intelligent, 'point of contact'
scripting for service associates in the front end selling process.
Through the customized rules capability, AIM Funds can set up random
sales, campaigns, or promotions. In addition, IMPRESS Plus can be told
when to prompt CSR's that selected promotions apply to the customer at
hand based on data points in the customer's profile, recent activity, or
the like.
<PAGE> 55
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
III. TECHNICAL OVERVIEW
First Data's combined Customer Service, Workflow, Image and
Intelligent Workstation (IWT) technologies enable users to display the
digitized image of a shareholder form on the workstation along with
other service, data entry and office automation applications. This
allows a user to enter information directly from the image without
having to look away from the screen or handle paper. IMPRESS Plus
will have access to First Data's transfer agent processing system,
office automation tools, and correspondence tracking and
policy/procedure access systems. First Data has developed the
workflow and image capabilities of the system to meet the needs of the
financial industry.
The Customer Service and Intelligent Workstation applications improve
data entry speed and quality by using graphical user interface tools
and LAN/WAN topologies to seamlessly connect the users desktop to the
mainframe servers. These tools and technologies will significantly
off-load transactions and query processing from the mainframe by
putting these capabilities on the desktops and empowering the
end-user.
IMPRESS Plus is designed to run in an open systems environment. It has
the ability to incorporate various workstation platforms due to a
common set of access routines and open communication architecture.
IMPRESS Plus supports high-performance networking architectures
including Novell's SPX/IPX as well as the UNIX TCP/IP standard. SNA
connectivity is supported for LU6.2, 3270, and 5250 communications.
The application supports Microsoft Windows 3.11, Windows 95, and NT
client workstations, multiple UNIX server back-end platforms, and the
latest client/server database technologies offered by the INFORMIX and
Microsoft database systems.
IMPRESS Plus contains a state-of-the-art integration API (application
programming interface) that allows other applications, including
customer-specific applications, to be seamlessly integrated into
IMPRESS Plus.
The Customer Service and IWT applications have been designed with an
object-based architecture that allows one common application to
support First Data's multiple back-end transfer agent systems. They
are designed around First Data's newly defined and implemented
corporate data model. This model represents the future data source
for First Data's common transfer agent application. This object-based
architecture allows for a high level of client customization and
integration.
<PAGE> 56
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IV. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
WORKFLOW MANAGEMENT FUNCTIONALITY OVERVIEW
WORKFLOW DYNAMIC WORKFLOW DESIGN AND MONITORING
MANAGEMENT
IMPRESS Plus provides a set of client/server based tools that
allow designers and authorized system users to build workflow
rules to be implemented on the work floor. These rules can be
built and implemented, then changed as required by trained
administrators.
GENERIC WORKFLOW AVAILABLE FOR ALL TRANSACTIONS
IMPRESS Plus offers a generic wordflow that can be used for
any transaction type that is designated in an operation.
Liquidations, correspondence, new accounts, etc. are just some
examples of transactions that can be processed through this
generic workflow. Should the workflow need to be customized or
altered, it can be.
WORK FLOW MONITORING
IMPRESS Plus provides the following work flow monitoring
activities in a real time mode:
o Allow users with the proper security access to
monitor the status of workflow activities or entire
work flow maps
o Monitor work-in-process items via a graphical display
which produces bar graphs in a variety of
presentation formats
o Monitor multiple statistics simultaneously on a
graphical display.
PRIORITIZATION OF WORK
IMPRESS Plus allows the setting of a default priority of items
during workflow design, and, in addition, dynamically during
work in process. During work in process, an item's priority
is based on its transaction type, its default or subsequently
manually altered priority setting, as well as its age in the
activity queue.
<PAGE> 57
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
WORKFLOW MANUAL ROUTING OF ITEMS
MANAGEMENT
(CONTINUED) IMPRESS Plus allows items to be manually routed to
workflow map destinations, or, in some cases, to
specific end users by those users with authorization
to do so.
AUTOMATIC ROUTING OF WORK
IMPRESS Plus routes work items to the next
destination on a pre-defined set of workflow rules.
These rules can be overridden by the user when
necessary.
ITEM COPY ROUTING
IMPRESS Plus allows users to make "copies" of items
within the workflow and route them to other workflow
activities. This is commonly used when an individual
processing the work determines that an item must be
forwarded to another processing department or review
the steps because it is actually two or more
transactions.
ENHANCED QUALITY CONTROL
IMPRESS Plus allows for random or pre-determined QC,
statistical QC, or other more intelligent or
selective QC means.
ENHANCED QUALITY ASSURANCE
IMPRESS Plus allows for random or pre-determined QA,
statistical QA, or other more intelligent or
selective QA means.
<PAGE> 58
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IMAGE FUNCTIONALITY OVERVIEW
IMAGE DOCUMENT SCAN, STORE, ROUTE, AND RETRIEVE
PROCESSING
IMPRESS Plus captures, through scanning, electronic
images OF documents, stores these electronic images
on magnetic disk, and subsequently allows for
retrieval of the electronic images. IMPRESS Plus
allows images to be accessed for image quality review
and provides for the rescanning of images determined
to be of unacceptable quality. Following the
completion of scanning and any image quality review,
items are automatically routed to subsequent
activities, based on a predefined set of workflow
rules.
ELECTRONIC DOCUMENT IMAGE PRESENTATION AND
MANIPULATION
IMPRESS Plus allows images to be viewed on image-
enabled workstations. Multi-page documents can be
scrolled through, and selected portions of an image
can be magnified.
IMAGE CROSS-REFERENCE TO PHYSICAL DOCUMENT LOCATION
TRACKING
AND RETRIEVAL IMPRESS Plus is designed so that the image database
stores the location of the physical document for each
document image. This location - known as a storage
box - is entered into the system while scanning
documents.
INDEXING OF IMAGES
IMPRESS Plus automatically assigns a unique indexing
number to each document that is created through
scanning. The unique indexing number consists of a
system-generated number that can subsequently be used
to cross-reference an item to a mainframe transfer
agent system. In addition, IMPRESS Plus allows for
the alternate indexing of documents by other user-
entered fields such as fund/account.
SOURCE KEY GENERATION AND DISPLAY
Each transaction type processed within IMPRESS Plus
receives a unique identifier that can be used to link
an item to the First Data transfer agent system.
This key may also be used for document retrieval.
IMAGE SCANNING, INDEXING, AND STORAGE OF DOCUMENTS
TRACKING PROCESSED PRIOR TO IMAGE WORKFLOW
AND RETRIEVAL
(CONTINUED) Through the IMPRESS Plus merge facility, users can
scan documents processed prior to the installation of
IMPRESS Plus. The merge facility allows you to
associate documents with existing, already scanned
and indexed documents, making them available for
future inquiry using IMPRESS Plus.
IMAGE ARCHIVAL AND SUBSEQUENT RETRIEVAL FROM OPTICAL
STORAGE
IMPRESS Plus provides storage and backup functions
for data objects, is designed to handle media
management, and communicates with the database
management system. IMPRESS Plus supports archival of
items to magnetic or selected WORM (Write Once
<PAGE> 59
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
Read Many) optical media. Archival from magnetic to
optical media criteria are set during installation
time.
PRINTING OF IMAGES
IMPRESS Plus allows you to print copies of document
images at LAN-based printers equipped with the
appropriate print server components.
REAL-TIME ADMINISTRATION TOOLS
IMPRESS Plus offers an administration function that
allows authorized users to add and maintain user
profiles, funds, transaction types, locations, and
other client site-specific data. This tool also
allows authorized users to change courier status,
determine the status of work that may have been
affected by an environmental mishap, and perform
other administrative tasks.
DOCUMENT/ACTIVITY HISTORY AND AUTOMATIC UPDATE
IMPRESS Plus automatically records and stores
document/activity history statistics on audit trail
logs during workflow activities, and produces
standard reports for such items as:
o Workflow activity type
o Date/time/user of each activity
o Beginning/ending date/time of each activity
o Last update user/date/time
ADMINISTRATIVE IMPRESS Plus allows much of this activity history to
FUNCTIONS be viewed on-line in various portions of the
(CONTINUED) application.
PRODUCTIVITY REPORTING AND QUALITY/TIMELINESS
REPORTING
IMPRESS Plus logs document/activity history
statistics to produce standard productivity reports
that can be run at the client's request.
ADHOC REPORTING
IMPRESS Plus provides a suite of standard reports
that can be customized. A client can also create
their own additional reports.
QUALITY CONTROL PROCESSING
IMPRESS Plus currently allows for processing
activities to be reviewed for quality by routing them
to a Quality Control queue. Authorized users can
then QC work items. Future IMPRESS Plus releases
will include various rule-based options for selective
quality control. IMPRESS Plus prevents users from
quality control checking their own work.
ACCESS SECURITY
IMPRESS Plus image processing provides security
access in the form of user logons and user profiles.
Users must have a user ID to access the system and
are further constrained by their user profile. The
client assigns user IDs for staff to access the
system and specifies the parameters of each user
profile. These profiles limit users to performing
<PAGE> 60
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
only those specific activities for which they have
been given permission (e.g. processing, scan, etc.).
It is recommended that the logon IDs match the user's
logon ID from the First Data transfer agent system.
VALUE-ADDED SHAREHOLDER ACCOUNTING SYSTEM ACCESS
FUNCTIONALITY
IMPRESS Plus allows workstation access to First
Data's transfer agent recordkeeping system. 3270
terminal emulation is accomplished through a
Windows-based software application. Keyboard mapping
is limited to the technical capabilities of the
emulation software and/or hardware.
DYNAMIC DATA EXCHANGE (DDE) FUNCTIONALITY
IMPRESS Plus will allow for Dynamic Data Exchange at
selected points in application modules when necessary
to transfer data between processes. An example would
be the passing of a source key stored on a transfer
agent system history line to the imaging inquiry
screen for a customer service operator.
ON-LINE HELP FOR USERS
IMPRESS Plus offers a comprehensive on-line help
system that follows Microsoft Windows help system
conventions. It is designed to serve both new users
learning how to use the system and more experienced
users who may occasionally need assistance or
additional information.
SYSTEM ADMINISTRATION PROCEDURES
IMPRESS Plus System Administration is made easier for
designated IMPRESS Plus technical support staff due
to the IMPRESS Plus Systems Administration and
Procedures manual and related documentation.
<PAGE> 61
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
INTELLIGENT WORKSTATION PROCESSING
(IWT) FUNCTIONALITY OVERVIEW
INTELLIGENT IWT is designed with a graphic interface ("GUI")
WORKSTATION which will provide an intelligent real-time interface
PROCESSING to the First Data transfer agent system for the
(IWT) following transaction activity:
NEW ACCOUNT SETUP
The IWT new account setup application is designed to
provide a MS/Windows graphic interface ("GUI") to
allow an intelligent real-time interface to the First
Data transfer agent system. New account setup
functionality includes:
o new account setup entry
o dealer/rep list
o TIN list for shareholder list
o systematic city and state population based on
entry of a 5 digit zip code
o dividend/cap gain addresses
o beneficiary addresses
o statement addresses
o ABA lookup and validation
o fund list
o wire and ACH bank addresses
Financial Transactions
The IWT financial transaction entry application is
designed to provide a MS/Windows graphic interface
("GUI") to allow an intelligent real-time interface
to the First Data transfer agent system. Financial
transaction entry functionality includes:
o telephone redemptions
o telephone exchange
o exchange processing
o transfer processing
o redemption processing
o subscription processing
Group
o linking and linking of accts by ROA, confirm,
L01, plan
<PAGE> 62
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
CUSTOMER SERVICE & ENHANCED INQUIRY SYSTEMS
FUNCTIONALITY OVERVIEW
CUSTOMER The Customer Service System is a client/server based,
SERVICE graphical user interface (GUI) system designed to
SYSTEM provide an intelligent real-time application to
enable clients to improve the quality of the service
provided to both shareholders and broker dealers.
This system provides functionality in the following
areas:
CONTACT TRACKING AND MANAGEMENT
A key feature of the Customer Service System will be
the ability to track and report on all interaction
with an end customer, be it a shareholder or
broker/dealer. Designed for ease of use by a
customer service representative, this system will
allow for the logging of telephone calls and
correspondence, the creation and updating of service
items, the processing and resolution of customer
issues to insure customer satisfaction at the end of
any contact. In addition, via reason codes and aging
information, management is empowered with the use of
statistical and trending reports regarding contact
made with their customer base .
CORRESPONDENCE GENERATION AND TRACKING
The Customer Service System is closely integrated to
word processing to allow for the automatic generation
of outgoing correspondence related to service items.
A service representative can choose from customized
pre-defined letters to generate high quality customer
correspondence.
TELEPHONE TRADING
Authorized customer service system users will be able
to perform transactions while on the telephone with
customers by invoking simplified graphical data entry
screens. In addition, customer service
representatives can create electronic forms
consisting of processing instructions for other
departments and dynamically send route these work
items via the workflow manager.
CUSTOMER ENHANCED INQUIRY
SERVICE
SYSTEM The Enhanced Inquiry windows provide enriched and
(Continued) user-friendly replacements for legacy transfer agent
inquiry screens. Examples of the inquiry functions
are search for customer information by name, account
number and social security number, account
information, financial transaction history, service
history, and correspondence history.
<PAGE> 63
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
IMPRESS IMAGE PRODUCTION HARDWARE AND SYSTEMS SOFTWARE
- ---------------------------------------------------------------------------------------------------------
PRODUCT Description QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Servers Parallel Cable for printer 10
- ---------------------------------------------------------------------------------------------------------
HP IV+ / 5 Laser Printer with 6 MB Ram, Jet Direct for
Printers other printing can be installed 10
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable,
Scan Server Terminator. 5
- ---------------------------------------------------------------------------------------------------------
Ricoh IS-520 SCSI with Ink Jet Endorser. SCSI
Mid Speed Scanner Version 5
- ---------------------------------------------------------------------------------------------------------
Sun SPARCstation 5 Model 170, 17" Color Display,
48MB RAM, 2X2.1 GB Int disks, 4mm Tape, 3.5"
Floppy Drive, CD-ROM, Solaris 2.5.1, Solarais
Answerbooks, 1 @ X1053A, Solaris 2.5.1 SDK Kit,
Kodak Scan Server Solaris 2.5.1 Motif ToolKit, SUN Professional C 4.0 3
- ---------------------------------------------------------------------------------------------------------
High Speed Scanner Kodak 923D Scanners 3
- ---------------------------------------------------------------------------------------------------------
Sun ULTRAserver 6000, 12 250MHZ CPU's, 17" Color
Display, 1.2GB RAM, 2x9 GB Int disks, DG Clariion 42
Gb Raid 5 disk array, 4mm Tape, CD-ROM, Solaris
2.5.1. Answerbooks, 35/7OGb DLT Tape Changer, 1 @
1053A, 1 @ X1052A, 2 @ X1062, Fast
Image Server Ethernet/FDDI/ATM 1
- ---------------------------------------------------------------------------------------------------------
CYGNET 1802 with (3) Philips LD6100 Optical Drives,
Jukebox Optical SCSI Cable, RS-232 Null Modem Cable 1
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 x 768, Windows 3.1, Hiijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- ---------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 2 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (4)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- ---------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 2 or 3
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
**The fax server will require analog modem lines a max of 16 lines would
- ---------------------------------------------------------------------------------------------------------
be required for the hardware listed above.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (10 KVA) 1
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN) (1.4 KVA) 3
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX HW) (1 KVA) 2
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 64
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- ---------------------------------------------------------------------------------------------------------
Equipment to maintain a routed or switched network
environment with no more that 25-30 clients per
Network Hardware network segment.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32MB ram. Display
should optimally support Image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (1280X1024) 400
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Software required on all workstations
- ---------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- ---------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- ---------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 65
EXHIBIT 2.2 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
IMPRESS Test/Training Hardware and Systems Software
- -------------------------------------------------------------------------------------------------------
PRODUCT DESCRIPTION QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Server Parallel Cable for printer 1
- -------------------------------------------------------------------------------------------------------
HP IV+/5 Laser Printer with 6 MB Ram, Jet Direct for
Printer other printing can be installed 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP 120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable
Scan Server Terminator 1
- -------------------------------------------------------------------------------------------------------
Ricoh IS-420 SCSI with Ink Jet Endorser, SCSI
Low Speed Scanner Version 1
- -------------------------------------------------------------------------------------------------------
Sun ULTRAserver 1, 250MHZ CPU, 17" Color Display,
128MB RAM, 2X2.1 GB Int disks, SUN 4GB External
Disk Pack, (2) 4mm Tape Drives, CD-ROM, Solaris
Image Server 2.5.1, Answerbooks, 1 @ 1053A, 1 @ X1052A. 1
- -------------------------------------------------------------------------------------------------------
Phillips LD6100 Optical Drive Differential, SCSI Cable
Standalone Optical SCSI Differential Terminator. 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 X 768, Windows 3.1, Hijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- -------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 1 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (1)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- -------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
** THE FAX SERVER WILL REQUIRE ANALOG MODEM LINES A MAX OF 4 LINES WOULD BE
REQUIRED FOR THE HARDWARE LISTED ABOVE.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX) (1 KVA) 1
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (3 KVA) 1
- -------------------------------------------------------------------------------------------------------
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32 MBram. Display
should optimally support image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (128X1024) 10
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Software required on all workstations
- -------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- -------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- -------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 66
EXHIBIT 3 OF SCHEDULE G
MAINTENANCE AND SUPPORT TERMS
These terms are based on an IMPRESS User network environment of up to 512 Users
and the associated server(s), as described in Exhibits 1 and 2 of this Schedule
G.
1. Software Support.FDISG shall provide the following Software support
services ("Software Support"):
1.1. FDISG shall provide the Fund with full System Administration Guide(s)
for FDISG Software.
1.2. FDISG will have a Response Center (help desk) to provide 24 hours a
day, 7 days a week to designated client contacts.
1.3. FDISG shall use reasonable efforts to resolve all Software failures
through; (a) remote support to the Fund's information systems staff ("Fund's
Staff"); (b) coordination of Third Party Vendor support (on-site or remotely);
(c) coordination of other subcontractors' actions; or (d) direct on-site
support by FDISG personnel.
1.4. FDISG shall investigate errors in the Software reported by the Fund
which prevent substantial compliance with the then current Documentation and to
initiate the corrective action, if any, which FDISG considers reasonable and
appropriate, including but not limited to temporary fixes, patches and
corrective releases to FDISG's clients generally. Notwithstanding the
foregoing, if reported errors result from or arise out of. (i) malfunctions of
equipment other than the Equipment, (ii) improper Fund operator procedure or
misuse of the system by the Fund, (iii) modifications or changes made to the
system without FDISG's prior written approval, (iv) causes beyond the
reasonable control of either party, or (v) user developed features such as
those users may develop with form generators, ad hoc report writers and user
customized screens, then FDISG shall have no responsibility for investigating
the error or making the correction, except as the parties may otherwise agree
to in writing. The Fund shall pay FDISG's then current time and materials
charges plus reasonable travel and out-of-pocket expenses incurred in
investigating and attempting to correct any such errors.
1.5. FDISG shall from time to time provide bug fixes, error corrections,
maintenance, minor enhancements, upgrades and updates to the Software which are
generally made available by FDISG to its similar customers as part of Software
Support ("Updates"). The cost of the Updates is included in the fees and other
charges identified in Schedule C of the Agreement, if the updates are supplied
to the Fund using FDISG's standard update facility. FDISG installation
assistance for the new Updates may be required and, is billable to the Fund as
an Additional Service. During the term of the Agreement, FDISG will use
reasonable efforts to provide the Fund with not less than thirty (30) days
prior written notice of FDISG's intent issue a new update of Software. The
Fund shall implement an Update within ninety (90) days of receipt. Any support
by FDISG of any prior release of the Software after such ninety (90) day period
shall be at FDISG's sole discretion and as an Additional Service.
1.6. Software Support, the License, and the Software shall not include any
modification to the Software which contains any substantial added functionality
(including any significant new interface features), as determined solely by
FDISG or any new architecture or any significant modification of the Software
which contains any substantial added or different functionality, whether or not
such new functionality is coupled with any change in software architecture or
hardware platform ("New Products"). New Products shall be provided and
licensed to the Fund as an Additional Service.
1.7. FDISG may decline to support the Software if (i) the Software or
Equipment was added to or changed without FDISG's prior approval; (ii) the Fund
does not perform the Software Support; or (iii) FDISG determines that such
support would adversely affect the Scope of Work.
1.8 Software Support for the FDISG Software shall conform to the standards
set forth in Section I of Schedule F.
2. The Fund's Maintenance and Support Responsibilities. The Fund's facility
will have all of the required security, space, electrical power source,
communications lines, heating, ventilation and cooling, and other physical
<PAGE> 67
requirements reasonably necessary for the installation and proper operation of
the Equipment. The Fund's users will first direct all questions and problem to
the Fund's Staff for proper call tracking and problem resolution. The Fund's
Staff will coordinate all facility issues at the site and will serve as primary
contact for FDISG when planning installs, upgrades and other equipment changes.
The Fund's Staff shall:
2.1. Identify designated client contacts, one for Operations and one
technical systems administrator, to function as single points of contact for
discussion, review and resolution of problems with FDISG.
2.2. Perform initial problem determination and symptom documentation.
2.3. Be responsible for all system hardware and network hardware components
and shrink-wrap software from a maintenance, support and problem resolution
standpoint.
2.4. Provide (a) data back-up and recovery, (b) preventive maintenance,
and (c) perform server administration tasks as described in the Systems
Administration Guide(s) and Third Party Software documentation.
2.5. Maintain all network and trouble-log documentation required by FDISG
or by third-party vendors. FDISG shall be allowed to review such documentation
if necessary to resolve support issues.
2.6. Be available during normal business hours and reachable for support 24
hours a day, 7 days a week, as required. The Fund shall maintain the
appropriate staff level to adequately perform the maintenance support functions
specified. This staff should have experience in network administration,
troubleshooting, Microsoft Windows, workstation memory management, and UNIX and
NT systems administration.
2.7. Consult with FDISG before performing any work that may affect the
Software or performance of the System, including installation, upgrading, or
unplanned maintenance affecting Equipment
2.8. The fund is responsible for maintenance and support of customized code
unless contracted with FDISG.
3. Support of Customized Code. (Code changed by Fund or FDISG on a customized
basis)
3.1 Software Revisions. At times, FDISG will provide software updates to
components (third party or FDISG software) to either enhance the product or
address quality deficiencies. FDISG is responsible for notifying the Fund of
these updates, and what changes have been made. The Fund is responsible for
installing the updates and modifying any code which they have customized to
accommodate these enhancements. Assistance can be provided by FDISG at stated
billable rates.
3.2 Support of Modified Code. FDISG will provide application, technical
and workflow support for modified code only on a time and materials basis.
FDISG may request the replacement of the modified code with the original code
in order to assist in the determination of the problem source.
3.3 Mainframe Resource Utilization. If customized code requires greater
FDISG mainframe CICS, DASD, or CPU resources than the base FDISG delivered
IMPRESS Plus solution, FDISG reserves the right to charge the Fund for this
usage. If there is concern that excessive resource utilization could impair
the mainframe system, FDISG reserves the right to disallow this modified code
from executing on the mainframe. The Fund is advised to consult with FDISG in
order to determine if planned customization may negatively impact mainframe
resources.
4. Roles and Responsibilities.
4.1 FDISG shall not be responsible for the support of any Directly
Obtained Third Party Software or any other third party products. The Fund is
responsible for network connectivity, Operating Systems, gateways, and other
third party products. FDISG is not responsible for hardware not listed in
Exhibit 2 of Schedule G or software not listed in Sections 1, 2.1.1, or 2.1.2
of Exhibit 1 of Schedule G, unless specifically covered in a separate
agreement.
4.2 Additional support tasks may be provided on a time and material basis.
This may include workflow analysis, customization, network design, third party
product installation and additional training.
<PAGE> 68
SCHEDULE H
ACE + SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule H (the "SOFTWARE"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibit 1 of Schedule H ("Exhibit 1").
Subject to the terms and conditions set forth in this Schedule H, FDISG grants
to the Fund and the Fund accepts from FDISG the non-exclusive, non-transferable
license to use the Software during the term of the Agreement ("LICENSE"). Some
software components ("THIRD PARTY SOFTWARE") required to be used with the
Software were developed by a third party ("THIRD PARTY VENDOR"). Third Party
Software is licensed to the Fund only pursuant to shrink wrapped or other
agreements between the Third Party Vendor and the Fund directly. Exhibit 1
shall indicate the Third Party Software that the Fund is responsible to obtain
and license. FDISG shall provide the Fund with all error corrections, minor
enhancements and interim upgrades to the Software which are made generally
available to FDISG client's of the Software ("SOFTWARE SUPPORT"), but shall not
provide a License to any substantial added functionality, new interfaces, new
architecture, new platforms or other major software development efforts, as
determined solely by FDISG.
1.2 Ownership. FDISG or its licensor shall retain title to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION").
FDISG reserves all rights in the Proprietary Information not expressly granted
to the Fund in this Schedule H. Upon FDISG's request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") also set forth in Exhibit 1 of Schedule H. Additional terms and
conditions concerning the Equipment are also set forth in Exhibit 1. The
Equipment identified in Exhibit 1 represents the minimum equipment requirements
to run the Software. FDISG disclaims responsibility for the performance of the
Software in the event that the Fund utilizes equipment different than that
which is set forth in Exhibit 1. FDISG and the Fund shall (a) within a
reasonable time after the Effective Date, agree upon the tasks required to
implement the Software, Third Party Software and Equipment ("SYSTEM") and the
party responsible and time frames for each task ("SCOPE OF WORK"); (b) perform
their respective assigned tasks according to the Scope of Work; and (c) if not
the party assigned to a task, cooperate with the responsible party. To the
extent the Scope of Work is incomplete, FDISG shall follow its reasonable and
customary practices. Upon prior notice by FDISG to the Fund, the Fund shall
give reasonable access to the System to FDISG, FDISG's employees, affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) in connection with the Fund's use of the FDISG System and only at the
locations identified in the Agreement. If the Equipment is inoperative due to
malfunction, the license grant shall, upon written notice to FDISG, be
temporarily extended to authorize the Fund to use the Software on any other
equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph..
1.5 Software Installation and Acceptance. FDISG shall advise the Fund
that the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
thirty (30) days after Software Installation Date or thirty (30) days after the
Fund's first use of Software to process live production data ("SOFTWARE
ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
<PAGE> 69
1.7 No-Export. The Software shall not be shipped or used by the fund
outside the United States. The Fund shall comply with all applicable export
and re-export restrictions and regulations of the U.S. Department of Commerce
or other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule H which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software. For the term of the Agreement, FDISG warrants ("Performance
Warranty") that the Software shall perform on the Equipment substantially in
accordance with the Documentation, except for Third Party Software as set forth
in Paragraph 2.2 below. The timely correction of errors and deficiencies in
the Software shall be Fund's sole and exclusive remedy for the Performance
Warranty. FDISG warrants ("Rights Warranty") it has the right to license the
Software in accordance with the Agreement. Provided the Fund gives FDISG
timely written notice, reasonable assistance, including assistance from the
Fund's employees, agents, independent contractors and affiliates (collectively,
"Fund's Agents"), and sole authority to defend or settle the action, then FDISG
shall do the following ("Infringement Indemnification"): (a) defend or settle,
at its expense, any action brought against the Fund or the Fund's Agents to the
extent the action is based on a claim that the Software infringes a duly issued
United States' patent or copyright or violates a third party's proprietary
trade secrets or other similar intellectual property rights ("Infringement");
and (b) pay damages and costs finally awarded against the Fund or the Fund's
Agents directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Third Party Warranties. All warranties for the Third Party Software,
if any, are specifically set forth in the Software Exhibits, Exhibit 1 or in
the applicable agreements supplied by the Third Party Vendors. Subject to the
terms of the Exhibit 1 and to the extent permitted by FDISG's suppliers, FDISG
conveys to Fund all Third Party Software warranties made by the Third Party
Vendors.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and
as limited by applicable law, the Fund shall indemnify, defend and hold FDISG
and FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("Confidential Information"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party, prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential
<PAGE> 70
Information, the other party may obtain injunctive relief, in addition to its
other remedies, inadequate monetary damages and irreparable harm being
acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System. Fund shall not
modify or reverse engineer the Software without FDISG's prior written consent.
<PAGE> 71
EXHIBIT 1 OF SCHEDULE H
SOFTWARE/HARDWARE
1. FDISG Software.
1.1 FDISG Software includes the following products:
ACE +
2. Third Party Software.
2.1 Directly Obtained Third-Party Software. The following Third Party
Software are separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of "shrink-wrapped" or other
agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required Optional
-------- --------
<S> <C>
Windows 3.1 Reachout PC Link (for external FDISG Support of ACE +)
DOS 3.3 or higher
</TABLE>
3. Hardware.
3.1 It is recommended that ACE + run on a PC Network (LAN) to fully use its
database features. The network should have at least 200 Mb of available disk
space. ACE + will also run on an individual local (hard) drive. PC
specifications are:
o 2 or more IBM PC Compatible 486/66 (486/33 minimum) Mhz (or
Pentium) with 16 Mb Ram (8 Mb minimum)
o 500 Mb Local (hard) drives (for backup only)
o External Fax/Modems (9600 baud or greater)(for PC faxing or
Reachout only)
o HP Laserjet 4 w/ Windows Drivers
3.2 PC/Mainframe Connection: ACE + data is based on mainframe ASCII files.
These files must be transmitted from the mainframe to LAN or PC. This can be
accomplished various ways. FDISG uses a mainframe to Gateway and BARR/SNA
transmission.
<PAGE> 72
SCHEDULE I
DISASTER RECOVERY SUMMARY
OVERVIEW
First Data's data center is a free standing building that is self sufficient
with back-up water supply, fuel storage, and diesel generator backup. The
building is protected with 24 hour on site guard protection as well as security
camera coverage throughout the property. Access is by picture ID only and all
doors are protected with card key access. Additionally, all systems are
protected by ACF2 Security. Security is audited on a regular basis.
Additionally, First Data maintains a reliable, tested disaster recovery system.
A tape backup system is set up on a daily rotation schedule with a full backup
of all data. The backup jobs run automatically every night and all tapes are
sent off-site on a daily basis to a physically secured facility. A business
resumption site has been established in our Providence facility. This Hot Site
is fully equipped with equipment, wiring and supplies in the case of a disaster
or business recovery.
A disaster is defined as any unforeseen business interruption or outage that
renders the data center or telecommunications network inoperable or
inaccessible for an undetermined amount of time suspending normal processing.
First Data's Disaster Recovery Plan provides us with the required procedures
and resource references to execute a full recovery of the data center and
associated critical processing.
This Plan addresses:
o Computer and communications equipment
o Programs, data and documentation
o Building and environmental concerns
o Fire detection and building evacuation
o Personnel, and
o Client Liaisons.
Due to contractual requirements, the data center must provide on-line
accessibility and processing availability within 24 hours of a declared
disaster. Total "downtime" is not to exceed 48 hours.
All outages that affect any client are considered priority one and all
available resources will be utilized to resolve outages, failures or slowdowns.
APPROACH
In a disaster situation, numerous issues and tasks must be addressed
immediately. To ensure all get equal attention, "teams" have been developed.
These teams are comprised of experienced First Data personnel responsible to
execute specific assigned functions critical to the overall recovery. Each team
will activate their procedures concurrently to affect a full system recovery at
the hot site. Some of the teams will act as support teams providing
<PAGE> 73
financial, administrative, and logistical coordination. The remaining recovery
teams will address more specific data and telecommunications issues.
o Support Teams
Financial/Administrative Support
Human Resources/Corporate Communications
Applications Team
Client Liaison Team
o Recovery Teams
Management Teams
Systems Software
Data Center Operations
Vendor
Telecommunications Team
Production Control
Facilities/Hardware
Each team will be headed by a team leader and a designated alternate. If, for
any reason, the team leader is unavailable, the alternate will assume
responsibility for the team notification and progress reporting to the team
management.
Dial backup capabilities, diverse routing of communications circuits and
triangulation present the best options for insuring continued system access in
the event of a communications failure. First Data can demonstrate each of these
capabilities at the client's request.
TESTING SUMMARY
First Data/FDT has contracted with Comdisco to provide hotsite disaster
recovery and backup services. First Data's overall goal is to establish network
connectivity for on-line and transmission capability, restore the application
and recover forward to a point in time and then re-process a batch cycle.
Using Comdisco's site at North Bergen, the First Data Technology (FDT)
operating system will be recovered while testing FDISG recoverability for all
network and application platforms.
The recovery will take place remotely with FDT, using the Business Recovery
Facilities (BRF) in Denver, and Westboro staff working out of the new BRF
in Tewksbury, MA. Comdisco will have staff at both BRFs, as well as North
Bergen, to assist whenever needed.
Tests are conducted annually. The test runs for 48 contiguous hours. Multiple
shifts will be required for FDT, FDISG, and Comdisco staff. Specific staff
requirements will be determined as the scope of the test becomes more clearly
defined.
The systems recovery portion of the test will take place at the Comdisco site in
New Jersey utilizing an IBM ES9000 with related peripherals. All the equipment
used in testing is
<PAGE> 74
compatible with the FDT hardware located in Denver. All tape mounts will be
handled by Comdisco staff in New Jersey, and the telecommunications testing
will be staffed by FDT with Comdisco assisting in New Jersey.
FDISG Test Objectives
o Test recoverability from both of Comdisco's new Business Recovery
Facilities
o Test transmission and network connectivity with clients
o Check and verify tape volumes stored offsite
o Benchmark the restore time for all (500) DASD volumes
o Ship all tapes from Denver to New Jersey
o Document (CDRS/FDISG) connectivity procedures
o Recover all applications to previous business cycle
<PAGE> 1
EXHIBIT 9(d)(5)
EXHIBIT 1
LIST OF FUNDS
AIM ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Advisor Cash Management Fund Class A and Class C Shares
AIM Advisor Flex Fund Class A and Class C Shares
AIM Advisor Income Fund Class A and Class C Shares
AIM Advisor International Value Fund Class A and Class C Shares
AIM Advisor Large Cap Value Fund Class A and Class C Shares
AIM Advisor MultiFlex Fund Class A and Class C Shares
AIM Advisor Real Estate Fund Class A and Class C Shares
</TABLE>
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A, Class B and Class C Shares
AIM Capital Development Fund Class A, Class B and Class C Shares
AIM Charter Fund Class A, Class B and Class C Shares
AIM Weingarten Fund Class A, Class B and Class C Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A and Class C Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A, Class B and Class C Shares
AIM Global Utilities Fund Class A, Class B and Class C Shares
AIM Growth Fund Class A, Class B and Class C Shares
AIM High Yield Fund Class A, Class B and Class C Shares
AIM Income Fund Class A, Class B and Class C Shares
AIM Intermediate Government Fund Class A, Class B and Class C Shares
AIM Municipal Bond Fund Class A, Class B and Class C Shares
AIM Value Fund Class A, Class B and Class C Shares
AIM Money Market Fund Class A, Class B, Class C and AIM Cash
Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A, Class B and Class C Shares
AIM Global Aggressive Growth Fund Class A, Class B and Class C Shares
AIM Global Growth Fund Class A, Class B and Class C Shares
AIM Global Income Fund Class A, Class B and Class C Shares
AIM Asian Growth Fund Class A, Class B and Class C Shares
AIM European Development Fund Class A, Class B and Class C Shares
</TABLE>
<PAGE> 2
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund Class A Shares
AIM Tax-Exempt Bond Fund
Of Connecticut Class A Shares
Intermediate Portfolio AIM Tax-Free Intermediate Shares -
Class A
</TABLE>
On behalf of the Funds and respective Portfolios and Classes as set forth in
this Exhibit 1, which may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ LEONARD A. WEISS
Title: EVP AND CFO
Effective as of August 4, 1997.
<PAGE> 1
EXHIBIT 9(d)(6)
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number 0609111-00002-0109001
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this 10th day of September 1997, by and
among Data Securities International, Inc. ("DSI"), a Delaware corporation, First
Data Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 2
Agreement, DSI shall request the initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
2
<PAGE> 3
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of
3
<PAGE> 4
one or more of its officers, selected by DSI, whose identity shall be
available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
4
<PAGE> 5
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction means an officer of Depositor
warrants that a release condition has not occurred or has been cured.
DSI shall send a copy of the instruction by certified mail or
commercial express mail service to Preferred Registrant. DSI shall
notify both Depositor and Preferred Registrant that there is a dispute
to be resolved pursuant to Section 25. Upon receipt of Contrary
Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to
Section 25, order by a court of competent jurisdiction, or termination
by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit,
5
<PAGE> 6
to the Preferred Registrant filing for release following receipt of
any fees due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
6
<PAGE> 7
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not
7
<PAGE> 8
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement. For any
service not listed on the Fee and Services Schedule, DSI shall provide
a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
8
<PAGE> 9
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By:/s/ ROBERT H. GRAHAM FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name: Robert H. Graham
------------------------------- By:/s/ ILLEGIBLE
Title: President ---------------------------------
------------------------------ Name: ILLEGIBLE
-------------------------------
Title: Executive Vice President
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By:/s/ CHRISTIE WOODWARD
---------------------------------
Name: Christie Woodward
-------------------------------
Title: Contract Administrator
------------------------------
</TABLE>
<PAGE> 10
SCHEDULE A
LIST OF FUNDS
AIM ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Advisor Cash Management Fund Class A and Class C Shares
AIM Advisor Flex Fund Class A and Class C Shares
AIM Advisor Income Fund Class A and Class C Shares
AIM Advisor International Value Fund Class A and Class C Shares
AIM Advisor Large Cap Value Fund Class A and Class C Shares
AIM Advisor MultiFlex Fund Class A and Class C Shares
AIM Advisor Real Estate Fund Class A and Class C Shares
</TABLE>
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A, Class B Shares and Class C Shares
AIM Capital Development Fund Class A, Class B Shares and Class C Shares
AIM Charter Fund Class A, Class B Shares and Class C Shares
AIM Weingarten Fund Class A, Class B Shares and Class C Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares and Class C Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A, Class B Shares and Class C Shares
AIM Global Utilities Fund Class A, Class B Shares and Class C Shares
AIM Growth Fund Class A, Class B Shares and Class C Shares
AIM High Yield Fund Class A, Class B Shares and Class C Shares
AIM Income Fund Class A, Class B Shares and Class C Shares
AIM Intermediate Government Fund Class A, Class B Shares and Class C Shares
AIM Municipal Bond Fund Class A, Class B Shares and Class C Shares
AIM Value Fund Class A, Class B Shares and Class C Shares
AIM Money Market Fund Class A, Class B, Class C and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A, Class B Shares and Class C Shares
AIM Global Aggressive Growth Fund Class A, Class B Shares and Class C Shares
AIM Global Growth Fund Class A, Class B Shares and Class C Shares
AIM Global Income Fund Class A, Class B Shares and Class C Shares
AIM Asian Growth Fund Class A, Class B Shares and Class C Shares
AIM European Development Fund Class A, Class B Shares and Class C Shares
</TABLE>
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund Class A Shares
AIM Tax-Exempt Bond Fund of Connecticut Class A Shares
Intermediate Portfolio AIM Tax-Free Intermediate Shares- Class A
</TABLE>
<PAGE> 11
EXHIBIT A
DESIGNATED CONTACT
Account Number: 0609111-00002-01090011
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO First Data Investor Services Group, Inc.
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
4400 Computer Drive
First Data Investor Services Group, Inc. ------------------------------------------------
- ---------------------------------------- Westboro, MA 01581
4400 Computer Drive ------------------------------------------------
- ----------------------------------------
Westboro, MA 01581 ------------------------------------------------
- ----------------------------------------
Invoice Contact: Brendan Bowen
- ---------------------------------------- --------------------------------
Designated Contact: John Corey
---------------------
Telephone: (508)871-9601
------------------------------
Facsimile:
------------------------------
State of Incorporation: Massachusetts
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO: AIM Fund Services, Inc.
-----------------------------------------------
AIM Fund Services, Inc. Eleven Greenway Plaza
Eleven Greenway Plaza -----------------------------------------------
Houston, Texas 77046 Houston, Tx 77046
-----------------------------------------------
-----------------------------------------------
Designated Contact: Jack Caldwell Invoice Contact: Jack Caldwell
--------------------- -------------------------------
Telephone: (713)214-1633
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 12
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number: 0609111-00002
--------------------------------------------------------
Depositor Company Name: First Data Investor Services Group
--------------------------------------------------------
DEPOSIT TYPE:
X Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS: MS Windows 3.11 or MS/Windows 95 OS on Intel X86 processor
based PC
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS: MS Windows 3.11 OS on Intel Pentium 133 MHz PC
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler:Impress Imaging-Plexus AD v4.1, Informix ESQL v2.2, MS Visual C++v4.1
----------------------------------------------------------------------
Impress Clearinghouse & Toolbar-MS Visual C++ v4.1
----------------------------------------------------------------------
ACE Plus - MS Visual Basic 4.0, MS Access v2.0
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: Impress Imaging System Version: V5.2.06.01
---------------------- -------------------------
Impress Clearinghouse V5.2.02.01
---------------------- -------------------------
Impress Toolbar V5.2.01.01
---------------------- -------------------------
ACE Plus V2.05.07
---------------------- -------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
AIM Funds Source, CD 1
August 8, 1997
Case Arrived cracked DSI
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By:/s/ ILLEGIBLE By: /S/ CHRISTIE WOODWARD
--------------------------------------- ---------------------------------------
Print Name: ILLEGIBLE Print Name: CHRISTIE WOODWARD
------------------------------- -------------------------------
Date: 9-3-97 Date of Acceptance: 9-10-97
------------------------------------- -----------------------
</TABLE>
<PAGE> 13
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number: 0609111-00002
------------------------------------------------------
Depositor Company Name: First Data Investor Services Group
------------------------------------------------------
DEPOSIT TYPE:
[X] Initial [ ] Supplemental [ ] Replacement
If Replacement: [ ] Destroy Deposit [ ] Return Deposit
ENVIRONMENT:
Host System CPU/OS: 3090/MVS
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS: 3090/MVS
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler: Standard IBM Compiler
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: FSR Source Code-931761 Version:
---------------------------- --------------------------
FSR JCL-931384
Item Label Description Media Quantity
DSN-P03AIM.PRIV.VENDOR.SEA.CSSP Data Tape 1
ROD_PANLIB VOLSER-932154 DSI
DSN_P03AIMPRIV.VENDOR.SEQ.ESC Data Tape 1
ROW.TAPE VOLSER=932155
<TABLE>
<S> <C>
For Depositor, I certify that the above described For DSI, I received the above described Deposit
Deposit Material was sent to DSI: Material subject to the terms on the reverse side
of this Exhibit:
By: /s/ NOT LEGIBLE By: /s/ CHRISTIE WOODWARD
---------------------------------------------- ---------------------------------------------
Print Name: NOT LEGIBLE Print Name: CHRISTIE WOODWARD
-------------------------------------- -------------------------------------
Date: NOT LEGIBLE Date of Acceptance: NOT LEGIBLE
------------------------------------------- -----------------------------
</TABLE>
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 34 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
February 6, 1998, relating to the financial statements and financial highlights
of AIM Advisor Funds, Inc. which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the references to us under the headings "Independent Accountants"
and "Financial Statements" in such Statement of Additional Information and to
the references to us under the heading "Financial Highlights" in such
Prospectus.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
Denver, Colorado
February 23, 1998
<PAGE> 1
EXHIBIT 11(b)
CONSENT OF COUNSEL
AIM ADVISOR FUNDS, INC.
We hereby consent to the use of our name and to the reference
to our firm under the caption "General Information-Legal Counsel" in the
Prospectus for the AIM Advisor Flex Fund, AIM Advisor International Value Fund,
AIM Advisor Large Cap Value Fund, AIM Advisor MultiFlex Fund and AIM Advisor
Real Estate Fund, which is included in Post-Effective Amendment No. 34 to the
Registration Statement under the Securities Act of 1933 and Amendment No. 35 to
the Registration Statement under the Investment Company Act of 1940 (No.
811-3886) on Form N-1A of AIM Advisor Funds, Inc.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
February 17, 1998
<PAGE> 1
EXHIBIT 14(a)
[AIM LOGO APPEARS HERE]
IRA APPLICATION
To open your AIM IRA account.
Complete Sections 1-11.
Return completed application and check to: A I M Fund Services, Inc., P.O. Box
4739, Houston, TX 77210-4739. Phone: 800-959-4246.
Make check payable to INVESCO Trust Company.
Please Note: To establish an IRA for your spouse, please copy and submit a
separate application.
Minors cannot open an AIM IRA account.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (Please print or type.)
Name
-----------------------------------------------------------------------
First Name Middle Last Name
Address
--------------------------------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Social Security Number Birth Date / /
---------------------- -------------------
(Required to Open Account) Month Day Year
Home Telephone ( ) Work Telephone ( )
--- ----------------- --- -----------------
- --------------------------------------------------------------------------------
2. DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm
-------------------------------------------------
Main Office Address
--------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
-------------------------------------------------------------
Branch Telephone
-----------------------------------------------------------
[ ] Investor is authorized for NAV purchase. (If authorized for NAV
purchase, other than the Broker, please attach NAV Certification
Form.)
- --------------------------------------------------------------------------------
3. ACCOUNT TYPE (Choose one only.)
[ ] IRA [ ] Rollover IRA [ ] SEP IRA* [ ] SARSEP IRA* (No new
SARSEP plans after
12/31/96)
*Employer (for SEP & SARSEP plans only)
-------------------------------------
- --------------------------------------------------------------------------------
4. CONTRIBUTION (Indicate type of contribution.)
[ ] REGULAR - Contribution for tax year 19___.
[ ] ROLLOVER - Represents a rollover from an employer's pension, profit
sharing or 401(k) plan, another IRA or a 403(b) custodial account or
annuity. Please complete a Direct Rollover Form, unless coming from
another IRA.
[ ] TRANSFER - Transfer from another IRA account. Please complete an IRA
Asset-Transfer Form.
[ ] SEP - Employer sponsored. Complete separate application for each
employee.
[ ] SARSEP - Employee salary-reduction SEP. Complete separate application
for each employee. (No new SARSEP plans after 12/31/96.)
13
<PAGE> 2
- --------------------------------------------------------------------------------
5. FUND INVESTMENT
Indicate Fund(s) and contribution amount(s).
MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open an
IRA is $250.
<TABLE>
<CAPTION>
Fund $ or % of Assets Class of Shares (Check one)
<S> <C> <C>
[ ]AIM Advisor Flex Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor International Value Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor Large Cap Value Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor MultiFlex Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor Real Estate Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Balanced Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Blue Chip Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Capital Development Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Cash Reserve Shares $ [ ]Class C
------------------------
[ ]AIM Charter Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Constellation Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Global Aggressive Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Income Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Utilities Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Intermediate Government Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM High Yield Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Income Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM International Equity Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Limited Maturity Treasury Shares $ [ ]Class A
------------------------
[ ]AIM Money Market Fund $ [ ]Class A [ ]Class B
------------------------
[ ]AIM Value Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Weingarten Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
Total $
------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, AIM Cash Reserve Shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in Section
3 of the Asset-Transfer Form.
- --------------------------------------------------------------------------------
6. ACCOUNT OPTIONS
Please indicate options you desire:
TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize the Transfer Agent to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
[ ] I DO NOT want the Telephone Exchange Privilege.
DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class of
shares.)
I have at least $5,000 in shares in my __________________________ Fund, for
which no certificates have been issued, and I would like to exchange:
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
on a [ ] monthly [ ] quarterly basis starting in the month of_____________
on the [ ] 10th or [ ] 25th of the month.
14
<PAGE> 3
DIVIDENDS AND CAPITAL GAINS (For clients over 59 1/2)
All distributions are subject to income tax.
[ ] Reinvest dividends and capital gains (Automatic for clients under
59 1/2.)
[ ] Mail dividends and capital gains to home address
[ ] Mail dividends to my bank
Name of Bank
---------------------------------------------------------------
Address Account #
-------------------------------------- ---------------------
- --------------------------------------------------------------------------------
7. WITHHOLDING ELECTION
Distributions from your IRA will be subject to an automatic federal income
tax withholding of 10%, unless otherwise noted below:
[ ] I do not want any federal income tax withheld from my distribution.
[ ] Withhold federal income tax at a rate of _________% (NOTE: The
percentage indicated must be a whole percentage and higher than 10%).
- --------------------------------------------------------------------------------
8. REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION (This option is for Class A shares only.)
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds--Registered Trademark--:
Fund(s) Account No(s).
------------------------------ ------------------------
------------------------------ ------------------------
------------------------------ ------------------------
LETTER OF INTENT
I agree to the Letter of Intent provisions in the Application Instructions. I
plan to invest during a 13-month period a dollar amount of at least: [ ]$25,000
[ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
9. BENEFICIARY INFORMATION
I hereby designate the following beneficiary(ies) to receive the balance in
my IRA custodial account upon my death. To be effective, the designation of
beneficiary and any subsequent change in designation of beneficiary must be
filed with the Custodian prior to my death. The balance of my account shall
be distributed in equal amounts to the beneficiary(ies) who survives me. If
no beneficiary is designated or no designated beneficiary or contingent
beneficiary survives me, the balance in my IRA will be distributed to the
legal representatives of my estate. This designation revokes any prior
designations. I retain the right to revoke this designation at any time. I
hereby certify that there is no legal impediment to the designation of this
beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------------- --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- --
Month Day Year
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- --
Month Day Year
15
<PAGE> 4
CONTINGENT BENEFICIARIES
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts unless otherwise
indicated.
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- ----
Month Day Year
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- ----
Month Day Year
- --------------------------------------------------------------------------------
10. AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. Individual Retirement
Account (IRA) appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the IRA custodial
agreement and disclosure statement and consent to the custodial account
fees as specified. I understand that a $10 annual AIM Fund IRA Maintenance
Fee will be deducted in early December from my AIM IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund
is required to have the following certification: Under the penalties
of perjury I certify by signing this Application as provided below
that:
1. The number shown in Section 1 of this Application is my correct
Social Security (or Tax Identification) Number, and
2. I am not subject to backup withholding either because (a) I have
not been notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to report
all interest or dividends or (b) the IRS has notified me that I am no
longer subject to backup withholding. (This paragraph (2) does not
apply to real estate transactions, mortgage interest paid, the
acquisition or abandonment of secured property, contributions to an
individual retirement arrangement and payments other than interest and
dividends.)
You must cross out paragraph (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return.
In addition, the Fund hereby incorporates by reference into this
section of the Application either the IRS instructions for Form W-9 or
the substance of those instructions whichever is attached to this
Application.
SIGNATURE PROVISIONS
I, the undersigned Depositor, have read and understand the foregoing
Application and the attached material included herein by reference. In
addition, I certify that the information which I have provided and the
information which is included within the Application and the attached
material included herein by reference is accurate including but not limited
to the representations contained in the Withholding Information section of
this Application above. (The Internal Revenue Service does not require your
consent to any provision of this document other than the certifications to
avoid backup withholding.)
Dated / /
--- --- ---
Signature of IRA Shareholder
-----------------------------------------------
16
<PAGE> 5
- --------------------------------------------------------------------------------
11. MAILING INSTRUCTIONS
Make check payable to INVESCO Trust Company.
Return Application to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
- --------------------------------------------------------------------------------
12. SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist you
between 7:30 a.m. and 6:00 p.m. Central time at 800-959-4246.
17 [AIM LOGO APPEARS HERE]
<PAGE> 6
INSTRUCTIONS FOR IRA ASSET-TRANSFER FORM
The IRA Asset-Transfer Form is used to transfer assets from an
existing IRA to an AIM Prototype IRA.
NOTE: It is not necessary to complete this form if the check
representing the transfer of assets has been attached to the
application.
1. Complete Sections 1 through 6 of the IRA Asset Transfer Form (on
pages 19 through 20 of this booklet).
2. Be sure that you have included your bank account or mutual fund
account number in Section 2 of the form, as well as the complete
mailing address for your existing custodian. You should contact
your existing custodian to verify that firm's proper mailing
address.
3. Be sure that your AIM account number is in Section 3 of the
form. If you do not have an AIM IRA, please complete the IRA
Application included on pages 13 through 16 of this booklet.
NOTE: If you currently hold AIM shares through a brokerage firm,
check with your investment representative to determine if you
should establish your IRA with the brokerage firm or directly
with AIM. If you decide to establish your IRA directly with AIM,
you must complete the AIM IRA Application.
4. Contact your existing custodian to determine whether a signature
guarantee is required in Section 5 of the IRA Asset Transfer
Form. Signature guarantees can be obtained at your bank or
brokerage firm.
5. You may wish to attach a current account statement for your
existing IRA to the IRA Asset Transfer Form.
6. Please mail any insurance or annuity policies and contracts
directly to the company which issued them. Do not attach them to
the IRA Application or IRA Asset Transfer Form.
7. Please mail the completed IRA Asset Transfer Form, along with
the completed IRA Application (if establishing a new AIM IRA)
to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
NOTE: If your existing account is a qualified plan, such as a
profit sharing, 401(k) or 403(b) plan, please complete the
Direct Rollover Form on page 23. Refer to the Instructions for
Direct Rollover Form to complete that form.
18
<PAGE> 7
[AIM LOGO APPEARS HERE]
IRA ASSET-TRANSFER FORM
Use this form only when transferring assets from an existing IRA to an AIM IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian. Complete Sections 1-5.
If you do not already have an AIM IRA, you must also submit an AIM IRA
Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (PLEASE PRINT OR TYPE.)
Name
-----------------------------------------------------------------------
First Name Middle Last Name
Address
--------------------------------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Social Security Number Birth Date / /
---------------------- -- -- --
Month Day Year
Home Telephone ( ) Work Telephone ( )
--- ----------------- --- -----------------
- --------------------------------------------------------------------------------
2. CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee
--------------------------------------------------
Account Number of Resigning Trustee
----------------------------------------
Address of Resigning Trustee
-----------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Attention Telephone
---------------------------------- -----------------------
- --------------------------------------------------------------------------------
3. IRA ACCOUNT INFORMATION
Please deposit proceeds in my [ ]New* [ ]Existing
Existing AIM Account Number
------------------
[ ]IRA Account [ ]Rollover IRA Account
[ ]SEP IRA Account [ ]SARSEP IRA Account
INVESTMENT ALLOCATION:
Fund Name Class %
--------------------------- --------------------- ------------
Fund Name Class %
--------------------------- --------------------- ------------
Fund Name Class %
--------------------------- --------------------- ------------
*If this is a new AIM IRA account, you must attach a completed AIM IRA
Application. If no class of shares is selected, Class A shares will be
purchased, except in the case of AIM Money Market Fund, where AIM Cash
Reserve Shares will be purchased.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 2 and
issue a check to my IRA with INVESCO Trust Company.
Amount to liquidate: [ ] All [ ] Partial amount of $_______________
When to liquidate: [ ] Immediately [ ] At maturity ____ /___ /___
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE TRANSFERRED IN KIND. TO
TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind" immediately:[ ]all [ ] partial amount of
shares_____________
19
<PAGE> 8
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I have established an Individual Retirement Account with the AIM Funds and
have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- ----- ----- -----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
- --------------------------------------------------------------------------------
6. DISTRIBUTION ELECTION INFORMATION SECTION 6 OF FORM TO BE COMPLETED BY
PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation [ ] declining years [ ] recalculation
[ ] annuitization [ ] amortization
2. Life expectancy [ ] single life payout [ ] joint life expectancy
factor-Joint birth date and relationship________________
3. The amount withheld from this rollover to satisfy this year's required
distribution $____________________
The life-expectancy ages used to calculate this required payment
was _________________________________________
Signature of Current Custodian/Trustee
------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
7. CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
-------------------- ---------------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature Mailing Date / /
------------------------ ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
8. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the IRA
holder on all documents.
20 [AIM LOGO APPEARS HERE]
<PAGE> 9
[AIM LOGO APPEARS HERE]
DIRECT ROLLOVER FORM
To directly roll over distributions from your employer's qualified plan to your
AIM IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian. Effective January 1, 1993, the Unemployment Compensation
Amendments of 1992 require that certain distributions from 403(b) accounts and
employer qualified plans (Keogh, money purchase pension, profit sharing and
401(k) plans) are subject to 20% withholding tax, unless the distribution is
"directly rolled over" to a new employer's qualified plan, a 403(b) account or
an IRA. Your employer will inform you what portion of your distribution is
eligible for rollover.
Please use this form to request a "direct rollover" to your AIM IRA. If you
currently do not have an IRA, you must also submit an AIM IRA Application with
this request. You may also use your former employer's direct rollover form.
PLEASE CONTACT YOUR EMPLOYER TO DETERMINE IF ADDITIONAL FORMS ARE REQUIRED.
- --------------------------------------------------------------------------------
1 PLAN TYPE Indicate type of retirement plan to be rolled over. [ ] 403(b) Plan
[ ] Employer's Qualified Retirement Plan
- --------------------------------------------------------------------------------
2 INVESTOR INFORMATION (Please print or type.)
Name
-------------------------------------------------------------------------
First Name Middle Last Name
Address
----------------------------------------------------------------------
Street City State Zip Code
Social Security Number Birth Date / /
-------------------- ---- ---- ----
Day Phone ( ) Month Day Year
---- ------------
- --------------------------------------------------------------------------------
3 CURRENT PLAN CUSTODIAN OR FORMER EMPLOYER INFORMATION
Name of Resigning Custodian or Former Employer
------------------------------
Former Employer Plan Name or Fund Account Number
------------------- --------
Address of Releasing Institution
--------------------------------------------
City State Zip Code
----------------------- ------------- ---------
Attention Telephone
------------------------------ ---------------------
- --------------------------------------------------------------------------------
4 ROLLOVER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 3 and
issue a check to my IRA with INVESCO Trust Company.
Amount to liquidate: [ ] All [ ] Partial amount of $_______________
When to liquidate: [ ] Immediately [ ] At maturity_____ /_____ /_____
OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund,
you may choose to roll them over "in kind.")
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE ROLLED OVER IN KIND.
Amount to roll over "in kind" immediately: [ ] all
[ ] partial amount of shares_____________
- --------------------------------------------------------------------------------
5 IRA ACCOUNT INFORMATION
Please deposit proceeds in my [ ] New* [ ] Existing
Existing AIM Account Number
----------------
[ ] IRA Account [ ] Rollover IRA Account
INVESTMENT ALLOCATION:
Fund Name Class %
---------------------- ------------------------- ---------
Fund Name Class %
---------------------- ------------------------- ---------
Fund Name Class %
--------------------- ------------------------- ---------
*If this is a new AIM IRA account, you must attach a completed AIM IRA
application. If no class of shares is selected, Class A shares will be
purchased, except in the case of AIM Money Market Fund, where AIM Cash
Reserve Shares will be purchased.
23
<PAGE> 10
- --------------------------------------------------------------------------------
6 AUTHORIZATION AND SIGNATURE
I have established an Individual Retirement Account with the AIM Funds and
have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
-------------------------------- ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
NOTE: SOME CUSTODIANS OF RETIREMENT PLANS REQUIRE THE COMPLETION OF THEIR
OWN FORM BEFORE SENDING A CHECK TO AIM.
[ ] Yes, I have [ ] No, I have not filed the necessary completed forms
with the current custodian.
- --------------------------------------------------------------------------------
7 DISTRIBUTION ELECTION INFORMATION SECTION 7 OF FORM TO BE COMPLETED BY
PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation [ ] declining years [ ] recalculation
[ ] annuitization [ ] amortization
2. Life expectancy [ ] single life payout
[ ] joint life expectancy factor-Joint birth date and relationship______
3. The amount withheld from this rollover to satisfy this year's required
distribution $____________________
The life-expectancy ages used to calculate this required payment was _______
Signature of Current Custodian/Trustee
-------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
8 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
--------------------- ----------------------
This direct rollover is to be executed from fiduciary to fiduciary and will
not place the participant in actual receipt of all or any of the plan
assets.
No federal income tax is to be withheld from this direct rollover.
Authorized Signature Mailing Date / /
------------------------- ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
9 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the IRA
holder on all documents.
24 [AIM LOGO APPEARS HERE]
<PAGE> 11
[AIM LOGO APPEARS HERE]
AUTOMATIC BANK DRAFT
To establish regular, monthly purchases of Fund shares.
The Automatic Bank Draft is a service available to shareholders of The AIM
Family of Funds--Registered Trademark--, making possible regular, monthly
purchases of Funds to allow dollar-cost averaging. Each month, A I M Fund
Services,Inc. will arrange for an amount of money selected by you ($50 minimum
per Fund) to be deducted from your checking account and used to purchase shares
of a specified AIM Fund. You will receive confirmations from A I M Fund
Services, Inc., and your bank statement will reflect the amount of the draft.
- --------------------------------------------------------------------------------
1 DRAFT AMOUNT
I authorize you to withdraw a total of $ __________________ ($50 minimum
per Fund) from my checking account at the bank shown below, beginning in
__________________________________ and invest this amount in shares of the
AIM Fund listed below. You have the option of selecting the 10th, 25th or
both dates each month for the automatic bank draft. Please refer to Section
2 for this selection. ALL DRAFTS WILL BE CONSIDERED CURRENT-YEAR IRA
CONTRIBUTIONS.
I agree that if the check is not honored by my bank upon presentation, AIM
Fund Services, Inc. may discontinue this service. I also authorize AIM Fund
Services, Inc. to liquidate sufficient shares of the Fund to make up any
deficiency resulting from a dishonored check. I understand that this program
may be discontinued at any time by the Fund or by myself by written notice to
AIM Fund Services, Inc. received no later than ten business days prior to the
above designated investment date.
- --------------------------------------------------------------------------------
2 FUND ACCOUNT INFORMATION (Please enter information exactly as your account is
registered.)
Name(s) AIM Account #
--------------------------------- -----------------------
---------------------------------
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
*Total $
--------------------------------
Signature Signature
-------------------------- ------------------------------
(All registered owners must sign.) (All registered owners must sign.)
*Please note that each draft (per Fund account) will be treated as a
separate item by your bank.
- --------------------------------------------------------------------------------
3 BANK AUTHORIZATION
Name of Bank
-----------------------------------------------------------------
Address of Bank
--------------------------------------------------------------
Bank Account # ABA Routing #
---------------------- ---------------------------
Please honor checks on my account by The Shareholders Services Group, Inc.
(TSSG), a wholly-owned subsidiary of First Data Corporation. Your authority
to do so shall continue until you receive further notice from me revoking
this authority. You may terminate your participation in this arrangement by
written notice either to TSSG or me. I agree that your rights with respect to
each check shall be the same as if it were drawn by me. I further agree that
should any check be dishonored, with or without cause, intentionally or
inadvertently, you shall be under no liability whatsoever.
------------------------------- -------------------------------------------
Depositor's Name (please print) Signature (exactly as appearing on bank
records)
------------------------------- -------------------------------------------
Depositor's Name (please print) Signature (exactly as appearing on bank
records)
25
<PAGE> 12
- --------------------------------------------------------------------------------
4 VOIDED CHECK
ATTACH YOUR VOIDED CHECK HERE.
AIM Fund Services, Inc.
P.O. Box 4739
Houston, Texas 77210-4739
Phone: 800-959-4246
[Voided Check Graphic]
26 [AIM LOGO APPEARS HERE]
<PAGE> 13
[AIM LOGO APPEARS HERE]
Form 5305-A (Rev. October 1992) Department of the Treasury Internal Revenue
Service
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(under Section 408(a) of the Internal Revenue Code)
Please fill out and retain with your tax records. Do NOT file with Internal
Revenue Service or AIM.
- --------------------------------------------------------------------------------
Name of depositor
---------------------------------------------------------------
Date of birth of depositor / / Social Security Number
----- ----- ----- -----------
Month Day Year
Address of depositor [ ] Check if Amendment
-------------------------------------
Name of Custodian INVESCO Trust Company
Address or principal place of business of custodian The State of Colorado
The Depositor whose name appears above is establishing an individual retirement
account under section 408(a) to provide for his or her retirement and for the
support of his or her beneficiaries after death.
The Custodian named above has given the Depositor the disclosure statement
required under Regulations section 1.408-6.
The Depositor assigned the custodial account ________ dollars ($______) in cash.
The Depositor and the Custodian make the following agreement:
- --------------------------------------------------------------------------------
A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
ARTICLE IV
1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date (April 1 following
the calendar year end in which the Depositor reaches age 70 1/2. By that date,
the Depositor may elect, in a manner acceptable to the Custodian, to have the
balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the Custodial account as of the close
of business on December 31 of the preceding year by the life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under paragraph 3,
determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designated beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the case
of distribution in accordance with paragraph 4(b)(ii), determine life expectancy
using the attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence.
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6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. THE DEPOSITOR AGREES to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408.6.
2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service and
the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related IRA Account Application
(referred to herein as the "IRA Adoption Agreement") (such Agreements being
collectively referred to herein as the "Agreement"), the Depositor directs the
Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the related IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds--Registered
Trademark--," which are managed or advised by subsidiaries of A I M Management
Group Inc., and any such investment company will hereafter be referred to as
"Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates. Additionally, if the Depositor's employer
maintains a qualified simplified employee pension (SEP), such employer may
contribute on behalf of the Depositor, the lesser of 15% of the Depositor's
compensation from such employer or $30,000.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the
account all rollover contributions which consist of cash, and it may, but shall
be under no obligation to, accept any other rollover contribution. In the case
of rollover contributions composed of assets other than cash, the prospective
Depositor shall provide the Custodian with a description of such assets and such
other information as the Custodian may reasonably require. The Custodian may
accept all or any part of such a rollover contribution if it determines that the
assets of which such contribution consists are either in a medium proper for
investment hereunder or that the assets can be promptly liquidated for cash.
The Depositor warrants that any rollover contribution to the account consists
of cash, the same property received in the distribution or, in the case of
amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution. The Depositor also warrants that in the case of a rollover into
the account of amounts distributed to the Depositor from a qualified employer's
plan or annuity, only amounts in excess of the amounts considered to be the
Depositor's employee contributions included in such distribution constitute the
contribution to this account. Additionally, the Depositor affirms that the
contribution to the account does not consist of amounts received from an
inherited individual retirement account or annuity. An individual retirement
account or annuity shall be treated as inherited if it was acquired by reason of
the death of an individual other than the Depositor's spouse. The Depositor also
affirms that in the case of a rollover into the account of amounts distributed
from an individual retirement account or annuity or retirement bond, he has not
during the one year period ending on the date of the distribution received any
other distribution from an individual retirement account or annuity or
retirement bond which constituted a rollover contribution (as described in
section 408(d)(3) of the Code).
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
deposit, and interest, if any, earned thereon. Any contributions made by or on
behalf of the Depositor in respect of a taxable year of the Depositor shall be
made by or on behalf of the Depositor to the Custodian for deposit in the
custodial account within the time period for claiming any income tax deduction
for such taxable year. It shall be the sole responsibility of the Depositor to
determine the amount of the contributions made hereunder. The Depositor shall
execute such forms as the Custodian may require in connection with any
contribution hereunder.
ARTICLE IX
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code),
all or a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The Custodian
may require such proof of disability as it deems necessary prior to the time
that amounts are distributed to the Depositor due to such disability.
3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE X
A Depositor shall have the right to designate a beneficiary or beneficiaries
to receive any amounts remaining in his account in the event of his death. Any
prior beneficiary designation may be changed or revoked at any time by a
Depositor by written designation signed by the Depositor on a form acceptable
to, and filed with, the Custodian; provided, however, that such designation, or
change or revocation of a prior designation shall not become effective until it
has been received by the Custodian, nor shall it be effective unless received by
the Custodian no later than thirty days before the death of the Depositor, and
provided further that the last such designation of beneficiary or change or
revocation of beneficiary executed by the Depositor, if received by the
Custodian within the time specified, shall control. Unless otherwise provided in
the beneficiary designation, amounts payable by reason of the Depositor's death
will be paid in equal shares only to the primary beneficiary or beneficiaries
who survive the Depositor, or, if no primary beneficiary survives the Depositor,
to the contingent beneficiary or beneficiaries who survive the Depositor. If the
Depositor had not, by the date of his death, properly designated a beneficiary
in accordance with the preceding sentences, or if no designated beneficiary
survives the Depositor, then the Depositor's beneficiary shall be the
Depositor's estate.
ARTICLE XI
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new
fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
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ARTICLE XII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the IRA Adoption Agreement is checked
for spousal accounts, separate custodial accounts will be opened and maintained
in each spouse's name. The amounts specified in the IRA Adoption Agreement shall
be credited to each spouse's separate custodial account except that no more than
$2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall be
registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIII
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below, the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the collection of contributions, the deductibility or propriety of any
contribution under this Agreement, or the purposes or propriety of any
distribution from the account, which matters are the responsibility of the
Depositor or the Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or preceding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting
upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XIV
1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing
to the Depositor, and may be removed by the Depositor at any time upon thirty
days' notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under this
Agreement, must be a bank (as defined in Section 408(n) of the Code) or such
other person who qualifies with the Internal Revenue Service to serve in the
manner prescribed by Code section 408(a)(2) and satisfies the Custodian, upon
request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XV
1. THE CUSTODIAN SHALL terminate the custodial account and pay the
proceeds of the account to the depositor if within thirty days after the
resignation or removal of the Custodian pursuant to Article XV above, the
Depositor has not appointed a successor custodian which has accepted such
appointment unless within that time the Distributor appoints such successor and
gives written notice thereof to the Depositor and the Custodian. The Distributor
shall have the right, but not the duty, to appoint such a successor. Termination
of the custodial account shall be effected by distributing all of the assets
therein in cash or in kind to the Depositor in a lump sum, subject to the
Custodian's right to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVI
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and
administered in accordance with the laws of The State of Colorado. The Custodian
and the Depositor hereby waive and agree to waive right to trial by jury in an
action or proceeding instituted in respect to this custodial account. The
Depositor further agrees that the venue of any litigation between him and the
Custodian with respect to the custodial account shall be in the State of
Colorado.
3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an
Individual Retirement Account and to entitle the Depositor to any retirement
savings deduction which he may qualify for under section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or
any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
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INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt an individual retirement account under section 408(a). When
fully executed by the Depositor and the Custodian not later than the time
prescribed by law for filing the Federal income tax return for the Depositor's
tax year (not including any extensions thereof), a Depositor will have an
individual retirement account (IRA) custodial account which meets the
requirements of section 408(a). This account must be created in the United
States for the exclusive benefit of the Depositor or his/her beneficiaries.
DEFINITIONS
Custodian. -- The Custodian must be a bank or savings and loan association,
as defined in section 408(n), or other person who has the approval of the
Internal Revenue Service to act as custodian.
DEPOSITOR. -- The Depositor is the person who establishes the custodial
account.
IRA FOR NON-WORKING SPOUSES
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the
non-working spouse.
An individual's social security number will serve as the identification
number of his or her individual retirement account.
For more information, obtain a copy of the required disclosure statement from
your custodian or get Publication 590, Individual Retirement Arrangements.
(IRAs).
SPECIFIC INSTRUCTIONS
Article IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both. The distribution option should
be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met.
Article IX -- This article and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor and the Custodian to complete
the agreement. These may include, for example: definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS--Registered Trademark--
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of an individual
retirement account is required to furnish each depositor who has established or
is establishing an individual retirement account with a statement which
discloses certain information regarding the account. INVESCO Trust Company
(hereinafter referred to as the "Custodian") is providing this Disclosure
Statement to you in accordance with that requirement, and this Disclosure
Statement contains general information about the The AIM Family of
Funds--Registered Trademark-- Individual Retirement Custodial Account
(hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed
in conjunction with both the Individual Retirement Custodial Account agreement
(From 5305-A and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your IRA. You should
review this Disclosure Statement and the IRA documents with your attorney or tax
advisor. The Custodian cannot give tax advice or determine whether or not the
IRA is appropriate for you.
A. SEVEN DAY RIGHT TO REVOKE YOUR IRA.
You may revoke your IRA at any time within seven business days after the date
the IRA is established, by giving proper notice. For purposes of revocation, it
will be assumed that you received the Disclosure Statement no later than the
date of your check with which you opened your IRA. Written notice must be hand
delivered or sent by first class mail, in which case, the revocation will be
effective as of the date the notice is postmarked (or if sent by certified or
registered mail, the date of certification or registration). Notice of
revocation should be made to: A I M Distributors, Inc., Eleven Greenway Plaza,
Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention: Shareholder
Services Department, area code (800) 959-4246. If you revoke your IRA, you are
entitled to a refund of your entire contribution to the IRA, without adjustment
for such items as sales commissions, administrative expenses or fluctuation in
market value. If you do not revoke within seven business days after the
establishment of the IRA, you will be deemed to have accepted the terms and
conditions of the IRA and cannot later revoke the IRA without certain potential
penalties.
B. STATUTORY REQUIREMENTS.
An IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or that of your beneficiaries. It must be
created by a written governing instrument that meets the following requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union,
savings and loan association or another person eligible to act as trustee or
custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS and simplified employee pension ("SEP")
contributions, contributions of more than $2,000 for any tax year may not be
made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your IRA may not be invested in "collectibles," such as art works, antiques,
metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and
silver coins), and certain other types of tangible personal property. An
investment in a collectible would be treated as a distribution from your IRA
which would be includible in your gross income, and, if you had not attained the
age of 59 1/2, the distribution would also be subject to the premature
distribution penalty as discussed in Part E(4) below;
(6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed
on or before April 1 of the calendar year following the calendar year in which
you reach age 70 1/2. The distribution may be made in a single sum, or you may
receive periodic distributions, so long as your entire interest is distributed
in equal or substantially equal payments over any of the following periods:
(a) your life;
(b) the lives of you and your designated beneficiary;
(c) a period certain not extending beyond your life expectancy;
(d) a period certain not extending beyond the life expectancy of you and
your designated beneficiary.
If the distributions from your IRA are to be made over one of the foregoing
periods, the amount distributed each year must meet the minimum distribution
requirements set forth in your IRA Custodial Agreement, or you will incur a
penalty as described in Part E(8) below;
(7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire
interest has been distributed to you, payments must continue at least as rapidly
as under the method of distribution in effect, at your death. If you die before
distributions have commenced, generally your entire interest must be distributed
within five years of your death. However, if your interest is payable to a
designated beneficiary, payments may be made over the life or a period not
exceeding the life expectancy of the beneficiary; provided, however, that such
payments must commence within one year of your death unless your designated
beneficiary is your surviving spouse, in which case payments need not commence
until the date on which you would have attained age 70 1/2. You should advise
the Custodian as to your beneficiary and the method of distribution desired.
C. INVESTMENT OF YOUR IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your IRA Funds in shares of investment companies which are
part of "The AIM Family of Funds--Registered Trademark--," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your IRA
Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your IRA, you should
provide the Custodian with specific
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instructions, detailing your investment decision so that the Custodian can
effectuate such investments as provided in your IRA Custodial Agreement. If you
fail to direct the Custodian as to the Investment of all or any portion of your
IRA account, the Custodian shall hold such uninvested amount in your account and
shall incur no liability for interest or earnings thereon. All dividends and
capital gain distributions received on shares of an investment company held in
your IRA will be reinvested in shares of that investment company, if available,
which shall be credited to the Custodian account. Detailed information about the
shares of the AIM fund(s) you select must be furnished to you in the form of
prospectuses governed by rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate IRA.
Section 219 of the Code contains special provisions governing whether amounts
contributed to your IRA will be deductible from gross income for federal income
tax purposes. To the extent you are not eligible or elect not to make deductible
IRA contributions, you may make nondeductible IRA contributions within the
aforementioned limits which are reduced by the amount of any deductible
contributions. The following is a summary of the rules regarding the
deductibility of contributions to your IRA. You should consult your tax advisor
to determine the specific application of such rules to your IRA contributions
for any particular taxable year.
(1) IF NEITHER YOU NOR YOUR SPOUSE IS an "active participant" (as
determined under section 219(g) of the Code and any regulations or rulings
thereunder) in a retirement plan during any part of the taxable year, you may
take a deduction for contributions to your IRA for such taxable year in an
amount equal to the lesser of $2,000 or 100% of your compensation (earned
income) for such taxable year.
(2) IF EITHER YOU OR YOUR SPOUSE (unless you file separate income tax returns
as noted below) is considered an "active participant" in a retirement plan for
any part of the taxable year, the extent, if any, to which contributions to your
IRA will be deductible depends on the amount of your adjusted gross income
("AGI"). The maximum IRA deduction as specified in Paragraph (1) above will be
reduced in the same ratio that the excess of your AGI over $25,000 (for a single
individual), $40,000 (for a married couple filing jointly) and zero (for a
married couple filing separately) bears to $10,000. Thus, if you are an active
participant in a retirement plan, no IRA deduction will be permitted if:
(a) You are a single individual with AGI in excess of $35,000,
(b) you are married and file a joint return with AGI in excess of $50,000,
or
(c) you are married, file separate returns and either you or your spouse
have AGI in excess of $10,000.
(3) IF YOU ARE MARRIED and your spouse has no compensation for the
taxable year, or elects to be treated as having no compensation for such year,
you are permitted an additional deduction in the amount of $2,000 for
contributions to an IRA for the benefit of your spouse provided that your spouse
has not attained age 70 1/2 and you file a joint income tax return for such
year, subject to the provisions of (1) or (2) above, whichever is applicable.
(see below)
You will be considered an "active participant" for any particular taxable
year if you are covered by a retirement plan for any part of such year.
Generally, you will be considered covered by a retirement plan for a year if
your employer or union has a retirement plan under which money is added to your
account or you are eligible to earn retirement credits for such year. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax-sheltered annuity
arrangement or a 401(k) plan), a SEP or a plan which promises you a retirement
benefit which is based upon the number of years of service you have with the
employer, you are likely to be an active participant. Your Form W-2 for the
year should indicate your participation status. You are an active participant
for a year even if you are not yet vested in your retirement benefit. Also, if
you make required contributions or voluntary employee contributions to a
retirement plan, you are an active participant. In certain plans you may be an
active participant even if you were only with the employer for part of the
year. You should note that if you are married but file a separate tax return,
and you did not live with your spouse at any time during the taxable year, your
spouse's active participation does not affect your ability to make deductible
contributions.
No deduction will be allowed under (1) or (2) above for any contribution
which is made for the taxable year during which you attain age 70 1/2 or for any
subsequent year. You are permitted to contribute and deduct up to $4,000 for
contributions to your IRA and a spousal IRA, subject to the provisions of (1)
and (2) above. However, in no event shall the contribution to either IRA exceed
$2,000. It should be noted that if both you and your spouse work, each may
contribute up to $2,000 of compensation (earned income) to his or her own IRA.
If your employer maintains a SEP, your employer may contribute to your IRA up
to the lesser of 15% of your compensation from such employer or $30,000.
Since SEP contributions are excluded from your gross income, such contributions
are not deductible for federal income tax purposes.
If contributions to your IRA are deductible as outlined above, you may claim
such deduction even if you do not itemize your deductions on your federal income
tax return. You must make contributions to your IRA during the taxable year for
which you claim the deduction or by the deadline for filing your federal income
tax return for such year (without regard to any filing deadline extension). For
example, if you are a calendar-year taxpayer, you must make contributions no
later than April 15th in order to take a deduction for the previous year.
If any portion of a contribution to your IRA is nondeductible as outlined
above, you must so designate on your federal income tax return, as required
under section 408(o)(4) of the Code and file From 8606 with your tax return.
E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your IRA and earnings thereon are
exempt from federal income tax until distributions are made from the IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other
than rollover contributions) have been deductible for federal income tax
purposes then all distributions from your IRA will be taxable as ordinary
income. However, if you have made any nondeductible IRA contributions,
distributions from your IRA will be treated as partially a return of deductible
contributions, if any, (taxable), partially a return of nondeductible
contributions (nontaxable) and partially a distribution of earnings (taxable).
The portion of an IRA distribution which will be excludable from income will be
determined by multiplying the total amount distributed by a fraction, the
numerator of which is the aggregate of all your nondeductible IRA contributions,
and the denominator of which is the aggregate balance of all of your IRAs
(including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of
your IRAs will be treated as a single IRA, (b) all distributions during a
taxable year will be treated as a single distribution and (c) the aggregate
balance of your IRAs will be determined as of the end of the calendar year with
or within which your taxable year ends, after adding back any distributions for
such year.
Distributions from your IRA are not eligible for any special tax treatment
such as five-or ten-year averaging or capital gains treatment.
(3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the
limits stated in Part D above, you will be assessed a 6% nondeductible excise
tax on such excess amounts. This tax is payable for each year the excess is
permitted to remain in your IRA. However, if the excess contribution has not
been taken as a deduction, and if the excess and all earnings thereon are
returned before the due date for filing your income tax return for the year in
which the excess contribution was made, the 6% excise tax will not be assessed.
The earnings on such excess contribution that are returned to you will be
taxable as ordinary income and will be deemed to have been earned and taxable in
the tax year during which the excess contribution was made. In addition, if you
are not disabled or have not reached age 59 1/2, the earnings will be subject to
the 10% premature withdrawal penalty discussed below. The 6% excess contribution
tax may be eliminated for future tax years by withdrawing the excess
contribution from your IRA before the due date for filing your tax return for
that year or by under-contributing for a subsequent year by an amount equal to
the excess contribution. If the total contributions for the year to your IRA are
$2,000 or less, and there are no employer contributions for the year, you may
withdraw any excess contributions after the due date for filing your tax return,
including extensions, and not include the amount withdrawn in your gross income.
This applies only to the part of the excess that you did not take a deduction
for. It is not necessary to withdraw the interest or other income earned on the
excess. You will have to pay the 6% tax on the excess amount for each year the
excess contribution was in the IRA.
If the contributions to your IRA for any year are more than $2,000, you must
include in your gross income any excess over $2,000, unless it is an excess
rollover contribution attributable to erroneous information. You may also have
to pay a 10% tax on premature distributions on the amount you withdraw, unless
you are age 59 1/2 or disabled.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your IRA that occur before you reach age 59 1/2
(except in the event of disability, death, rollover, medical expenses in excess
of 7.5% of adjusted gross income, medical insurance premiums in the event of
unemployment or as a qualifying distribution of an excess contribution), will be
assessed a 10% additional income tax on the amount distributed which is
includible in your gross income. However, the additional 10% income tax will not
be imposed if the distribution is one of a scheduled series of level payments to
be made over your life or life expectancy or over the joint lives or joint life
expectancies of you and your beneficiary. Amounts treated as distributions from
the IRA because of pledging the IRA as described below, or prohibited
transactions as described below, will also be considered premature distributions
if they occur before you reach age 59 1/2 (assuming you are not disabled).
31
<PAGE> 18
(5) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the
portion so pledged is treated as being distributed to you in that year. In
addition
to any regular income tax that may be payable on the distribution, the premature
distribution penalty as discussed above may also be applicable.
(6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your IRA, your IRA will lose its exemption from tax and you must include the
fair market value of your IRA in your gross income for the year during which the
prohibited transaction occurred. In addition to any regular income tax that may
be payable, the premature distribution
penalty as discussed above may also be applicable.
(7) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income tax
that may be payable on distributions from your IRA, you will be assessed
penalties on certain accumulations if funds in your IRA are not distributed in
accordance with the rules described in Part B above. If the amount distributed
from your IRA during the year is less than the minimum amount required to be
distributed during such year, an excise tax will be imposed. The tax imposed is
equal to 50% of the amount by which the minimum required distribution exceeds
the amount actually distributed during the year.
(8) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. Generally, for estate tax
purposes, the value of your IRA will be fully includible in your gross estate in
the event of your death. For gift tax purposes, beneficiary designations will
not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who
has no earned income or elects to be treated as having no earned income will
qualify for the annual present interest gift exclusion. You should consult your
tax advisor with respect to the application of community property laws on estate
and gift tax issues relating to your IRA.
(9) INHERITED IRAS. Your IRA will be treated as an inherited IRA if, upon
your death, it is acquired by a beneficiary other than your surviving spouse. An
inherited IRA may not be rolled over to a qualified plan or to another IRA, nor
may an inherited IRA accept any regular or rollover deposits. Only a beneficiary
who is your surviving spouse will be allowed to roll over the IRA funds into his
or her own IRA.
(10) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of
distributions from your IRA is subject to federal income tax withholding unless
you elect not to have withholding applied. If you elect not to have withholding
applied to taxable distributions from your IRA, or if insufficient federal
income tax is withheld from any distribution, you may be responsible for payment
of estimated taxes, as well as for penalties under the estimated tax rules, if
withholding and estimated tax payments were not sufficient. Additional
information regarding withholding and the necessary election forms will be
provided no later than at the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a tax-free distribution of cash or other assets from one
retirement program to another. There are two kinds of rollover contributions to
an IRA. In one, you contribute amounts distributed to you from one IRA to
another IRA. With the other, you contribute amounts distributed to you from your
employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable
IRA contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. The portion you contribute to your IRA will not be taxable to you until you
withdraw it from the IRA. Your employer or former employer will give you the
opportunity to roll over the distribution directly from the plan to the IRA. If
you elect, instead, to receive the distribution, you must deposit it into the
IRA within 60 days after you receive it.
An "eligible rollover distribution" is any distribution from a qualified plan
that would be taxable other than (1) a distribution that is one of a series of
periodic payments for an employee's life or over a period of 10 years or more,
(2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
If the entire amount in your IRA has been contributed in a tax-free rollover
from your employer's or former employer's qualified plan or 403(b) plan, you may
later roll over the IRA to a new employer's plan if such plan permits rollovers.
Your IRA would then serve as a conduit for those assets. However, you may later
roll those IRA funds into a new employer's plan only if you make no further
contributions to that IRA, or commingle the IRA rollover funds with existing IRA
assets.
G. AMENDMENTS.
The Custodian of your IRA may amend the agreements establishing your IRA at
any time. The Custodian will comply with the amendment procedures set forth in
your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your IRA is subject to market
fluctuation, the value of your IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your IRA, including current market values of investments. Certain fees will be
charged by the Custodian in connection with your IRA.
Such fees are disclosed on the Custodian's fee schedule, a copy of which
has been provided to you. Upon thirty days' prior written notice, the Custodian
may substitute a new fee schedule. Any fees or other expenses incurred in
connection with your IRA will be deducted from your IRA (with liquidation of
Fund Shares, if necessary), or at the Custodian's option, such fees or expenses
may be billed to you directly.
For its services to the various funds, in The AIM Family of
Funds--Registered Trademark--, INVESCO Trust Company receives a custodian fee.
This fee is in addition to fees it receives for acting as Custodian under the
IRA. INVESCO Trust Company and A I M Distributors, Inc. also will receive
additional fees for performing specific services with respect to the various
funds in the AIM Family of Funds. Any such fees will be fully disclosed to you.
Potential investors should obtain a copy of the current Prospectus relating to
the fund(s) selected for investment prior to making an investment. Also, copies
of the Statement of Additional Information relating to such fund(s) will be
provided upon your request to A I M Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give the
amount of contributions to the IRA, the year to which each contribution relates,
and the total value of the IRA as of the end of the year. Information relating
to contributions and distributions must be reported annually to the Internal
Revenue Service and to you. You must also file Form 5329 (Return for Individual
Retirement Savings Arrangement) with the Internal Revenue Service for each
taxable year during which you are assessed any penalty or tax as discussed in
Part E above.
Your IRA has been approved by the Internal Revenue Service. Such approval is
a determination as to the form of the IRA, and does not represent a
determination of the IRA's merits as an investment.
Further information about IRAs can be obtained from any district office of
the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your IRA. This is not a legal document. Your legal rights and obligations
are governed by the federal tax laws and regulations and your Custodial
Agreement and Adoption Agreement with the Custodian.
32
<PAGE> 1
EXHIBIT 14(b)
SEP AND SARSEP IRA ADOPTION AGREEMENT [AIM LOGO APPEARS HERE]
The undersigned Employer hereby establishes a Simplified Employee Pension Plan
(SEP) and/or a Salary Reduction Simplified Employee Pension Plan (SARSEP) for
the exclusive benefit of Employees who are eligible to participate. The terms of
the Plan are set forth in this Adoption Agreement and the accompanying Plan
Document which is hereby adopted and incorporated herein by reference.
- --------------------------------------------------------------------------------
1. EMPLOYER AND PLAN INFORMATION
Employer's Name
-------------------------------------------------------------
Address
---------------------------------------------------------------------
Tax I.D. Number Telephone Number
---------------------------- --------------
Form of Business:
[ ] Sole Proprietor [ ] Partnership [ ] Corporation
[ ] Electing S Corporation
Name of individual authorized to issue instructions to AIM:
----------------------------------------------------------------------------
Plan Year: Plan Type:
[ ] Calendar year. [ ] SEP IRA only
[ ] Employer's Taxable Year ending on . [ ] SARSEP IRA only
------
[ ] Combined SEP and SARSEP IRA
- --------------------------------------------------------------------------------
2. EFFECTIVE DATES
(a) New Plan: Effective as of .
------------------
(b) Amended and Restated Plan:
(i) Original Plan effective as of .
------------------------
(ii) Amended and Restated Plan effective as of .
----------------------
(c) Elective Deferrals effective as of .
-----------------------
- --------------------------------------------------------------------------------
3. ELIGIBILITY REQUIREMENTS
(a) Age: [ ] No requirement. [ ] Minimum age _____________ (not over 21).
(b) Service:
Employees who have performed services for the Employer during at least
________ (maximum 3) of the immediately preceding 5 Plan Years.
(c) Excluded Classes of Employees (select all applicable options):
[ ] None.
[ ] Employees covered by a collective bargaining agreement under which
retirement plan benefits have been the subject of good faith bargaining.
[ ] Employees whose Compensation as defined at Code Section 414(q)(7)
is less than $400 (as adjusted for inflation) during the Plan Year.
[ ] Non-resident aliens.
- --------------------------------------------------------------------------------
4. EMPLOYER ALLOCATION FORMULA
[ ] (a) Proportionate Allocation described at paragraph 3.3(a) of the SEP
and SARSEP Plan Document, or
[ ] (b) Integrated Allocation described at paragraph 3.3(b) of the Plan
Document. This allocation formula may not be adopted if the Employer
maintains any other plan which is integrated with Social Security.
15
<PAGE> 2
- --------------------------------------------------------------------------------
5. EMPLOYEE ELECTIVE DEFERRALS (FOR SARSEP ONLY)
% limit ________ (not to exceed 15%). Dollar limit $ _________________(not
to exceed $9,240 as indexed).
- --------------------------------------------------------------------------------
6. CASH BONUS OPTION
An Employee [ ] may [ ] may not defer a bonus.
- --------------------------------------------------------------------------------
7. LIMITATIONS ON USE OF PROTOTYPE
An Employer may adopt this Plan even if such Employer maintains another
qualified defined contribution plan, provided that contributions are limited
in accordance with Code Section 415. An Employer may not participate in this
Plan if the Employer maintains currently or has ever maintained a defined
benefit plan which is now terminated. An Employer who participates in this
Plan and who adopts a qualified defined benefit plan, may no longer
participate in this Plan. Thereafter, such Employer shall be considered to
have an individually drafted plan.
- --------------------------------------------------------------------------------
8. TOP-HEAVY MINIMUM CONTRIBUTIONS
The Top-Heavy Plan requirements under Code Section 416 shall be satisfied
by:
[ ] (a) this Plan.
[ ] (b)
----------------------------------------------------------------------
(Name of other qualified plan of the Employer).
- --------------------------------------------------------------------------------
9. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the prototype to:
A I M Distributors, Inc.
Retirement Plans Department
11 Greenway Plaza, Suite 1919
P.O. Box 4333
Houston, Texas 77210-4739
(800) 998-4246 Ext. 5612
In the event that the Sponsor amends, discontinues or abandons this
prototype Plan, notification will be provided to the Employer's address
provided on the first page of this Agreement.
- --------------------------------------------------------------------------------
10. SIGNATURES
(a) This Agreement was signed by the Employer the day of 19 .
------ --------- --
Signed for the Employer by
--------------------------------------------------
Title
-----------------------------------------------------------------------
Signature
-------------------------------------------------------------------
(b) This Agreement was signed by AIM Distributors, Inc. the day of 19 .
---- --- -
Signed for the Sponsor by
--------------------------------------------------
Title
-----------------------------------------------------------------------
Signature
-------------------------------------------------------------------
[AIM LOGO APPEARS HERE] AIM Distributors, Inc. 43101-10/95
16
<PAGE> 3
SEP AND SARSEP IRA PLAN DOCUMENT [AIM LOGO APPEARS HERE]
AIM Distributors, Inc. hereby establishes a Prototype Plan for use, in
conjunction with an Internal Revenue Service approved IRA, by Employers who wish
to establish a qualified Simplified Employee Pension Plan (SEP) and/or a Salary
Reduction Simplified Employee Pension Plan, sometimes called a SARSEP. If the
Employer executes an Adoption Agreement which is accepted by AIM Distributors,
Inc. and which incorporates this document by reference, the Boston Safe Deposit
& Trust will act as custodian or trustee of the IRA plans established by
Employees eligible to receive contributions under the terms of this Plan. The
salary reduction feature of this prototype SEP and SARSEP may not be used by an
Employer who: 1) at any time during the prior Plan Year had more than 25
Employees who would have been eligible to participate; 2) has any leased
employees within the meaning of Code Section 414(n)(2); 3) is a governmental or
tax-exempt entity; 4) has eligible Employees whose taxable year is not the
calendar year; 5) has less than 50% of the Employees that are eligible to make
Elective Deferrals elect to have Elective Deferrals made to the Plan. No part of
this prototype document may be used if the Employer currently maintains or has
ever maintained a defined benefit pension plan which is now terminated. The
Employer's SARSEP shall contain the following terms and conditions:
ARTICLE I
DEFINITIONS
1.1 ADOPTION AGREEMENT The document attached hereto by which the Employer
elects to establish a qualified Salary Reduction Simplified Employee Pension
Plan under the terms of this Prototype Plan.
1.2 CODE The Internal Revenue Code of 1986, including any amendment thereto.
1.3 COMPENSATION The total wages, salaries, fees (for professional services)
and other taxable remuneration (without regard to whether or not an amount is
paid in cash) paid to a Participant from the Employer which are includible in
the Participant's gross income for the taxable year, as defined within the
meaning of Code Section 415(c)(3). Compensation does not include:
(a) Contributions to this plan or any other plan of deferred
compensation; and
(b) Amounts realized from the exercise of a nonqualified stock option,
or when restricted stock becomes freely transferable or is no longer subject to
a substantial risk of forfeiture; and
(c) Amounts realized from the disposition of stock acquired under a
qualified stock option; and
(d) Amounts received as a pension or annuity.
When applicable to a Self-Employed Individual, Compensation shall mean
Earned Income. With respect to any Plan Year, Compensation will be limited to
the first $150,000 of Compensation [or such higher amount determined in
accordance with Code Section 408(k)(3)(C)]. If a Plan determines Compensation
on a period of time that contains fewer than 12 calendar months, then the annual
compensation limit is an amount equal to the annual compensation limit for the
calendar year in which the Compensation period begins multiplied by the ratio
obtained by dividing the number of full months in the period by 12.
1.4 CUSTODIAN BOSTON SAFE DEPOSIT & TRUST or any successor thereto.
1.5 DEFERRAL PERCENTAGE LIMITATION Deferral Percentage Limitation is the
maximum amount of Elective Deferrals, expressed as a percentage of Compensation,
that can be contributed on behalf of any Highly Compensated Employee for a
particular Plan Year. This limitation equals the product of the average of the
Elective Deferrals (expressed as a percentage of each such Employee's
Compensation) made on behalf of each non-highly compensated employee for the
same Plan Year, multiplied by 1.25.
In calculating this average, the percentage for an eligible non-highly
compensated Employee who chooses not to have Elective Deferrals made on his or
her behalf for a Plan Year, is zero. The determination of the deferral
percentage for any Employee is to be made in accordance with Code Section
408(k)(6) and such other requirements as may be provided by the Secretary of
the Treasury. In addition, for purposes of determining the deferral percentage
of a Highly Compensated Employee, the Elective Deferrals and Compensation of
the Employee will also include the Elective Deferrals and Compensation of
any Family Member. This special rule applies, however, only if the Highly
Compensated Employee owns more than 5% of the Employer or is one of the ten
most highly-paid employees. The Elective Deferrals and Compensation of Family
Members used in this special rule do not count in computing the average of the
deferral percentages of non-highly compensated Employees.
1.6 EARNED INCOME Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and the deductions allocable to such items,
provided that personal services of the individual are a material income
producing factor. Earned Income shall be reduced by contributions made by an
Employer to a qualified plan, including this Plan, to the extent deductible
under Code Section 404. Earned Income shall also be reduced by one-half of the
self employed's social security taxes.
1.7 EFFECTIVE DATE The date on which the Employer's Plan commences or an
amendment becomes effective. The Effective Date of the Elective Deferral
provisions shall be designated by the Employer in the Adoption Agreement.
1.8 ELECTIVE DEFERRAL(s) Employer contributions made to the Plan at the
election of the Participant, in lieu of cash Compensation, pursuant to a Salary
Savings Agreement or other deferral mechanism, such as a cash option
contribution. With respect to any taxable year, a Participant's Elective
Deferral is the sum of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under any of the following: a
qualified cash or deferred arrangement as described in Code Section 401(k);
this Plan or any other simplified employee pension cash or deferred
arrangement described in Code Section 402(h)(1)(B); an eligible deferred
compensation plan under Code Section 457; and a plan described in Code Section
501(c)(18). Also included are any Employer contributions made on the behalf of
Participant for the purchase of an annuity contract under Code Section 403(b)
pursuant to a Salary Savings Agreement.
1.9 EMPLOYEE Any person employed by the Employer (including Self-Employed
Individuals and partners), all Employees of a member of an affiliated service
group [as defined in Code Section 414(m)], Employees of a controlled group of
corporations [as defined in Code Section 414(b)], Employees of any incorporated
or unincorporated trade or business which is under common control [as defined in
Code Section 414(c)], and all leased Employees who are not Employees of the
Employer but are required to be treated as Employees of the Employer under
section 414(n), and all Employees required to be aggregated under section
414(o) of the Code. All such Employees shall be treated as employed by a
single Employer.
1.10 EMPLOYER Any corporation, partnership, or proprietorship which adopts
this prototype plan, including any entity which succeeds the Employer and adopts
this Plan.
1.11 FAMILY MEMBER An Employee who is related to a Highly Compensated
Employee as a spouse, or as a lineal ascendant (such as a parent or grandparent)
or descendant (such as a child or grandchild) or spouse of either of those, in
accordance with Code Section 414(q) and the regulations thereunder. Family
membership is only applicable to Highly Compensated Employees who either own
more than 5% of the Employer or are one of the ten most highly compensated
Employees.
1.12 HIGHLY COMPENSATED EMPLOYEE An individual described in Code Section
414(q) who, during the current or preceding Plan Year:
(a) Was a 5% owner as defined in Code Section 416(i)(1)(B)(i);
(b) Received Compensation in excess of $50,000, as adjusted pursuant to
Code Section 415(d), and was in the top-paid group (the top 20% of Employees
ranked by Compensation);
(c) Received Compensation in excess of $75,000, as adjusted pursuant to
Code Section 415(d); or
(d) Was an officer as defined in Code Section 416(i)(1)(A) and received
Compensation in excess of 50% of the dollar limit on annual benefits payable
under Code Section 415 for defined benefit plans.
1.13 INDIVIDUAL RETIREMENT ACCOUNT AIM Distributors, Inc. Individual
Retirement Account which meets the requirements of Code Section 408(a)
established in conjunction with the Employer's Plan (IRA), as the recipient
of the Employer's contributions for the benefit of a participating Employee.
1.14 KEY EMPLOYEE Any Employee or former Employee [and the beneficiaries of
these Employees] who, at any time during the current Plan Year and the four
preceding Plan Years, was:
(a) An officer of the Employer [if the Employee's Compensation exceeds
50% of the limit under Code Section 415(b)(1)(A)];
(b) An owner of one of the ten largest interests in the Employer [if the
Employee's Compensation exceeds 100% of the limit under Code Section
415(c)(1)(A) and the ownership interest exceeds 1/2% of the Employer];
(c) A 5% owner of the Employer as defined in Code Section
416(i)(1)(B)(i)]; or
(d) A 1% owner of the Employer [if the Employee has Compensation in
excess of $150,000].
1.15 OWNER-EMPLOYEE A sole proprietor or partner owning more than 10% of
either the capital or profits interest of the partnership.
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<PAGE> 4
1.16 PARTICIPANT Any Employee of the Employer who is participating in the
Plan.
1.17 PLAN The Simplified Employee Pension Plan with salary reduction
provisions as embodied herein.
1.18 PLAN ADMINISTRATOR The Employer is the Plan's named fiduciary and Plan
Administrator.
1.19 PLAN YEAR The 12-consecutive month period designated by the Employer in
the Adoption Agreement.
1.20 SALARY SAVINGS AGREEMENT A written agreement between the Employer and a
participating Employee where the Employee authorizes the Employer to withhold a
specified percentage of his or her Compensation for deposit to the Plan on
behalf of such Employee.
1.21 SARSEP A Simplified Employee Pension Plan (SEP) in which a
participating Employee may make an election through a Salary Savings Agreement
to have a portion of his or her salary deferred and have the Employer contribute
the entire amount of deferred salary to an IRA on his or her behalf.
1.22 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no net profits for the taxable year.
1.23 SEP-IRA The Individual Retirement Account established to receive the
Employer's contributions for the benefit of each participating Employee.
1.24 SPONSOR The institution whose name appears on the cover hereof.
1.25 TAXABLE WAGE BASE The maximum amount of earnings which may be
considered wages at the beginning of the Plan Year under Section 230 of the
Social Security Act.
1.26 TAXABLE YEAR The taxable year of an Employer for Federal income tax
purposes.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION Each Employee of the Employer shall automatically become a
Participant under the Plan as of the first day of the Plan Year during which
such Employee meets the eligibility requirements selected by the Employer in the
Adoption Agreement. Employees shall not be permitted to authorize Elective
Deferrals until the individual satisfies the Plan's eligibility requirements. In
the event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have become a Participant had he or she been in the
eligible class. A former Participant shall again become a Participant
immediately upon returning to the employ of the Employer.
2.2 MAXIMUM AGE The Plan shall not exclude Employees who have attained age
70 1/2, provided such Employees meet the eligibility requirements in the
Adoption Agreement.
2.3 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.4 WITHDRAWAL OF CONTRIBUTIONS Participation in the Plan shall not be
terminated, suspended, or in any way affected, if a Participant withdraws all or
any part of his or her IRA. This Plan shall not impose any prohibition on a
Participant's right to make withdrawals from his or her IRA.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 AMOUNT Prior to the close of each Plan Year, the Employer shall
determine in writing the amount of its contribution for such Plan Year. This is
in addition to any amount contributed pursuant to Salary Savings Agreements with
the Participants. The Employer's contribution shall be discretionary and the
Employer shall be under no obligation to contribute each year. The Employer may
make a contribution even if no Elective Deferrals are contributed for such year.
Contributions to the SEP are deductible by the Employer for the Taxable Year
with or within which the Plan Year of the SEP ends. Contributions made for a
particular Taxable Year and contributed by the due date of the Employer's income
tax return, including extensions, are deemed made in that Taxable Year.
3.2 LIMITATIONS ON ALLOCATIONS The Employer's contribution (including Salary
Savings Agreement amounts) when allocated to eligible Participants for any Plan
Year shall not exceed the lesser of 15% of each Participant's Compensation or
$30,000 [as indexed under Code Section 415]. In addition, the Employer's
contribution shall also bear a uniform relationship to the total Compensation
of each Participant. For purposes of the preceding sentence, the Employer's
contribution to the Old Age, Survivors and Disability Insurance program may be
considered as part of the Employer's contribution. Employer contributions to
the Old Age, Survivors and Disability Insurance Program may not be considered
under this Plan if it is considered under any other plan of the Employer.
3.3 ALLOCATION FORMULAS The Employer's contribution shall be allocated among
eligible Participants in accordance with one of the formulas provided below.
Employees and former Employees employed by the Employer at any time during the
Plan Year, who met the eligibility requirements at any time during the Plan
Year, shall share in the Employer's contribution for such Plan Year, even though
no longer employed. The Employer's contribution shall automatically be allocated
in accordance with paragraph (a) unless paragraph (b) is selected in the
Adoption Agreement.
(a) PROPORTIONATE ALLOCATION The Employer's contribution for each Plan
Year shall be allocated to the IRA of each eligible Employee in the same portion
as such Employee's Compensation [not in excess of $150,000 as adjusted for
inflation under Code Section 401(a)(17)] for such Plan Year bears to all
eligible Employees' Compensation for that year.
(b) INTEGRATED ALLOCATION The Employer's contribution for the Plan Year
shall be allocated to each eligible Participant (using his or her Compensation
earned during the Plan Year) as follows:
(i) First, to the extent contributions are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions will be allocated to
Participants who have Compensation in excess of the Taxable Wage Base (excess
Compensation) as in effect at the beginning of the Plan Year. Each such
Participant will receive an allocation in the ratio that his or her excess
Compensation bears to the excess Compensation of all Participants. Participants
may only receive an allocation of 3% of excess Compensation.
(iii) Next, any remaining Employer contributions will be allocated
to all Participants in the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus excess Compensation of all
Participants. Participants may only receive an allocation of up to 2.7% of their
Compensation plus excess Compensation, under this allocation method.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum contribution or
benefit is provided under another Plan [see Section 8 of the Adoption
Agreement] covering the same Employees, sub-paragraphs (i) and (ii) above may
be disregarded and 5.7% may be substituted for 2.7% where it appears in (iii)
above.
(iv) Next, any remaining Employer contributions will be allocated to
all Participants in the ratio that each Participant's Compensation bears to all
Participants' Compensation.
3.4 RESPONSIBILITY FOR CONTRIBUTIONS The Sponsor shall not be required to
determine if the Employer has made a contribution or if the amount contributed
is in accordance with the Adoption Agreement or the Code. The Employer shall
have sole responsibility in this regard.
ARTICLE IV
EMPLOYEE ELECTIVE DEFERRALS
4.1 ELECTIVE DEFERRAL REQUIREMENTS Elective Deferrals shall only be
permitted for Plan Years in which:
(a) Not less than 50% of the Participants elect to make Elective
Deferrals to the SEP-IRA on their behalf; and
(b) The Employer had no more than 25 Employees at all times during the
prior Plan Year who were eligible to participate in the Plan.
4.2 SALARY SAVINGS AGREEMENT An Employee may elect to have Elective
Deferrals made under this Plan through either a lump sum or continuing Elective
Deferrals, or both, pursuant to his or her Salary Savings Agreement. The amount
of Elective Deferrals may not exceed the percentage or dollar amount specified
in the Employer's Adoption Agreement. Under no circumstances may an Employee's
Elective Deferrals in any calendar year exceed the lesser of:
(a) Fifteen percent of the Employee's Compensation determined without
including the SEP-IRA contributions, (13.0435% of Compensation plus Elective
Deferrals), or
(b) $7,000 as adjusted for inflation at the beginning of such taxable
year. This amount may be reduced if a Participant contributes pre-tax
contributions to qualified plans of this or other Employers.
4.3 TIMING OF ELECTIVE DEFERRALS Elective Deferrals may not be based on
Compensation an Employee has received, or had a right to receive, prior to the
execution of the Employee's Salary Savings Agreement. A Participant may amend
his or her Salary Savings Agreement to increase, decrease or terminate the
Elective Deferral percentage upon written notice to the Employer. Such increase,
decrease or termination shall be effective as soon as reasonably possible, but
in any event within 90 days of written notice. If a Participant terminates his
or her Elective Deferrals, such Participant shall not be permitted to put a new
Salary Savings Agreement into effect until after 90 days. The Employer may also
amend or terminate said agreement on written notice to the Participant to insure
the Plan's qualified status. If a Participant has not authorized the Employer to
withhold at the maximum rate and desires to increase the total withheld for a
Plan Year, such Participant may authorize the Employer to withhold a
supplemental amount up to 100% of his or her Compensation for one or more pay
periods. In no event may the sum of the amounts withheld under the Salary
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<PAGE> 5
Savings Agreement plus the supplemental withholding exceed 15% of a
Participant's Compensation for a Plan Year (net of the Elective Deferrals).
The Employer agrees to deposit Elective Deferrals with the Sponsor for credit
to Participant IRAs within 30 days after being withheld from the Participant's
Compensation.
4.4 CASH BONUS OPTION If permitted by the Employer in the Adoption
Agreement, an Employee may base Elective Deferrals on cash bonuses during the
year that, at the Employee's election, may be contributed to the SEP-IRA or
received by the Employee in cash.
4.5 DISALLOWED ELECTIVE DEFERRALS If the 50% requirement in paragraph
4.1(a) is not satisfied as of the end of any Plan Year, all the Elective
Deferrals made by Employees for that Plan Year shall be considered disallowed
Elective Deferrals.
4.6 NOTIFICATION OF DISALLOWED ELECTIVE DEFERRALS The Employer shall notify
each affected Participant, within 2 1/2 months after the end of the Plan Year to
which the disallowed Elective Deferrals relate, that the deferrals are no longer
considered SARSEP contributions. Such notification shall specify the amount of
the disallowed Elective Deferrals and the Participant's calendar year in which
they are includible in income. Additionally, the notice must provide an
explanation of the applicable penalties if the disallowed Elective Deferrals are
not withdrawn in a timely fashion. The notice to each affected Participant shall
state the following:
(a) The amount of the disallowed Elective Deferral;
(b) That the disallowed Elective Deferrals are includible in the
Participant's gross income for the calendar year or years in which the amounts
deferred would have been received by the Participant in cash had she or he not
made the election to defer, and that the income allocable to such disallowed
Elective Deferrals is includible in the Participant's gross income in the year
withdrawn from the SEP-IRA; and
(c) That the Participant must withdraw the disallowed Elective Deferrals
and allocable income from the SEP-IRA by the April 15 following the calendar
year of notification by the Employer. Disallowed Elective Deferrals not
withdrawn by the April 15 following the calendar year of notification will be
subject to the IRA contribution limitations of Code Section 219 and Section 408
and may be considered excess contributions to the Participant's IRA. Disallowed
Elective Deferrals may be subject to the six percent tax on excess
contributions under Code Section 4973. If income allocable to a disallowed
Elective Deferral is not withdrawn by April 15 following the year of
notification by the Employer, the income may be subject to the ten percent tax
on early distributions under Code Section 72(t) when withdrawn.
4.7 REPORTING Disallowed Elective Deferrals are reported for tax purposes in
the same manner as excess SEP contributions.
ARTICLE V
ACCOUNTS OF PARTICIPANTS
5.1 INDIVIDUAL RETIREMENT ACCOUNT Each Employee, upon becoming a Participant
under the Plan, shall establish an IRA with the Sponsor. The Employee or Sponsor
shall furnish an account number to the Employer certifying the existence of such
account.
5.2 DETERMINATION OF DEPOSIT When making a contribution to the Plan, the
Employer shall calculate each Participant's proportionate share of the
Employer's contribution as determined in the Adoption Agreement. The Employer
shall then deliver the contribution to the Sponsor indicating the amount to be
credited to each Participant's SEP-IRA.
5.3 CONTROL OF ACCOUNT All contributions made under the Plan by the Employer
shall be irrevocable. After allocation to a Participant's SEP-IRA, the Employer
shall have no further control of such contribution and the terms of the
Participant's IRA shall be fully effective.
5.4 ALLOCATION OF ELECTIVE DEFERRALS The Employer shall contribute to each
Employee's SEP-IRA the amount of the Elective Deferrals designated in his or her
Salary Savings Agreement.
ARTICLE VI
LIMITATIONS ON CONTRIBUTIONS
6.1 LIMITATIONS ON ELECTIVE DEFERRALS A Participant's Elective Deferrals may
be limited to the extent necessary to satisfy the maximum contribution
limitations under Code Section 415(c)(1)(A) if the Employer maintains any
other SEP or any qualified plan to which contributions are made for such Plan
Year.
6.2 OVERALL LIMITATIONS ON CONTRIBUTIONS In addition to the dollar
limitation of Code Section 415(c)(1)(A) ($30,000 in 1991), contributions to this
Plan, when aggregated with contributions to all other SEPs and contributions
plus forfeitures under other qualified defined contribution plans of the
Employer, generally may not exceed 25% of Compensation for any Employee. If
these limits are exceeded on behalf of any Employee for a particular Plan Year,
that Employee's Elective Deferrals for that year must be reduced to the extent
of the excess.
6.3 LIMITATIONS FOR HIGHLY COMPENSATED EMPLOYEES Elective Deferrals by a
Highly Compensated Employee must satisfy the Deferral Percentage Limitation
under Code Section 408(k)(6) and paragraph 1.4 herein. Amounts in excess of the
Deferral Percentage Limitation will be deemed excess SEP contributions on behalf
of the affected Highly Compensated Employee.
6.4 NOTIFICATION OF EXCESS SEP CONTRIBUTIONS The Employer shall notify each
affected Participant, within 2 1/2 months following the end of the Plan Year to
which the excess SEP contributions relate, of any excess SEP contributions to
the Participant's SEP-IRA for the applicable year. Such notification shall
specify the amount of the excess SEP contributions and the calendar year in
which the contributions are includible in income and must provide an explanation
of applicable penalties if the excess contributions are not withdrawn in a
timely fashion.
6.5 NOTIFICATION REQUIREMENTS The notification to each affected Participant
of excess SEP contributions must specifically state in a manner calculated to be
understood by the average Employee:
(a) The amount of the excess SEP contributions attributable to the
Participant's Elective Deferrals;
(b) The calendar year in which the excess SEP contributions are
includible in gross income; and
(c) That the Participant must withdraw the excess SEP contributions (and
allocable income) from the SEP-IRA by April 15 following the year of
notification by the Employer. Those excess contributions not withdrawn by April
15 following the year of notification will be subject to the IRA contribution
limitations of Code Section 219 and Section 408 for the preceding calendar year
and thus may be considered an excess contribution to the Participant's IRA.
Such excess contributions may be subject to the six percent tax on excess
contributions under Code Section 4973. If income allocable to an excess SEP
contribution is not withdrawn by April 15 following the year of notification by
the Employer, the income may be subject to the ten percent tax on early
distributions under Code Section 72(t) when withdrawn.
6.6 EXCESS SEP CONTRIBUTIONS INCLUDIBLE IN INCOME Excess SEP contributions
are includible in the participating Employee's gross income on the earliest
dates any Elective Deferrals made on behalf of the Employee during the Plan Year
would have been received by the Employee had he or she originally elected to
receive the amounts in cash. However, if the excess SEP contributions (not
including allocable income) total less than $100, then the excess contributions
are includible in the Employee's gross income in the year of notification.
Income allocable to the excess SEP contributions is includible in the year of
withdrawal from the IRA.
6.7 EXCISE TAXES AND PENALTIES If the Employer fails to notify any of the
affected Employees within 2 1/2 months following the end of the Plan Year of an
excess SEP contribution, the Employer must pay a tax equal to 10% of the excess
SEP contribution. If the Employer fails to notify employees by the end of the
Plan Year following the Plan Year in which the excess SEP contributions arose,
the SEP no longer will be considered to meet the requirements of Code Section
408(k)(6) and contributions in the Employee's IRA will be subject to the IRA
contribution limitations and thus may be considered excess contributions to the
Employee's IRA.
6.8 WITHDRAWAL RESTRICTIONS The Employer shall notify each Participant who
makes an Elective Deferral for a Plan Year that, notwithstanding the prohibition
on withdrawal restrictions contained elsewhere in this Plan, any amount
attributable to such Elective Deferrals which is withdrawn or transferred before
the earlier of 2 1/2 months after the end of the particular Plan Year or the
date the Employer notifies its Employees that the Deferral Percentage
Limitations have been calculated, will be includible in income and possibly
subject to an early penalty tax.
ARTICLE VII
TOP-HEAVY RULES
7.1 TOP-HEAVY MINIMUM CONTRIBUTION Each Plan Year for which the Plan is Top
Heavy under Code Section 416, each non-key Employee shall receive an allocation
of Employer contributions equal to the lesser of 3% of Compensation or the
percentage of Compensation allocated to the Key Employee receiving the highest
percentage allocation. The Top-Heavy minimum contribution shall be satisfied
under this Plan unless the Employer designates another plan in the Adoption
Agreement.
7.2 CONTRIBUTIONS COUNTED TOWARDS MINIMUM For purposes of satisfying the
minimum contribution requirement under Code Section 416, only Employer
contributions shall be taken into account. Employee Elective Deferrals shall
not be considered.
7.3 TOP-HEAVY DETERMINATION This Plan is Top-Heavy for a Plan Year if, as of
the last day of the previous Plan Year (or current Plan Year if this is the
first year of the Plan) the total of elective and non-elective contributions
made on behalf of Key Employees for all years this Plan has been in existence
exceeds 60% of such contributions for all Employees who were eligible to
participate. If the Employer maintains (or maintained within the prior five
years) any other SEP or defined contribution plan in which a Key Employee
participates (or participated), the contributions or account balances, whichever
is applicable, must be aggregated with the contributions made to this Plan. The
contributions (and
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<PAGE> 6
account balances, if applicable) of an Employee who ceases to be a Key Employee
or of an individual who has not been in the employ of the Employer for the
previous five years shall be disregarded. The identification of Key Employees
and the Top-Heavy calculation shall be determined in accordance with Code
Section 416 and the regulations thereunder.
ARTICLE VIII
ADMINISTRATION
8.1 PLAN ADMINISTRATOR The Employer shall be the Plan's named fiduciary and
shall serve as Plan Administrator. As Plan Administrator, the Employer shall:
(a) Carry out the provisions of the Plan including determining
eligibility of Employees, allocating contributions, and interpreting the Plan
when necessary,
(b) Deliver all contributions to the Sponsor showing the amount to be
allocated to each Participant's IRA,
(c) Communicate with Employees regarding their participation and
benefits under the Plan,
(d) Advise Employees in writing of all contributions to their IRAs, and
(e) Perform any other duties required of the Plan Administrator.
8.2 SPONSOR The Sponsor shall be depository for individual IRAs established
by Plan Participants. As depository, the Sponsor shall:
(a) Accept for deposit contributions transmitted by the Employer. The
Sponsor need not verify the amount of the contributions received or the amounts
allocated to individual IRAs provided that no contribution for an individual IRA
exceeds the lesser of $30,000 as indexed or 15% of the individual's Compensation
for the Plan Year, and
(b) Administer each individual IRA in accordance with the provisions of
the Sponsor's IRA document.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 AMENDMENT BY SPONSOR The Sponsor may amend or terminate any or all
provisions of this prototype plan at any time without obtaining the approval or
consent of any Employer or Participant, provided that no amendment shall
authorize or permit any part of an Employer's contribution to be used for or
diverted to purposes other than for the exclusive benefit of Participants. The
Sponsor will inform each adopting Employer of any amendments to or termination
of the prototype SARSEP.
9.2 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Plan will meet
the requirements of Code Section 408(k)(6) and the regulations thereunder as a
qualified Salary Reduction Simplified Employee Pension Plan. Should the
Commissioner of Internal Revenue or any delegate of the Commissioner at any time
determine that the Plan fails to meet the requirements of said Code
Section 408(k)(6), the Sponsor will amend the Plan so as to maintain its
qualified status.
9.3 AMENDMENT BY EMPLOYER The Employer may amend any option elected in the
Adoption Agreement provided that no amendment shall authorize or permit any part
of the Employer's contribution to be used for or diverted to purposes other than
for the exclusive benefit of Participants. If the Employer amends the Adoption
Agreement other than within the available options, the Employer may no longer
participate in this Plan.
9.4 TERMINATION The Employer may terminate its Plan at any time by filing
written notice with the Sponsor. In such event, the Sponsor shall continue to
administer each Participant's IRA as provided under the IRA agreement. The
Sponsor may also terminate the prototype upon written notice to the Employer.
ARTICLE X
GOVERNING LAW
Construction, validity and administration of the prototype plan, and any
Employer Plan as embodied in the prototype document and accompanying Adoption
Agreement, shall be governed by Federal law to the extent applicable and, to the
extent not applicable, by the laws of the State/Commonwealth in which the
principal office of the Sponsor is located.
<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE Department of the Treasury
Prototype SEP with Salary Reduction Feature 002
FFN: 50441601900-002 Case: 9580093 EIN: 74-1894784 Washington, D.C. 20224
Letter Serial No. C410671b
AIM DISTRIBUTORS INC. Person to Contact: Ms. Arrington
11 GREENWAY PLAZA SUITE 1919 Telephone Number: (202) 622-8173
HOUSTON, TEXAS 77046 Refer Reply to: CP:E:EP:T1
Date: 11-13-95
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of your Simplified Employee Pension
(SEP) arrangement does not adversely affect its acceptability under section
408(k) of the Internal Revenue Code. This SEP arrangement is approved for use
only in conjunction with an Individual Retirement Arrangement (IRA) which meets
the requirements of Code section 408 and has received a favorable opinion
letter, or a model IRA (Forms 5308 and 5305-A).
Employers who adopt this approved plan will be considered to have a retirement
savings program that satisfies the requirements of Code section 408 provided
that it is used in conjunction with an approved IRA. Please provide a copy of
this letter to each adopting employer.
Code section 408(l) and related regulations require that employers who adopt
this SEP arrangement furnish employees in writing certain information about this
SEP arrangement and annual reports of savings program transactions.
Your program may have to be amended to include or revise provisions in order to
comply with future changes in the law or regulations.
If you have any questions concerning IRS processing of this case, call us at the
above telephone number. Please refer to the Letter Serial Number and File Folder
Number shown in the heading of this letter. Please provide those adopting this
plan with your phone number, and advise them to contact your office if they have
any questions about the operation of this plan.
You should keep this letter as a permanent record. Please notify us if you
terminate the term of this plan.
Sincerely yours,
/s/ [ILLEGIBLE]
-----------------------------------------
Chief, Employee Plans Technical Branch 1
20
<PAGE> 7
[AIM LOGO APPEARS HERE]
Form 5305-A (Rev. October 1992) Department of the Treasury
Internal Revenue Service
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(under Section 408(a) of the Internal Revenue Code)
A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section 1.401(a)
(9)-2, the provisions of which are incorporated by reference.
2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date (April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life expectancy of the designated beneficiary or beneficiaries starting by
December 31, of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the Custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. THE DEPOSITOR AGREES to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408.6.
2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related IRA Account Application
(referred to herein as the "IRA Adoption Agreement") (such Agreements being
collectively referred to herein as the "Agreement"), the Depositor directs the
Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the related IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
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"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds," which are managed
or advised by subsidiaries of A I M Management Group Inc., and any such
investment company will hereafter be referred to as "Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates. Additionally, if the Depositor's employer
maintains a qualified simplified employee pension (SEP), such employer may
contribute on behalf of the Depositor, the lesser of 15% of the Depositor's
compensation from such employer or $30,000.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the
account all rollover contributions which consist of cash, and it may, but shall
be under no obligation to, accept any other rollover contribution. In the case
of rollover contributions composed of assets other than cash, the prospective
Depositor shall provide the Custodian with a description of such assets and such
other information as the Custodian may reasonably require. The Custodian may
accept all or any part of such a rollover contribution if it determines that the
assets of which such contribution consists are either in a medium proper for
investment hereunder or that the assets can be promptly liquidated for cash.
The Depositor warrants that any rollover contribution to the account
consists of cash, the same property received in the distribution or, in the case
of amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution. The Depositor also warrants that in the case of a rollover into
the account of amounts distributed to the Depositor from a qualified employer's
plan or annuity, only amounts in excess of the amounts considered to be the
Depositor's employee contributions included in such distribution constitute the
contribution to this account. Additionally, the Depositor affirms that the
contribution to the account does not consist of amounts received from an
inherited individual retirement account or annuity. An individual retirement
account or annuity shall be treated as inherited if it was acquired by reason of
the death of an individual other than the Depositor's spouse. The Depositor also
affirms that in the case of a rollover into the account of amounts distributed
from an individual retirement account or annuity or retirement bond, he has not
during the one year period ending on the date of the distribution received any
other distribution from an individual retirement account or annuity or
retirement bond which constituted a rollover contribution (as described in
section 408(d)(3) of the Code).
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
deposit, and interest, if any, earned thereon. Any contributions made by or on
behalf of the Depositor in respect of a taxable year of the Depositor shall be
made by or on behalf of the Depositor to the Custodian for deposit in the
custodial account within the time period for claiming any income tax deduction
for such taxable year. It shall be the sole responsibility of the Depositor to
determine the amount of the contributions made hereunder. The Depositor shall
execute such forms as the Custodian may require in connection with any
contribution hereunder.
ARTICLE IX
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code),
all or a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The Custodian
may require such proof of disability as it deems necessary prior to the time
that amounts are distributed to the Depositor due to such disability.
3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE X
A Depositor shall have the right to designate a beneficiary or beneficiaries
to receive any amounts remaining in his account in the event of his death. Any
prior beneficiary designation may be changed or revoked at any time by a
Depositor by written designation signed by the Depositor on a form acceptable
to, and filed with, the Custodian; provided, however, that such designation, or
change or revocation of a prior designation shall not become effective until it
has been received by the Custodian, nor shall it be effective unless received by
the Custodian no later than thirty days before the death of the Depositor, and
provided further that the last such designation of beneficiary or change or
revocation of beneficiary executed by the Depositor, if received by the
Custodian within the time specified, shall control. Unless otherwise provided in
the beneficiary designation, amounts payable by reason of the Depositor's death
will be paid in equal shares only to the primary beneficiary or beneficiaries
who survive the Depositor, or, if no primary beneficiary survives the Depositor,
to the contingent beneficiary or beneficiaries who survive the Depositor. If the
Depositor had not, by the date of his death, properly designated a beneficiary
in accordance with the preceding sentences, or if no designated beneficiary
survives the Depositor, then the Depositor's beneficiary shall be the
Depositor's surviving spouse, or if there is no surviving spouse, the
Depositor's estate.
ARTICLE XI
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a
new fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
ARTICLE XII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the IRA Adoption Agreement is checked
for spousal accounts, separate custodial accounts will be opened and maintained
in each spouse's name. The amounts specified in the IRA Adoption Agreement shall
be credited to each spouse's separate custodial account except that no more than
$2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall
be registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIII
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below,
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the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the collection of contributions, the deductibility or propriety of any
contribution under this Agreement, or the purposes or propriety of any
distribution from the account, which matters are the responsibility of the
Depositor or the Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or preceding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting
upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XIV
1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing
to the Depositor, and may be removed by the Depositor at any time upon thirty
days' notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under
this Agreement, must be a bank (as defined in Section 408(n) of the Code) or
such other person who qualifies with the Internal Revenue Service to serve in
the manner prescribed by Code section 408(a)(2) and satisfies the Custodian,
upon request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XV
1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds
of the account to the depositor if within thirty days after the resignation or
removal of the Custodian pursuant to Article XV above, the Depositor has not
appointed a successor custodian which has accepted such appointment unless
within that time the Distributor appoints such successor and gives written
notice thereof to the Depositor and the Custodian. The Distributor shall have
the right, but not the duty, to appoint such a successor. Termination of the
custodial account shall be effected by distributing all of the assets therein in
cash or in kind to the Depositor in a lump sum, subject to the Custodian's right
to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVI
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT is accepted by the Custodian and shall be construed and
administered in accordance with the laws of The Commonwealth of Massachusetts.
The Custodian and the Depositor hereby waive and agree to waive right to trial
by jury in an action or proceeding instituted in respect to this custodial
account. The Depositor further agrees that the venue of any litigation between
him and the Custodian with respect to the custodial account shall be in the
County of Suffolk, The Commonwealth of Massachusetts.
3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an
Individual Retirement Account and to entitle the Depositor to any retirement
savings deduction which he may qualify for under section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or
any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt an individual retirement account under section 408(a). When
fully executed by the Depositor and the Custodian not later than the time
prescribed by law for filing the Federal income tax return for the Depositor's
tax year (not including any extensions thereof), a Depositor will have an
individual retirement account (IRA) custodial account which meets the
requirements of section 408(a). This account must be created in the United
States for the exclusive benefit of the Depositor or his/her beneficiaries.
DEFINITIONS
CUSTODIAN. -- The Custodian must be a bank or savings and loan association,
as defined in section 408(n), or other person who has the approval of the
Internal Revenue Service to act as custodian.
DEPOSITOR. -- The Depositor is the person who establishes the custodial
account.
IRA FOR NON-WORKING SPOUSES
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the
non-working spouse.
An employee's social security number will serve as the identification number
of his or her individual retirement account. An employer identification number
is only required for each participant-directed individual retirement account. An
employer identification number is required for a common fund created for
individual retirement accounts.
For more information, obtain a copy of the required disclosure statement
from your custodian or get Publication 590, Individual Retirement Arrangements.
(IRAs).
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SPECIFIC INSTRUCTIONS
ARTICLE IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both. The distribution option should
be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met.
ARTICLE IX -- This article and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor and the Custodian to complete
the agreement. These may include, for example: definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS --Registered Trademark--
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of an individual
retirement account is required to furnish each depositor who has established or
is establishing an individual retirement account with a statement which
discloses certain information regarding the account. Boston Safe Deposit and
Trust Company (hereinafter referred to as the "Custodian") is providing this
Disclosure Statement to you in accordance with that requirement, and this
Disclosure Statement contains general information about the The AIM Family of
Funds --Registered Trademark-- Individual Retirement Custodial Account
(hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed
in conjunction with both the Individual Retirement Custodial Account agreement
(From 5305-A and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your IRA. You should
review this Disclosure Statement and the IRA documents with your attorney or
tax advisor. The Custodian cannot give tax advice or determine whether or not
the IRA is appropriate for you.
A. SEVEN DAY RIGHT TO REVOKE YOUR IRA.
You may revoke your IRA at any time within seven business days after the
date the IRA is established, by giving proper notice. For purposes of
revocation, it will be assumed that you received the Disclosure Statement no
later than the date of your check with which you opened your IRA. Written notice
must be hand delivered or sent by first class mail, in which case, the
revocation will be effective as of the date the notice is postmarked (or if sent
by certified or registered mail, the date of certification or registration).
Notice of revocation should be made to: A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, P.O. Box 4739, Houston, Texas 77210-4739, Attention:
Shareholder Services Department, area code (800) 959-4246. If you revoke your
IRA, you are entitled to a refund of your entire contribution to the IRA,
without adjustment for such items as sales commissions, administrative expenses
or fluctuation in market value. If you do not revoke within seven business days
after the establishment of the IRA, you will be deemed to have accepted the
terms and conditions of the IRA and cannot later revoke the IRA without certain
potential penalties.
B. STATUTORY REQUIREMENTS.
An IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or that of your beneficiaries. It must be
created by a written governing instrument that meets the following requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union,
savings and loan association or another person eligible to act as trustee or
custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS, simplified employee pension ("SEP") contributions,
and spousal IRA contributions described below, contributions of more than $2,000
for any tax year may not be made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your IRA may not be invested in "collectibles," such as art works, antiques,
metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and
silver coins), and certain other types of tangible personal property. An
investment in a collectible would be treated as a distribution from your IRA
which would be includible in your gross income, and, if you had not attained the
age of 59 1/2, the distribution would also be subject to the premature
distribution penalty as discussed in Part E(4) below;
(6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed
on or before April 1 of the calendar year following the calendar year in which
you reach age 70 1/2. The distribution may be made in a single sum, or you may
receive periodic distributions, so long as your entire interest is distributed
in equal or substantially equal payments over any of the following periods:
(a) your life;
(b) the lives of you and your designated beneficiary;
(c) a period certain not extending beyond your life expectancy;
(d) a period certain not extending beyond the life expectancy of you and
your designated beneficiary.
If the distributions from your IRA are to be made over one of the foregoing
periods, the amount distributed each year must meet the minimum distribution
requirements set forth in your IRA Custodial Agreement, or you will incur a
penalty as described in Part E(8) below;
(7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire
interest has been distributed to you, payments must continue at least as rapidly
as under the method of distribution in effect, at your death. If you die before
distributions have commenced, generally your entire interest must be distributed
within five years of your death. However, if your interest is payable to a
designated beneficiary, payments may be made over the life or a period not
exceeding the life expectancy of the beneficiary; provided, however, that such
payments must commence within one year of your death unless your designated
beneficiary is your surviving spouse, in which case payments need not commence
until the date on which you would have attained age 70 1/2. You should advise
the Custodian as to your beneficiary and the method of distribution desired.
C. INVESTMENT OF YOUR IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your IRA Funds in shares of investment companies which are
part of "The AIM Family of Funds --Registered Trademark--," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your IRA
Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your IRA, you should
provide the Custodian with specific instructions, detailing your investment
decision so that the Custodian can effectuate such investments as provided in
your IRA Custodial Agreement. If you fail to direct the Custodian as to the
Investment of all or any portion of your IRA account, the Custodian shall hold
such uninvested amount in your account and shall incur no liability for
interest or earnings thereon. All dividends and capital gain distributions
received on shares of an investment company held in your IRA will be reinvested
in shares of that investment company, if available, which shall be credited to
the Custodian account. Detailed information about the shares of the AIM fund(s)
you select must be furnished to you in the form of prospectuses governed by
rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate IRA.
Section 219 of the Code contains special provisions governing whether
amounts contributed to your IRA will be deductible from gross income for federal
income tax purposes. To the extent you are not eligible or elect not to make
deductible IRA contributions, you may make nondeductible IRA contributions
within the aforementioned limits which are reduced by the amount of any
deductible contributions. The following is a summary of the rules regarding the
deductibility of contributions to your IRA. You should consult your tax advisor
to determine the specific application of such rules to your IRA contributions
for any particular taxable year.
(1) IF NEITHER YOU, NOR YOUR SPOUSE, IS an "active participant" (as
determined under section 219(g) of the Code and any regulations or rulings
thereunder) in a retirement plan during any part of the taxable year, you may
take a deduction for contributions to your IRA for such taxable year in an
amount equal to the lesser of $2,000 or 100% of your compensation (earned
income) for such taxable year.
(2) IF EITHER YOU, OR YOUR SPOUSE (unless you file separate income tax
returns as noted below), is considered an "active participant" in a retirement
24
<PAGE> 11
plan for any part of the taxable year, the extent, if any, to which
contributions to your IRA will be deductible depends on the amount of your
adjusted gross income ("AGI"). The maximum IRA deduction as specified in
Paragraph (1) above will be reduced in the same ratio that the excess of your
AGI over $25,000 (for a single individual), $40,000 (for a married couple filing
jointly) and zero (for a married couple filing separately) bears to $10,000.
Thus, if you are an active participant in a retirement plan, no IRA deduction
will be permitted if:
(a) You are a single individual with AGI in excess of $35,000,
(b) you are married and file a joint return with AGI in excess of
$50,000, or
(c) you are married, file separate returns and either you or your spouse
have AGI in excess of $10,000.
(3) IF YOU ARE MARRIED and your spouse has no compensation for the taxable
year, or elects to be treated as having no compensation for such year, you are
permitted an additional deduction in the amount of $250 for contributions to an
IRA for the benefit of your spouse provided that your spouse has not attained
age 70 1/2 and you file a joint income tax return for such year, subject to the
provisions of (1) or (2) above, whichever is applicable. (see below)
You will be considered an "active participant" for any particular taxable
year if you are covered by a retirement plan for any part of such year.
Generally, you will be considered covered by a retirement plan for a year if
your employer or union has a retirement plan under which money is added to your
account or you are eligible to earn retirement credits for such year. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax-sheltered annuity
arrangement or a 401(k) plan), a SEP or a plan which promises you a retirement
benefit which is based upon the number of years of service you have with the
employer, you are likely to be an active participant. Your Form W-2 for the year
should indicate your participation status. You are an active participant for a
year even if you are not yet vested in your retirement benefit. Also, if you
make required contributions or voluntary employee contributions to a retirement
plan, you are an active participant. In certain plans you may be an active
participant even if you were only with the employer for part of the year. You
should note that if you are married but file a separate tax return, and you did
not live with your spouse at any time during the taxable year, your spouse's
active participation does not affect your ability to make deductible
contributions.
No deduction will be allowed under (1) or (2) above for any contribution
which is made for the taxable year during which you attain age 70 1/2 or for any
subsequent year. You are permitted to contribute and deduct up to $4,000 for
contributions to your IRA and a spousal IRA, subject to the provisions of (1)
and (2) above. However, in no event shall the contribution to either IRA exceed
$2,000. It should be noted that if both you and your spouse work, each may
contribute up to $2,000 of compensation (earned income) to his or her own IRA.
If your employer maintains a SEP, your employer may contribute to your IRA
up to the lesser of 15% of your compensation from such employer or $30,000.
Since SEP contributions are excluded from your gross income, such contributions
are not deductible for federal income tax purposes.
If contributions to your IRA are deductible as outlined above, you may claim
such deduction even if you do not itemize your deductions on your federal income
tax return. You must make contributions to your IRA during the taxable year for
which you claim the deduction or by the deadline for filing your federal income
tax return for such year (without regard to any filing deadline extension). For
example, if you are a calendar-year taxpayer, you must make contributions no
later than April 15th in order to take a deduction for the previous year.
If any portion of a contribution to your IRA is nondeductible as outlined
above, you must so designate on your federal income tax return, as required
under section 408(o)(4) of the Code and file From 8606 with your tax return.
E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your IRA and earnings thereon are
exempt from federal income tax until distributions are made from the IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other
than rollover contributions) have been deductible for federal income tax
purposes then all distributions from your IRA will be taxable as ordinary
income. However, if you have made any nondeductible IRA contributions,
distributions from your IRA will be treated as partially a return of deductible
contributions, if any, (taxable), partially a return of nondeductible
contributions (nontaxable) and partially a distribution of earnings (taxable).
The portion of an IRA distribution which will be excludable from income will be
determined by multiplying the total amount distributed by a fraction, the
numerator of which is the aggregate of all your nondeductible IRA contributions,
and the denominator of which is the aggregate balance of all of your IRAs
(including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of
your IRAs will be treated as a single IRA, (b) all distributions during a
taxable year will be treated as a single distribution and (c) the aggregate
balance of your IRAs will be determined as of the end of the calendar year with
or within which your taxable year ends, after adding back any distributions for
such year.
Distributions from your IRA are not eligible for any special tax treatment
such as five-or ten-year averaging or capital gains treatment.
(3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the
limits stated in Part D above, you will be assessed a 6% nondeductible excise
tax on such excess amounts. This tax is payable for each year the excess is
permitted to remain in your IRA. However, if the excess contribution has not
been taken as a deduction, and if the excess and all earnings thereon are
returned before the due date for filing your income tax return for the year in
which the excess contribution was made, the 6% excise tax will not be assessed.
The earnings on such excess contribution that are returned to you will be
taxable as ordinary income and will be deemed to have been earned and taxable in
the tax year during which the excess contribution was made. In addition, if you
are not disabled or have not reached age 59 1/2, the earnings will be subject to
the 10% premature withdrawal penalty discussed below. The 6% excess contribution
tax may be eliminated for future tax years by withdrawing the excess
contribution from your IRA before the due date for filing your tax return for
that year or by under-contributing for a subsequent year by an amount equal to
the excess contribution. If the total contributions for the year to your IRA are
$2,250 or less, and there are no employer contributions for the year, you may
withdraw any excess contributions after the due date for filing your tax return,
including extensions, and not include the amount withdrawn in your gross income.
This applies only to the part of the excess that you did not take a deduction
for. It is not necessary to withdraw the interest or other income earned on the
excess. You will have to pay the 6% tax on the excess amount for each year the
excess contribution was in the IRA.
If the contributions to your IRA for any year are more than $2,250, you must
include in your gross income any excess over $2,250, unless it is an excess
rollover contribution attributable to erroneous information. You may also have
to pay a 10% tax on premature distributions on the amount you withdraw, unless
you are age 59 1/2 or disabled.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your IRA that occur before you reach age 59 1/2
(except in the event of disability, death, rollover, medical expenses in excess
of 7.5% of adjusted gross income, medical insurance premiums in the event of
unemployment or as a qualifying distribution of an excess contribution), will be
assessed a 10% additional income tax on the amount distributed which is
includible in your gross income. However, the additional 10% income tax will not
be imposed if the distribution is one of a scheduled series of level payments to
be made over your life or life expectancy or over the joint lives or joint life
expectancies of you and your beneficiary. Amounts treated as distributions from
the IRA because of pledging the IRA as described below, or prohibited
transactions as described below, will also be considered premature distributions
if they occur before you reach age 59 1/2 (assuming you are not disabled).
(5) EXCESS DISTRIBUTIONS If the aggregate of your distributions from
qualified plans and individual retirement accounts exceed a certain limit for
any calendar year, a 15% excise tax will be imposed on such excess
distributions. Generally, the limit is the greater of $150,000 (available only
if a special grandfather provision is not elected on a return filed for a
pre-1989 tax year) or $112,500 as adjusted for cost-of-living increases. For any
such excess distributions prior to your attainment of age 59 1/2, the 15% excise
tax will be offset by the 10% additional income tax on early distributions.
(6) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the
portion so pledged is treated as being distributed to you in that year. In
addition to any regular income tax that may be payable on the distribution, the
premature distribution penalty as discussed above may also be applicable.
(7) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your IRA, your IRA will lose its exemption from tax and you must include the
fair market value of your IRA in your gross income for the year during which the
prohibited transaction occurred. In addition to any regular income tax that may
be payable, the premature distribution penalty as discussed above may also be
applicable.
(8) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income
tax that may be payable on distributions from your IRA, you will be assessed
penalties on certain accumulations if funds in your IRA are not distributed in
accordance with the rules described in Part B above. If the amount distributed
from your IRA during the year is less than the minimum amount required to be
distributed during such year, an excise tax will be imposed. The tax imposed is
equal to 50% of the amount by which the minimum required distribution exceeds
the amount actually distributed during the year.
(9) ESTATE AND GIFT TAX STATUS OR DISTRIBUTIONS. Generally, for estate tax
purposes, the value of your IRA will be fully includible in your gross estate in
the event of your death. For gift tax purposes, beneficiary designations will
not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who
has no earned income or elects to be treated as having no earned income will
qualify for
25
<PAGE> 12
the annual present interest gift exclusion. You should consult your tax advisor
with respect to the application of community property laws on estate and gift
tax issues relating to your IRA.
(10) INHERITED IRAs. Your IRA will be treated as an inherited IRA if, upon
your death, it is acquired by a beneficiary other than your surviving spouse. An
inherited IRA may not be rolled over to a qualified plan or to another IRA, nor
may an inherited IRA accept any regular or rollover deposits. Only a beneficiary
who is your surviving spouse will be allowed to roll over the IRA funds into his
or her own IRA.
(11) FEDERAL INCOME TAX WITHOLDING. The taxable portion of distributions
from your IRA is subject to federal income tax withholding unless you elect not
to have withholding applied. If you elect not to have withholding applied to
taxable distributions from your IRA, or if insufficient federal income tax is
withheld from any distribution, you may be responsible for payment of estimated
taxes, as well as for penalties under the estimated tax rules, if withholding
and estimated tax payments were not sufficient. Additional information regarding
withholding and the necessary election forms will be provided no later than at
the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a tax-free distribution of cash or other assets from one
retirement program to another. There are two kinds of rollover contributions to
an IRA. In one, you contribute amounts distributed to you from one IRA to
another IRA. With the other, you contribute amounts distributed to you from your
employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable
IRA contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. The portion you contribute to your IRA will not be taxable to you until you
withdraw it from the IRA. Your employer or former employer will give you the
opportunity to roll over the distribution directly from the plan to the IRA. If
you elect, instead, to receive the distribution, you must deposit it into the
IRA within 60 days after you receive it.
An "eligible rollover distribution" is any distribution from a qualified
plan that would be taxable other than (1) a distribution that is one of a series
of periodic payments for an employee's life or over a period of 10 years or
more, (2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
If the entire amount in your IRA has been contributed in a tax-free rollover
from your employer's or former employer's qualified plan or 403(b) plan, you may
later roll over the IRA to a new employer's plan if such plan permits rollovers.
Your IRA would then serve as a conduit for those assets. However, you may later
roll those IRA funds into a new employer's plan only if you make no further
contributions to that IRA, or commingle the IRA rollover funds with existing IRA
assets.
G. AMENDMENTS.
The Custodian of your IRA may amend the agreements establishing your IRA at
any time. The Custodian will comply with the amendment procedures set forth in
your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your IRA is subject to market
fluctuation, the value of your IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your IRA, including current market values of investments.
Certain fees will be charged by the Custodian in connection with your IRA.
Such fees are disclosed on the Custodian's fee schedule, a copy of which has
been provided to you. Upon thirty days' prior written notice, the Custodian may
substitute a new fee schedule. Any fees or other expenses incurred in connection
with your IRA will be deducted from your IRA (with liquidation of Fund Shares,
if necessary), or at the Custodian's option, such fees or expenses may be billed
to you directly.
For its services to the various funds, in The AIM Family of
Funds--Registered trademark--, Boston Safe Deposit and Trust Company receives a
custodian fee. This fee is in addition to fees it receives for acting as
Custodian under the IRA. Boston Safe Deposit and Trust Company and A I M
Distributors, Inc. also will receive additional fees for performing specific
services with respect to the various funds in the AIM Family of Funds. Any such
fees will be fully disclosed to you. Potential investors should obtain a copy of
the current Prospectus relating to the fund(s) selected for investment prior to
making an investment. Also, copies of the Statement of Additional Information
relating to such fund(s) will be provided upon your request to A I M
Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give the
amount of contributions to the IRA, the year to which each contribution relates,
and the total value of the IRA as of the end of the year. Information relating
to contributions and distributions must be reported annually to the Internal
Revenue Service and to you. You must also file Form 5329 (Return for Individual
Retirement Savings Arrangement) with the Internal Revenue Service for each
taxable year during which you are assessed any penalty or tax as discussed in
Part E above.
Your IRA has been approved by the Internal Revenue Service. Such approval is
a determination as to the form of the IRA, and does not represent a
determination of the IRA's merits as an investment.
Further information about IRAs can be obtained from any district office of
the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your IRA. This is not a legal document. Your legal rights and obligations
are governed by the federal tax laws and regulations and your Custodial
Agreement and Adoption Agreement with the Custodian.
26
<PAGE> 13
SEP AND SARSEP IRA APPLICATION [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (Please print or type.)
Name Birth Date / /
--------------------------------------------------- -- -- --
First Name Middle Last Name Month Day Year
Address
---------------------------------------------------------------------
Street City State Zip Code
Social Security Number
---------------------
Daytime Telephone Evening Telephone
-------------------------- ----------------
- --------------------------------------------------------------------------------
2. TYPE OF ACCOUNT
[ ] SEP - Employer contributions only.
[ ] SARSEP - Employee salary-reduction SEP.
[ ] Combined SEP/SARSEP - Employer and Employee contributions.
Name of Employer Telephone
-------------------------------- ------------------
- --------------------------------------------------------------------------------
3. FUND INVESTMENT
Indicate Fund(s) and contribution amount(s). Make check payable to Boston
Safe Deposit and Trust Company. Minimum $25 per fund per contribution
submission.
<TABLE>
<CAPTION>
Fund $ or % of Assets Class of Shares (check one)
<S> <C> <C>
[ ] AIM Balanced Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Charter Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Constellation Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Income Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Utilities Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM High Yield Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Income Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Intermediate Government Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM International Equity Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Limited Maturity Treasury Shares $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Money Market Fund $ [ ] Class A
----------------------------
[ ] AIM Value Fund $ [ ] Class A [ ] Class B [ ] Class C
----------------------------
[ ] AIM Weingarten Fund $ [ ] Class A [ ] Class B
----------------------------
Total $ [ ] Class A [ ] Class B
----------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased.
All dividends and capital gains will be reinvested in the fund(s)
automatically.
- --------------------------------------------------------------------------------
4. TELEPHONE EXCHANGE
Telephone Exchange Privilege. Unless indicated below, I authorize the
Transfer Agent to accept instructions from any person to exchange shares in
my account(s) by telephone in accordance with the procedures and conditions
set forth in the Fund's current prospectus.
[ ] I do not want the Telephone Exchange Privilege.
27
<PAGE> 14
- --------------------------------------------------------------------------------
5. BENEFICIARY INFORMATION
I hereby designate the following beneficiary to receive the balance in my
IRA custodial account upon my death. To be effective, the designation of
beneficiary and any subsequent change in designation of beneficiary must be
filed with the Custodian prior to my death. If no beneficiary is designated
or no designated beneficiary or contingent beneficiary survives me, the
balance in my IRA will be distributed to the legal representatives of my
estate. This designation revokes any prior designations. I retain the right
to revoke this designation. In the event that I die and no primary
beneficiary listed below (or such beneficiary's heirs, if applicable) is
alive, distribute all Fund accounts in my IRA to the following contingent
beneficiary, or contingent beneficiary's heirs, if applicable.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------------ ---- --------------
Beneficiary's Social Security Number Birth Date / /
------------- -- -- --
Name % Relationship
------------------------------------ ---- --------------
Beneficiary's Social Security Number Birth Date / /
------------- -- -- --
CONTINGENT BENEFICIARY
Name % Relationship
------------------------------------ ---- --------------
Social Security Number Birth Date / /
--------------------------- -- -- --
- --------------------------------------------------------------------------------
6. AUTHORIZATION AND SIGNATURE
I hereby adopt the A I M Distributors, Inc. Individual Retirement Account
appointing Boston Safe Deposit and Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the IRA custodial
agreement and disclosure statement and consent to the custodial account fees
as specified. I understand that a $10 annual AIM Fund IRA Maintenance Fee
will be deducted in early December from my AIM IRA account. Under the
Interest and Dividend Tax Compliance Act of 1983, the Fund is required to
have the following certification. Under the penalties of perjury, I certify
that (i) the number shown in Section 1 is my correct Social
Security/Taxpayer Identification Number and (ii) I am not subject to backup
withholding because the Internal Revenue Service (a) has not notified me
that I am subject to backup withholding as a result of failure to report all
interest or dividends, or (b) has notified me that I am no longer subject to
backup withholding. Please refer to the Fund prospectus for complete
instructions regarding backup withholding.
Your Signature Date / /
---------------------------------------------- -- -- --
- --------------------------------------------------------------------------------
7. DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm Branch #
----------------------- ------------------
Home Office
-----------------------------------------------------------------
Address
---------------------------------------------------------------------
Rep. Name Rep. #
----------------------------------------- --------------------
Authorized Signature Telephone
------------------------------ -----------------
Branch Address
------------------------------------------------
Street City State Zip Code
[ ] Authorized for NAV purchase
28 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43102-10/95
<PAGE> 15
SARSEP IRA ENROLLMENT AND SALARY [ AIM LOGO APPEARS HERE]
SAVINGS AGREEMENT
- --------------------------------------------------------------------------------
8. INVESTOR INFORMATION (Please print or type.)
Name Date / /
---------------------------------------------------- -- -- --
First Name Middle Last Name Month Day Year
Address
---------------------------------------------------------------------
Street City State Zip Code
Birth Date / / Hire Date / /
--- --- --- --- --- ---
Month Day Year Month Day Year
- -------------------------------------------------------------------------------
Social Security Number
------------------------------------------------------
[ ] I HEREBY ELECT TO BECOME A PARTICIPANT IN THE SARSEP.
As a Participant, I hereby authorize the Company to deduct ______% of my
Compensation or a flat dollar amount of $ __________ per pay period which I
understand will be contributed by the Employer to my IRA. I understand that
my annual SARSEP contribution cannot exceed the lesser of 15% of my
compensation or $9,240, or an amount as limited by IRS regulations. The
minimum contribution is $25 PER FUND PER CONTRIBUTION SUBMISSION.
[ ] I AM PRESENTLY A PARTICIPANT IN THE SARSEP.
As a Participant, I hereby authorize the Company to change the amount it
deducts from my Compensation from _______% to _______% or if a dollar amount
has been specified, from $_______________ per pay period to $_______________
per pay period. I understand that this change will be effective 30 days from
the first day of the month following receipt of this notice.
[ ] I HEREBY WITHDRAW MY AUTHORIZATION TO CONTINUE PAYROLL DEDUCTIONS UNDER THE
SARSEP.
I understand this directive will be effective 30 days from delivery of this
notice to the Employer. I further understand that I may not again authorize
payroll deductions for a period of 90 days from the date of this notice.
[ ] CASH BONUS ELECTION (IF APPLICABLE)
I hereby authorize the Company to deduct ________% from my cash bonus as an
additional contribution to my IRA. I understand that my total annual
contribution cannot exceed the lesser of 15% of my compensation or $9,240,
or an amount as limited by IRS regulations.
--------------------------------------
Participant's Signature
29 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43103-10/95
<PAGE> 16
30
<PAGE> 17
SEP AND SARSEP TOP-HEAVY TEST [AIM LOGO APPEARS HERE]
Plan Year End
--------------------------
- --------------------------------------------------------------------------------
1. A Top-Heavy Test must be performed at the end of each plan year. A Plan
becomes top heavy when 60% of the Plan's aggregate SEP and/or SARSEP
contributions or 60% of the aggregate market value of the Plan as of the
last day of the Plan year is allocated to key employees. You may test using
either market values or contributions, but you may find it easier to test
based on contributions.
<TABLE>
<CAPTION>
Key Employees' Names Contributions Market Value
(SEP and SARSEP) 12/31 or Fiscal Year End
<S> <C> <C>
$ $
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
(A) Total $ $
--------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
Non-Key Employees' Names Contributions Market Value
(SEP and SARSEP) 12/31 or Fiscal Year End
<S> <C> <C>
$ $
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
(B) Total S $
--------------------- -------------------------------
(C) Plan Totals (line A + line B) $ $
--------------------- -------------------------------
(D) Top-Heavy Percentage
(line A divided by line C) --------------------- -------------------------------
(If greater than 60%, plan is "top heavy")
</TABLE>
Note: If you have additional key or non-key employees, please attach additional
pages as necessary.
If the Plan is top heavy, the employer must make a minimum contribution on
behalf of all non-key eligible employees. The contribution must equal the
highest percentage deferred by a key employee, up to a maximum of 3%, based on
the non-key employee's compensation. These contributions can be made to any
qualified retirement plan (SEP or SARSEP IRA), as indicated in the adoption
agreement. Key employees may also receive the top-heavy contribution.
31 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43104-10/95
<PAGE> 18
32
<PAGE> 19
SARSEP IRA ACTUAL DEFERRAL [AIM LOGO APPEARS HERE]
PERCENTAGE (ADP) TEST
Plan Year End
----------------------
- --------------------------------------------------------------------------------
1. THE ACTUAL DEFERRAL PERCENTAGE (ADP) TEST
The Actual Deferral Percentage (ADP) Test is an annual test which restricts
the amount that Highly Compensated Employees may contribute through salary
deferral to their SARSEP accounts. Each Highly Compensated Employee may
defer no more than 125% of the deferral percentage of the Non-Highly
Compensated (NHC) group of employees. The test must be performed annually as
of the last day of the plan year.
- --------------------------------------------------------------------------------
2. INSTRUCTIONS
(1) Separate eligible employees into two groups: Highly Compensated and
Non-Highly Compensated. The definition of Highly Compensated is provided
in the Question and Answer Section on page 13.
(2) List each ELIGIBLE employee in their respective group indicating their
compensation and salary deferral. IMPORTANT: You must also include all
eligible employees who elect not to make salary deferral contributions.
Indicate their deferral amount ($) in Column 4 as zero.
(3) Compute each eligible employees' deferral percentage in Column 4.
(4) Add up the deferred percentage of each employee in the Highly
Compensated group and the Non-Highly Compensated group separately.
Divide by the number of eligible employees in each group.
(5) Compare the two groups' average deferral percentages. Each Highly
Compensated participant cannot defer more than 125% of the average
deferral percentage of the Non-Highly Compensated group.
- --------------------------------------------------------------------------------
3. DEFINITIONS
(1) EMPLOYEE: For the purposes of this worksheet we are listing only
employees eligible for this SARSEP. An employee who was eligible at any
time during the Plan Year, but who terminates prior to the end of the
Plan Year is included for this test. Additionally, an eligible employee
who elects not to make Elective Deferrals shall be treated as having a
0% Deferral Percentage.
(a) HIGHLY COMPENSATED EMPLOYEE An Employee (and certain family
members) who meet the criteria listed in Sections 1.11 and 1.12
of the SEP and SARSEP IRA Plan Document. (Also see Question and
Answer Section on page 13.)
(b) NON-HIGHLY COMPENSATED EMPLOYEE: An Employee who doesn't meet
the definition of Highly Compensated.
(2) ELECTIVE DEFERRALS: All contributions made to the SARSEP at the election
of an eligible employee (Participant) in lieu of cash compensation or
bonuses pursuant to a salary savings agreement or cash option election.
(3) COMPENSATION: Total wages, salaries, fees, bonuses or other taxable
remuneration paid to Participant from the Employer during the period in
which the individual actually participated in the Plan. Compensation
shall be limited to $160,000 (or any higher limit announced by the IRS).
The Compensation limit must be adjusted proportionately for Plan Years
of less than 12 months.
33
<PAGE> 20
- --------------------------------------------------------------------------------
4. ELIGIBLE NON-HIGHLY COMPENSATED (NHC) EMPLOYEES
NOTE: Please read the Definitions before completing worksheet.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Deferral
Employee Name Elective Deferrals Compensation Percentage
column 2 divided
by column 3
<S> <C> <C> <C>
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
</TABLE>
(5) Total of all Deferral Percentages (column 4)
---------------
(6) Number of eligible Non-Highly Compensated Employees (column 1)
-------------
(7) Average Deferral Percentage for Non-Highly Compensated
Employees (line 5 divided by line 6)
--------------------
- --------------------------------------------------------------------------------
5. ELIGIBLE HIGHLY COMPENSATED (HC) EMPLOYEES
NOTE: Please read the Definitions before completing worksheet.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Deferral
Employee Name Elective Deferrals Compensation Percentage
column 2 divided
by column 3
<S> <C> <C> <C>
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
</TABLE>
(A) Total of all Deferral Percentages (column 4)
------------------
(B) Number of eligible Highly Compensated Employees (column 1)
----------------
(C) Average Deferral Percentage for Highly Compensated Employees
(line A divided by line B)
--------------------
(D) EACH HIGHLY COMPENSATED PARTICIPANT MAY NOT DEFER MORE THAN 125% X LINE 7,
SECTION 4
125% X _________________ = ______________ ADP FOR EACH HIGHLY COMPENSATED
PARTICIPANT
34 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43105-3/96
<PAGE> 21
SEP/SARSEP TRANSMITTAL FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYER INFORMATION (Please print or type.)
Name of Employer
------------------------------------------------------------
Address
---------------------------------------------------------------------
City State Zip Code
------------------------------ --------------- --------------
- --------------------------------------------------------------------------------
2. EMPLOYER'S AUTHORIZATION (Signature(s) of authorized employer
representative)
We hereby authorize Boston Safe Deposit and Trust Company to invest
contributions in accordance with the instructions below.
Date / /
- ------------------------------------------------------------ -- -- --
Month Day Year
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name of Social Security Selected Contribution per Fund**
Participant Number AIM Funds* (Minimum $25 per Fund)
SEP SARSEP
<S> <C> <C> <C> <C>
1 $ $
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
2
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
3
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
4
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
5
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
6
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
</TABLE>
*Indicate funds used by each participant.
**Indicate dollar($) amount contributed per fund.
35
<PAGE> 22
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name of Social Security Selected Contribution per Fund**
Participant Number AIM Funds* (Minimum $25 per Fund)
SEP SARSEP
<S> <C> <C> <C> <C>
7 $ $
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
8
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
9
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
10
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
11
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
Total Employer Contributions $
------------
Total Employee Salary
Deferral Contributions $
-----------
Total Employer and
Employee Contributions $
-----------
</TABLE>
If a contribution for a participant is to be invested in more than one fund, $25
or more must be invested in each fund selected. Attach form, check (payable to
Boston Safe Deposit and Trust) and SEP and SARSEP applications and mail to:
AIM Fund Services, Inc.
Attn: Retirement Plans Operations
P.O. Box 2646
Houston, Texas 77252-2646
*Indicate funds used by each participant.
**Indicate dollar($) amount contributed per fund.
36 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43106-10/95
<PAGE> 1
EXHIBIT 14(c)
AIM PROFIT SHARING/MONEY PURCHASE PENSION PLAN
ENROLLMENT & BENEFICIARY DESIGNATION FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYEE INFORMATION (Please Print)
Company Name Trust Tax ID #
------------------------------ ---------------
Last Name First Middle
------------- ------------ -----------------------
Social Security Number
----------------------------------------------------
Address
-------------------------------------------------------------------
Home Phone Work Phone
--------------------------- ------------------------
- --------------------------------------------------------------------------------
2. INVESTMENT SELECTION
I elect to have my Employer contributions invested as indicated below. If
any existing assets are being transferred to AIM, they will be invested the
same as your future contributions. (Write in the name of each AIM Fund you
choose to invest in as permitted by the Plan.)
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
100% Total (Minimum $25 per fund, per payroll deferral)
- --------------------------------------------------------------------------------
3. PRIMARY BENEFICIARY(IES)
I name the following person(s) to receive benefits payable from my
company's retirement plan upon my death:
<TABLE>
<S> <C> <C>
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- -----------
Street Address City State Zip Code
----------------------- ----------------- --- -------------------
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- ----------- Percentages must
Street Address City State Zip Code total 100%
----------------------- ----------------- --- -------------------
</TABLE>
Attach additional sheets if you wish to name more than two primary
beneficiaries.
- --------------------------------------------------------------------------------
4. CONTINGENT BENEFICIARY(IES)
If my primary beneficiary(ies) is/are deceased at the time of my death, the
following person(s) shall receive benefits payable from my Company
Retirement Plan upon my death:
<TABLE>
<S> <C> <C>
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- -----------
Street Address City State Zip Code
----------------------- ----------------- --- -------------------
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- ----------- Percentages must
Street Address City State Zip Code total 100%
----------------------- ----------------- --- -------------------
</TABLE>
Attach additional sheets if you wish to name more than two contingent
beneficiaries.
- --------------------------------------------------------------------------------
5. SPOUSAL CONSENT
(This section must be completed only if you are married and selecting a
primary beneficiary other than your spouse.)
I, the spouse of the above-named employee, consent to my spouse's
designation. I understand that if a primary beneficiary other than myself
has been named, no benefit will be paid to me from the Plan upon my
spouse's death unless I am named also as an additional primary beneficiary
or as a contingent beneficiary, and the primary beneficiary(ies) is/are
deceased.
Spouse's Signature Date / /
-------------------------------- ----- ----- -----
Signature of Witness (other than spouse) Date / /
---------- ----- ----- -----
- --------------------------------------------------------------------------------
6. EMPLOYEE AUTHORIZATION (Please sign and date this form)
I understand that my designation becomes effective on the day I submit this
form and replaces any earlier beneficiary designation I have made under the
Plan. If I am married at the time of my death, my spouse will receive my
Plan benefits, regardless of whom I have named as beneficiary, if Section 4
of this form is not complete.
Employee Signature Date / /
-------------------------------- ----- ----- -----
A I M Distributors, Inc. *40700-12/96
<PAGE> 2
PROFIT SHARING/MONEY PURCHASE
PLAN APPLICATION [AIM LOGO APPEARS HERE]
Complete Sections 1-9. Please print or type.
- -------------------------------------------------------------------------------
1. EMPLOYER INFORMATION
Name of Employer/Business
---------------------------------------------------
Plan Name
-------------------------------------------------------------------
Address
-------------------------------------------------------------------
Street City State Zip Code
Trust Tax I.D# Daytime Telephone - -
---- -------------- ---- ---- --------
- --------------------------------------------------------------------------------
2. DEALER INFORMATION: To be completed by securities dealer.
Dealer's Name
--------------------------------------------------------------
Main Office Address
--------------------------------------------------------
Rep. Name and Number
--------------------------------------------------------
Branch Rep. Signature
---------------------------- --------------------------
Home Office Address
---------------------------------------------------------
Telephone - -
---- ---- ---------
- --------------------------------------------------------------------------------
3. PLAN TRUSTEES
Name Plan Adm./Contact Person
------------------------- ----------------------
Name Plan Adm. Telephone - -
------------------------- ----- ----- -----
- --------------------------------------------------------------------------------
4. TYPE OF CONTRIBUTION
Note: If you have paired AIM Profit Sharing and Money Purchase Pension
Plans, you must submit separate applications and separate contribution
checks. [ ] Profit Sharing Plan [ ] Money Purchase Plan
- --------------------------------------------------------------------------------
5. TYPE OF ACCOUNT ESTABLISHMENT
[ ] Establish separate accounts for each participant. (Attach participant
listing.)
[ ] Establish a pooled account for all participants. (Record keeper is
responsible for allocating plan assets to each participant.)
- --------------------------------------------------------------------------------
6. FUND INVESTMENT
Indicate fund(s) and contribution amount(s). Make check payable to Boston
Safe Deposit and Trust Company.
<TABLE>
<CAPTION>
Class of
Shares Class of Shares
Fund $ or % of (Check one) Fund $ or % of (Check one)
Assets Assets
<S> <C> <C> <C> <C> <C>
[ ] AIM Balanced Fund $ [ ] A [ ] B [ ] AIM Intermediate Government Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Blue Chip Fund $ [ ] A [ ] B [ ] AIM Growth Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Capital Develop-
ment Fund $ [ ] A [ ] B [ ] AIM High Yield Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Charter Fund $ [ ] A [ ] B [ ] AIM Income Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Constellation
Fund $ [ ] A [ ] AIM International Equity Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Global Aggressive
Growth Fund $ [ ] A [ ] B [ ] AIM Limited Maturity Treasury Shares $ [ ] A
----------- ----------
[ ] AIM Global Growth
Fund $ [ ] A [ ] B [ ] AIM Money Market Fund $ [ ] A [ ] B [ ] C
----------- ----------
[ ] AIM Global Income
Fund $ [ ] A [ ] B [ ] AIM Value Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Global Utilities
Fund $ [ ] A [ ] B [ ] AIM Weingarten Fund $ [ ] A [ ] B
----------- ----------
Total from both columns $
----------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in Section
3 of the Asset-Transfer Form.
<PAGE> 3
- -------------------------------------------------------------------------------
7. TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, the plan authorizes the Transfer Agent to accept
instructions from any person to exchange shares in its plan account(s) by
telephone, in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
[ ] The plan DOES NOT want the telephone exchange privilege.
- --------------------------------------------------------------------------------
8. REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION
The plan applies for Right of Accumulation reduced sales charges based on
the following accounts in The AIM Family of Funds--Registered Trademark--.
Fund(s) Account No(s).
----------------------- -------------------------------
LETTER OF INTENT
The plan agrees to the Letter of Intent provisions as stated in Fund's
prospectus(es). The plan agrees to invest during a 13-month period a dollar
amount of at least:
[ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
9. DUPLICATE ACCOUNT STATEMENT
Name
------------------------------------------------------------------------
Address
---------------------------------------------------------------------
(AIM will only send one duplicate statement. Check one of the following
boxes.)
[ ]Plan Administrator [ ]Record Keeper [ ]Benefit Consultant [ ]Trustee
- --------------------------------------------------------------------------------
10. AUTHORIZATION AND SIGNATURE
The trustee(s) hereby adopts the AIM Distributors, Inc. Money
Purchase/Profit Sharing Plan appointing Boston Safe Deposit and Trust
Company as Custodian. The trustee(s) has received and read the current
prospectus of the investment company(ies) selected in this agreement. The
trustee(s) understands that a $10 annual maintenance fee for each
participant in the AIM Money Purchase/Profit Sharing Plan will be
deducted in early December. The trustee(s) acknowledges reading and
completing the AIM Funds Money Purchase/Profit Sharing Plan Adoption
Agreement(s) and Trust Agreement.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is
required to have the following certification. Please refer to the Fund
prospectus for complete instructions regarding backup withholding. Under the
penalties of perjury, the trustee(s) certifies that (i) the number shown in
Section 1 is its correct Taxpayer Identification Number and (ii) the plan is
not subject to backup withholding because the Internal Revenue Service (a)
has not notified the plan that it is subject to backup withholding as a
result of failure to report all interest or dividends, or (b) has notified
the plan that it is no longer subject to backup withholding (does not apply
to real estate transactions, mortgage interest paid, the acquisition or
abandonment of secured property, contributions to an individual retirement
arrangement (IRA), and payments other than interest and dividends).
Certification Instructions - You must cross out item(b) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your tax
return.
[ ] Exempt from Backup Withholding (i.e. exempt entity as described in
Application Instructions)
Signature of Plan Trustee Date / /
----------------------------- ---- ---- ------
Signature of Plan Trustee Date / /
----------------------------- ---- ----- -------
Signature of Plan Trustee Date / /
----------------------------- ---- ----- -------
- --------------------------------------------------------------------------------
11. INSTRUCTIONS
Make check payable to Boston Safe Deposit and Trust Company.
Return completed application and check to A I M Distributors, Inc., P.O.
Box 4739, Houston, TX 77210-4739.
[AIM LOGO APPEARS HERE] A I M Distributors, Inc. 42600-12/96
<PAGE> 4
[AIM LOGO APPEARS HERE]
AIM FAMILY OF FUNDS
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLANS
MONEY PURCHASE PENSION AND PROFIT SHARING PLAN DOCUMENT, TRUST AGREEMENT,
ADOPTION AGREEMENTS, SUMMARY PLAN DESCRIPTIONS AND APPLICATIONS
AIM DISTRIBUTORS, INC.
<PAGE> 5
AIM DISTRIBUTORS, INC.
PROTOTYPE PAIRED DEFINED CONTRIBUTION PLANS
PROFIT SHARING/MONEY PURCHASE PENSION PLANS
TABLE OF CONTENTS
I. Adopting the AIM Profit Sharing Plan: Adoption Agreement #001
II. Adopting the AIM Money Purchase Pension Plan: Adoption Agreement #002
III. Money Purchase Pension and Profit Sharing Plan Basic Document #01
IV. Determination Letters
V. Trust Agreement
VI. Employee Notices
- Model Summary Plan Description for Profit Sharing Plan
- Model Summary Plan Description for Money Purchase Plan
VII. Forms
- Money Purchase Pension and Profit Sharing Plan Account Application
- Participant Enrollment & Beneficiary Designation
- Asset Transfer Form
- Contribution Transmittal Form
1
<PAGE> 6
ESTABLISHING
YOUR
PROTOTYPE DEFINED CONTRIBUTION PLANS
PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
The Prototype Paired Defined Contribution Plans sponsored by AIM Distributors,
Inc. are a Profit Sharing Plan and a Money Purchase Pension Plan. Both of these
plans are provided under one plan document with separate adoption agreements.
An employer can adopt either one or both of these plans.
AIM Distributors, Inc. will not act as trustee, plan administrator, nor record
keeper. Before establishing a qualified plan, you should consult with a tax
advisor or attorney. Failure to properly complete these documents could result
in plan disqualification.
To establish the AIM Prototype Profit Sharing and/or Money Purchase Pension
Plan the following forms need to be completed:
1. PLAN ADOPTION AGREEMENT(S). (Section I & II.)
You must complete the appropriate adoption agreement, Profit Sharing
Agreement #001, or Money Purchase Pension Agreement #002, and all
other documents stated in the plan set up instructions.
To establish both a Money Purchase Pension and a Profit Sharing Plan
(Paired Plans), you must complete both the Profit Sharing Adoption
Agreement (Agreement #001) and the Money Purchase Adoption Agreement
(Agreement #002) found in Sections I & II.
2. FIDELITY BOND REQUIREMENT: All qualified plans are required to be covered
by a Fidelity Bond equal to at least 10% of the asset value of the plan,
and not less than $1,000 nor greater than $500,000. Fidelity bonds can be
obtained through your business insurance agent.
3. TRUST AGREEMENT DOCUMENT (Section III.)
Complete and sign pages 77 and 78 of the Trust Document.
4. AIM PROFIT SHARING/MONEY PURCHASE PLAN ACCOUNT APPLICATION (Section VII.)
Complete a separate application for each plan established: Profit
Sharing and/or Money Purchase Pension Plan.
5. PARTICIPANT ENROLLMENT AND DESIGNATION OF BENEFICIARY FORM (Section VII
Employer retains)
Each eligible employee must complete an enrollment and beneficiary
form and return it to the plan administrator to be retained with plan
records. A copy of the employee's enrollment form should be forwarded
to AIM only if you are requesting that individual mutual fund accounts
be established for each employee.
2
<PAGE> 7
Do not return the employee enrollment forms if you are
establishing "pooled" investment accounts for the plan. AIM will
only establish "individual" mutual fund participant accounts for
plans with less than 50 participants.
6. TO TRANSFER ASSETS FROM AN EXISTING PLAN: Complete the Asset Transfer
Form in Section V as well as the documents indicated on the previous
page.
7. FEES: There is an annual custodial account fee of $10.00 for each
participant account or each "pooled" account establish at AIM.
After completion, return only the AIM Money Purchase Pension and Profit Sharing
Account Application and a copy of the participant enrollment forms (individual
mutual fund accounts only) with your contribution to establish the plan. Do not
return participant enrollment forms if establishing "pooled" AIM Fund
investment accounts.
Enclose your initial contribution check payable to: Boston Safe Deposit &
Trust Company.
DO NOT return the Adoption Agreement(s), Summary Plan Description(s),
Beneficiary Form, or Trust Agreement to AIM. These documents must be retained
with your permanent plan records.
Return to:
AIM Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
DEADLINE: New Plans must execute all plan documents prior to the last day of
the plan year (fiscal or calendar year). The plans contribution must be made
by the due date of the business tax return including extensions for the
contribution to be tax deductible.
NOTICE TO EMPLOYEES
Once you have adopted the AIM Money Purchase Pension and/or Profit Sharing Plan
you will need to communicate the adoption and principal provisions of the plan
to employees. This is done by providing the following information to employees:
1. SUMMARY PLAN DESCRIPTION
The employer must give each eligible employee a Summary Plan Description
(SPD) of the plan and file the Summary Plan Description with the Department
of Labor within 120 days of establishing the plan. You must complete the
SPD to indicate the plan features you have designated in the adoption
agreement. AIM has partially completed the SPD in accordance with the
features we pre-marked. Any future amendments to the adoption agreement
must also be made to the SPD.
There is a sample letter provided for filing the SPD with the Department
of Labor.
These notices are provided in Section VII.
3
<PAGE> 8
ADOPTING THE AIM PROFIT SHARING PLAN
ADOPTION AGREEMENT #001
4
<PAGE> 9
ADOPTING THE AIM PROFIT SHARING PLAN ADOPTION
AGREEMENT #001
TO ADOPT THE AIM SPONSORED PROFIT SHARING PLAN YOU WILL NEED TO COMPLETE
THE FOLLOWING FORMS:
- The Profit Sharing Adoption Agreement and Summary Plan Description
(SPD) and Trust Agreement
- A Profit Sharing Plan Account Application
- An Enrollment and Beneficiary Designation Form for each participant.
PLAN STRUCTURE:
If you are establishing "pooled" investment accounts, utilizing a third
party administrator for record keeping:
- Submit only the AIM Profit Sharing and/or Money Purchase Pension Plan
Account Application indicating all the AIM Funds permitted as
investment options by the Plan and the investment amount for each
fund. You must identify the Plan's trustees. If you are not making
your full contribution at this time, we require a minimum $1,000
initial contribution.
If you want AIM to establish separate mutual fund accounts for each plan
participant:
- Submit the AIM Profit Sharing Account Applications with the
participant enrollment forms (Section VII).
- Identify each participant's name, mailing address, SS # and their AIM
Fund'(s) investment election on the enrollment form.
- The plan administrator must submit all contributions with a breakdown
identifying each participant and their total contribution allocated to
the funds the participant has chosen.
- The minimum contribution per participant is $25 per fund, per
contribution submission.
- The maximum number of individual, participants accounts AIM will
establish is 50, utilizing no more than 6 AIM Funds.
- Duplicate statements will be issued to your recordkeeper or
administrator, if requested.
RETURN TO: AIM Fund Services
P.O. Box 4739
Houston, TX 71210-4739
ADOPTION AGREEMENT
To make it easy for you, the Profit Sharing Plan Adoption Agreement has been
partially completed to reflect the features most frequently chosen. Please
review the completed plan adoption agreement with your legal or tax advisor to
ensure that the plan provisions are appropriate.
NOTE: If desired, you may change any of the prechecked elections by making the
appropriate change and placing your initials and date next to the section being
changed.
[X] PRE-CHECKED SECTIONS:
The key sections in this Adoption Agreement which have been completed are as
follows:
5
<PAGE> 10
- - All employees who are Age 21 and have fulfilled one year of service are
eligible to share in plan for contributions. (Years of service cannot
exceed 2 years: all contributions are then 100% vested.)
- - An employee who completes 1,000 hours of service within 12 consecutive
months of their date of hire is credited with a year of service for initial
eligibility. Only 500 hours of service are required in any year thereafter
for a participant to be eligible for a plan contribution. There is no
requirement that a participant be employed on the last day of the plan year
to receive a contribution in the year they separate from service.
- - After fulfilling age and service eligibility requirements, employees may
enter the plan on the first day of a plan year on the first day of the
seventh month of the plan year. (Calendar Year = January 1 & July 1 entry
dates)
- - All union and non U.S. resident alien employees are excluded from
participation. Please note that all other employees of the plan sponsors,
as well as employees of certain companies related to the plan sponsor, are
eligible to participate.
- - Please note that all other employees of the plan sponsors, as well as
employees of certain companies related to the plan sponsor, are eligible to
participate.
- - The employees annual contribution will be discretionary.
- - The plan is not integrated with Social Security. If you choose to integrate
your contribution, AIM will not compute the integration allocation.
- - Normal retirement age of 65.
- - No Loans and No Hardship Distributions are permitted.
- - No Life Insurance may be purchased by the plan.
- - The Employer is the Plan Administrator responsible for administration of
the Plan. (If you appoint another entity as the Plan Administrator, that
entity must sign Section XV of the Adoption Agreement to accept the
responsibility of Plan Administrator.
[X] SECTIONS TO BE COMPLETED BY EMPLOYER
The following sections of the Adoption Agreement must be completed by the
employer.
Section II: Employer Data (Page 1 & 2) - Complete A through G. If
applicable, Complete H and I. (Name, address, TIN, etc.)
Section IX: Vesting - Choose the vesting schedule desired.
SECTION XIV: Allocation Limitation - complete this section.
Section XVI: Self Trusteed Plan - You must designate a trustee or trustees
of this plan. The trustee(s) must sign the Adoption Agreement.
NEITHER AIM NOR BOSTON SAFE DEPOSIT & TRUST COMPANY WILL ACT
AS THE PLAN TRUSTEE. The trustees must sign the Adoption
Agreement on page 12.
Section XVII: Employer Signature - Read the employer acknowledgment and
execute this section.
6
<PAGE> 11
Fidelity Bond - Contact your insurance company regarding the purchase of a
fidelity bond which will cover the plan administrator and plan fiduciaries. The
bond must be for at least $1,000 or an amount equal to 10% of the plan's assets
not to exceed $500,000.
FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION
OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY
THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL).
PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTORS, NOR AIM FUND SERVICES WILL ACT AS
THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, CALCULATE
CONTRIBUTION ALLOCATIONS, PROVIDE RECORD KEEPING SERVICES, PERFORM
DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND
ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED
THIRD PARTY.
7
<PAGE> 12
PROFIT SHARING ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#001 SPONSORED BY
AIM DISTRIBUTORS, INC.
ADOPTION AGREEMENT #001
This is the Adoption Agreement for paired defined contribution plan #001 of
basic plan document #001, which is a combined prototype profit sharing/money
purchase pension plan. This Adoption Agreement may be adopted either singly or
in combination with paired defined contribution plan #002, a prototype money
purchase pension plan.
NOTE: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this
Adoption Agreement may result in Plan disqualification.
- -----------------------------------
The Employer hereby establishes a profit sharing plan and a trust upon the
respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan and, the
Trust Agreement, if applicable, shall be supplemented and modified by the terms
and conditions contained in this Adoption Agreement and shall be effective on
the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
- -----------------------------------
1. SPONSOR DATA
------------
A. AIM DISTRIBUTORS, INC.
Name of Sponsor (or authorized representative)
B. 11 GREENWAY PLAZA- SUITE 1919
Address
HOUSTON, TX 77046
C. (713) 347-1919
Telephone Number
- -----------------------------------
II. EMPLOYER DATA
A. ___________________________________________________
Name of Employer and Employer Identification Number
B. ___________________________________________________
Address
C. (_____)____________________________________________
Telephone Number
D. ___________________________________________________
Employers Taxable Year End
E. ___________________________________________________
Plan Year End
F. The Employer is: [ ] A corporate entity
[ ] A non corporate entity
[ ] A corporation electing to be taxed under
Subchapter S
8
<PAGE> 13
G. ___________________________________________________
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
______________________________________________________________________
Effective Date of Amendment (should be first day of a Plan Year)
______________________________________________________________________
Name of Prior Plan
______________________________________________________________________
Effective Date of Prior Plan
I. ______________________________________________________________________
Limitation Year, if different from E., above
III. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan upon
completion of the eligibility requirements (complete 1 and 2)
(Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[X] One Year of Service.
[ ] ____ Years of Service. (You can require less than or more
than one Year of Service, but not more than two (2). If
you select more than one Year of Service, the Employee
must be 100% vested once he becomes eligible, and you must
select vesting schedule B in section X of this Adoption
Agreement. If the Year of Service is or includes a
fractional year, an Employee will not be required to
complete any specified number of Hours of Service (sec IV,
A of this Adoption Agreement) to receive credit for such
fractional year.
2. Age. The Employee must attain age 21 (not greater than age
21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[X] Union Employees. Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer
and Employee representatives (as defined in section 3.1(b)(i) of
the Plan), if retirement benefits were the subject of good faith
bargaining.
[X] Nonresident Aliens. Employees who are nonresident aliens and who
receive no earned income from the Employer which constitutes
income from sources within the United States. For purposes of
this section III, the term "Employee" includes all employees of
this Employer or any employer aggregated with this Employer under
sections 414(b), (c) or (m) or (o) of the Code and individuals who
are Leased Employees required to be considered Employees of any
such employer under section 414(n) or (o) of the Code. Therefore,
all employees of companies in a controlled group of businesses
will be eligible to participate in this plan.
- -----------------------------------
9
<PAGE> 14
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 Hours
of service during a Plan Year. If a lower number of hours is desired,
state the number here: 1,000 (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method)(Plan section 2.19):
1. [X] On the basis of actual hours for which an Employee is paid or
entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited with
ten (10) Hours of Service if under section 2.19 of the plan such
Employee would be credited with at least one (1) Hour of Service
during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1) Hour of
Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An Employee will
be credited with ninety-five (95) Hours of Service if under section
2.19 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the semimonthly payroll period.
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under section
2.19 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3
and 8.5):
1. [X] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
----------------------------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
- ----------------------------------
V. COMPENSATION
A. Compensation (choose 1 or 2)(Plan section 2.7):
1. [ ] shall include
- or -
2. [X] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includable in the gross income of the Employee under
sections 125, 402(e)(3), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be
___________________________ (but not earlier than the first day of the
first Plan Year beginning after 1986).
- ----------------------------------
10
<PAGE> 15
VI. CONTRIBUTIONS
A. Profit sharing plan formulas (choose 1 or 2)(Plan section 4.19(b)):
1. [X] Discretionary pursuant to Employer resolution. If no
resolution is adopted, then _0_% of Participants'
compensation.
-or-
2. [ ] ___% of Participants' Compensation, plus discretionary
amount, if any, by Employer resolution.
NOTE: Each of these formulas is subject to maximum limitations on
contributions as provided in the Plan and the Internal Revenue Code.
In no event may the Employer Contribution exceed 15% of the aggregate
compensation of all Participants for the year, plus up to 10% credit
carryover in certain circumstances. Additional limitations are
included in the Plan where the Employer also has another qualified
retirement plan. The limit on contributions and forfeitures allocated
to an individual participant's account, per year is generally the
lesser of 25% of compensation or $30,000.
- --------------------------------
VII. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. Formula (choose 1 or 2)(Plan section 5.3(b)). NOTE: If you provide
for hardship withdrawals you must use Formula 1.
1. [X] Nonintegrated Plan -- Employer contributions shall be
allocated to the accounts of all eligible Participants
prorated upon compensation.
-or-
2. [ ] Integrated Plan -- Employer contributions and forfeitures
shall be integrated with Social Security and allocated in
accordance with the provisions of Plan section 5.3(b). The
Plan's Integration Level shall be (choose (a),(b) or (c))):
(a) [ ] Taxable Wage Base. (The maximum amount considered as
wages for such year under section 3121(a)(1) of the
Internal Revenue Code (the Social Security taxable wage
base) as of the beginning of the Plan Year).
-or-
(b) [ ] $______ (a dollar amount not to exceed the Taxable
Wage Base).
-or-
(c) [ ] _____% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan,
only one plan may be integrated with Social Security.
B. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[ ] Participants who terminate employment during the Plan year with
not more than 500 Hours of Service and who are not Employees as
of the last day of the Plan Year (other than Participants who
die, retire or become Totally and Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number
here: _____.
11
<PAGE> 16
- --------------------------
VIII. DISTRIBUTIONS.
A. Normal Retirement Age is (choose 1 or 2)(Plan section 2.26):
1. [X] The date a Participant reaches age 65 (not more than 65
or less than 55). If no age is indicated, normal
retirement age shall be 65.
2. [ ] The later of age ____ (not more than 65) or the ____
(not more than 5th) anniversary of the day the
Participant commenced participation in the Plan. The
participation commencement date is the first day of the
first Plan Year in which the Participant commenced
participation in the Plan.
B. Early Retirement Date (choose 1 or 2)(Plan section 2.10):
1. [ ] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age 55 (not less than 55) and
completes 5 years of service (not more than 15).
2. [X] Early Retirement will not be permitted under the Plan.
C. All distributions will be in the form of a lump sum in accordance with
the Safe Harbor Rules in Article 9, Section 9.6 of the Plan Document.
- --------------------------
IX. OPTIONAL FEATURES
A. Hardship withdrawals (choose 1 of 2)(Plan section 12.2):
1. [ ] The Plan permits hardship withdrawals.
- or -
2. [X] The Plan does not permit hardship withdrawals.
NOTE: The Plan may not provide hardship withdrawals if integration
with Social Security is elected in section VII.A.2.
B. Loans (choose 1 or 2)(Plan ARTICLE 13):
1. [ ] The Plan permits loans to Participants.
- or -
2. [X] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of
noncorporate entities or to Shareholder-Employees of
subchapter S corporations. If Plan loans are permitted, the
Trustee designated in section XVI of this Adoption Agreement
may not be the Sponsor's designated Trustee.]
C. Insurance (choose 1 or 2)(Plan ARTICLE 14):
1. [ ] The Plan permits Participants to designate a portion of
their Account to purchase life insurance contracts. (MUST
NOT be selected if Sponsor's designated trustee is appointed
as Trustee).
12
<PAGE> 17
The percentage of the Employer Contributions which may
be applied to purchase life insurance contracts shall
be equal to _____%.
-or -
2. [X] The Plan does not permit Participants to designate a
portion of their Account to purchase life insurance
contracts.
NOTE: Section 14.5 of the Plan provides certain limits on the amount
of Employer Contributions that can be applied to purchase life
insurance contracts.]
- ------------------------------
X. VESTING
Employer Contributions and earnings will become vested if the
Participant terminates employment for any reasons other than
retirement at or after Normal Retirement Age or Early Retirement Date,
death, or disability pursuant to the following schedule (choose A, B,
C or D) (Plan section 8.3):
<TABLE>
<CAPTION>
A. [ ] Years of
Service Vested Percentage
------- -------- ----------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
B. [ ] 100% vesting immediately after satisfaction of the
eligibility requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement, vesting
schedule B must be chosen.
C. [ ] 100% vesting after years of service (not to exceed
three).
- or -
<TABLE>
<CAPTION>
D. [ ] Years of
Service Vested Percentage
------- -------- ----------
<S> <C> <C>
1 year ___%
2 years ___% (not less than 20)
3 years ___% (not less than 40)
4 years ___% (not less than 60)
5 years ___% (not less than 80)
6 years ___% (not less than 100)
</TABLE>
- ------------------------------
XI. INVESTMENT CHOICES
A. [X] Investment of Trust assets may be selected only from
Shares or other investments offered by the Sponsor.
(AIM Distributors Inc., AIM Family of Funds)
B. [ ] ___% of the Trust assets must be invested in Shares
or other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
13
<PAGE> 18
C. [ ] 50% of the Trust assets must be invested in Shares or
other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
D. [ ] 25% of the Trust assets must be invested in Shares or
other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
The Sponsor may impose additional limitations
relating to the type of permissible investments in
the Trust (Plan section 7.3).
- ------------------------------
XII. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in
accordance with instructions of the Employer or Plan Administrator
except that (choose A, B or C) (Plan section 7.2):
A. [ ] No exceptions; the or Plan Administrator shall make
all investment selections.
B. [ ] The Employer delegates all investment responsibility
to the Trustee. (MAY NOT be selected if Sponsor's
designated trustee is appointed as Trustee).]
C. [X] Each Participant [ ] may, [X] shall direct that:
1. [X] Amounts voluntarily contributed by such
Participant pursuant to section 4.3 of the
Plan, rollover contributions pursuant to
section 4.4 of the Plan and direct transfers
pursuant to section 4.5 of the Plan, if any,
- and/or -
2. [X] Employer Contributions on the Participant's
behalf, shall be invested in specified
investments offered by the Sponsor.
Participants may make or change such
directions by giving written notice to the
Plan Administrator. Reasonable restrictions
may be imposed on this privilege by the Plan
Administrator or the Sponsor for purposes of
administrative convenience.
- ------------------------------
XIII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation
provided by section 5.2 of the Plan shall receive a minimum allocation
of contributions and forfeitures under this Plan equal to 3% of
Compensation, or if lesser, the largest percentage of Compensation
allocated on behalf of any Key Employee for the Plan Year.
NOTE: If the Participant also participates in paired defined
contribution plan #002 (the money purchase pension plan), the
required minimum allocation must be made under paired defined
contribution plan #002 (the money purchase pension plan).
- ------------------------------
14
<PAGE> 19
XIV. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #002) IN WHICH ANY PARTICIPANT
IN THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT.
THIS SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A
WELFARE BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN
INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(l)(2) OF THE
CODE, UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT
TO ANY PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan (choose either 1 or 2) (Plan section
6.3):
1. [ ] The provision of section 6.2 will apply as if the
other plan were a master or prototype plan.
- or -
2. [ ] (On an attachment, provide the method under which
the plans will limit total annual additions to the
maximum permissible amount, and will properly reduce
any excess amounts, in a manner that precludes
Employer discretion).
B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer attach an
explanation of the method under which the plan involved will
satisfy the 1.0 limitation in a manner that precludes
Employer discretion.
- ------------------------------
XV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose 1, 2, 3 or
4) (Plan sections 2.30 and 15.4):
1. [ ] The Trustee
- or -
2. [X] The Employer
- or -
3. [ ] An individual Plan Administrator designated
by the Employer
-----------------------------------
Name
-----------------------------------
Address
-----------------------------------
Signature
- or -
15
<PAGE> 20
4. [ ] A committee of two or more Employees
designated by the Employer:
-----------------------------
Name & Title
-----------------------------
Signature
-----------------------------
Name & Title
-----------------------------
Signature
-----------------------------
Name & Title
-----------------------------
Signature
NOTE: If no Plan Administrator has been designated or serving at any
time, the Employer will be deemed the Plan Administrator
(Plan section 15.4).
B. The Plan Administrator (including all members of a committee,
if a committee is named) is a Named Fiduciary for the Plan. If
other persons are also to be Named Fiduciaries, their names
and addresses are:
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
C. The Named Fiduciaries have all of the powers set forth in the
Plan. If any powers or duties are to be allocated among them,
or delegated to third parties, indicate below what the powers
or duties are and to whom they are to be delegated (Plan
section 15.3):
-------------------------------
-------------------------------
-------------------------------
-------------------------------
16
<PAGE> 21
XVI. THE TRUSTEE
A. The Employer hereby appoints the following to serve as
Trustee, and the trustee, by signing this Adoption Agreement
accepts the appointment (complete either A or B) (Plan section
2.39):
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
B. The Employer hereby appoints the Sponsor's designated
trustee(s) to serve as Trustee(s):
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
17
<PAGE> 22
VII. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial
investments under the Plan and represents that it has delivered a copy
thereof to each Participant in the Plan, and that it will deliver to
each Participant making contributions and each new Participant, a copy
of the then current prospectus of such investment companies. The
Employer further represents that the information in this Adoption
Agreement shall become effective only when approved and countersigned
by the Trustee. The right to reject this Adoption Agreement for any
reason is reserved by the sponsor.
This Adoption Agreement must be used only in conjunction with basic
plan document #01.
NOTE: An Employer who has ever maintained or who later adopts any
plan (including, after December 31, 1985, a welfare benefit
fund, as defined in section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate
accounts for Key Employees, as defined in section 419A(d)(3) of
the Code, or an individual medical account, as defined in
section 415(1)(2) of the Code), in addition to this Plan
(other than paired defined contribution plan #002), may not
rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is
qualified under section 401 of the Internal Revenue Code. If
the Employer who adopts or maintains multiple plans wishes to
obtain reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key
District Director of Internal Revenue.
This Adoption Agreement consists of 11 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement
to be executed by its duly authorized officers this ___ day of ____.
-------------------------------
(Name of Employer)
By:
-------------------------------
(Name & Title)
Date:
------------------
18
<PAGE> 23
ADOPTING THE AIM MONEY PURCHASE PENSION PLAN
ADOPTION AGREEMENT #002
19
<PAGE> 24
ADOPTING THE AIM MONEY PURCHASE PENSION PLAN ADOPTION
AGREEMENT #002
To adopt the AIM Sponsored Money Purchase Pension Plan you will need to
complete the following forms:
o The Money Purchase Pension Adoption Agreement and Summary Plan
Description (SPD)
o A Money Purchase Pension Account Application
o An Enrollment and Beneficiary Designation Form for each participant.
PLAN STRUCTURE:
If you are establishing "pooled" investment accounts, utilizing a third party
administrator for record keeping:
o Submit only the AIM Money Purchase Profit Sharing and/or Profit Sharing
Plan Account Application indicating all the AIM Funds permitted as
investment options by the Plan. You must identify the Plan's trustees.
If you want AIM to establish separate mutual fund accounts for each plan
participant, registered in the plan's name:
o Submit the AIM Money Purchase Plan Account Application with the
participant enrollment forms (Section VII)
o Identify each participant's name, mailing address, SS # and their AIM
Fund's investment election on the enrollment form.
o The plan administrator must submit all contributions with a breakdown
identifying each participant, and their total contribution allocated
to the funds the participant has chosen.
o The minimum contribution per participant is $25 per fund, per
contribution submission.
o The maximum number of individual participants accounts AIM will
establish is 50 utilizing no more than 6 AIM Funds.
o Duplicate statements will be issued to your recordkeeper or
administrator if requested.
Return to:
AIM Fund Services
P.O. Box 4739
Houston, TX 77210-4739
ADOPTION AGREEMENT
To make it easy for you, the Money Purchase Pension Adoption Agreement has been
partially completed to reflect the retirement plans provisions most frequently
chosen. Please review the completed plan adoption agreement with your legal or
tax advisor to ensure that the plan provisions are correct. NOTE: If desired,
you may change any of the prechecked elections by making the appropriate change
and placing your initials and date next to the section being changed.
[X] PRE-CHECKED SECTIONS:
The key sections in this Adoption Agreement which have been completed are as
follows:
o All employees who are Age 21 and have fulfilled one year of service are
eligible for contributions. (Years of service cannot exceed 2 years:
all contributions are then 100% vested).
20
<PAGE> 25
o An employee who completes 1,000 hours of service, within 12 consecutive
months of their date of hire, is credited with a year of service for
initial eligibility. Only 500 hours of service are required in any year
thereafter for a participant to be eligible for a plan contribution.
There is no requirement that a participant be employed on the last day
of the plan year to receive a contribution in the year they separate
from service.
o After fulfilling age and service eligibility requirements, employees
will enter the plan on the plan anniversary date or the date which is
six months subsequent to each plan anniversary date. (Calendar Year =
January 1 & July 1)
o All union and non-resident alien employees are excluded from
participation.
o A MONEY PURCHASE PENSION PLAN REQUIRES A FIXED ANNUAL CONTRIBUTION FROM
THE EMPLOYER STATED AS A PERCENTAGE OF EACH ELIGIBLE EMPLOYEE'S
COMPENSATION (SECTION VI).
o The plan is not integrated with Social Security. If you choose to
integrate your contribution, AIM will not compute the allocation.
o Normal retirement age of 65.
o No Loans and No Hardship Distributions are permitted.
o No Life Insurance may be purchased by the plan
MONEY PURCHASE PENSION PLAN ADOPTION AGREEMENT
SECTIONS TO BE COMPLETED BY EMPLOYER
The following sections must be completed by the employer.
Section II: Employer Data (Page 2) - Complete A through G. If applicable,
Complete H and I. (Name, address, TIN, etc.)
Section VI: Contributions - Must complete percentage under A(1).
Section IX: Vesting - Choose the vesting schedule desired.
Section XV: Self Trusteed Plan - You must designate the trustee of this
plan. Neither AIM nor Boston Safe Deposit & Trust Company will
be the plan's trustee.
Section XVI: Employer Signature - Read the employer acknowledgment and
execute this section.
Fidelity Bond - Contact your insurance company regarding the purchase of a
fidelity bond which will cover the plan and plan fiduciaries.
The bond must be for at least $1,000 or an amount equal to 10%
of the plan's assets not to exceed $500,000.
21
<PAGE> 26
FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION
OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY
THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL).
PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTIONS, NOR AIM FUND SERVICES WILL ACT
AS THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, COMPUTE
CONTRIBUTION ALLOCATION, PROVIDE RECORD KEEPING SERVICES, PERFORM
DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND
ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED
THIRD PARTY.
22
<PAGE> 27
MONEY PURCHASE PENSION ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#002 SPONSORED BY
AIM DISTRIBUTORS, INC.
ADOPTION AGREEMENT #002
This is the Adoption Agreement for paired defined contribution plan #002 of
basic plan document #01, which is a combined prototype profit sharing/money
purchase pension defined contribution plan. This adoption agreement may be
adopted either singly or in combination with paired defined contribution plan
#001, a prototype profit sharing plan.
Note: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this Adoption
Agreement may result in Plan disqualification.
- --------------------
The Employer hereby establishes a money purchase pension plan and a trust upon
the respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan, the Trust
Agreement, and the Custody Agreement, if applicable, shall be supplemented and
modified by the terms and conditions contained in this Adoption Agreement and
shall be effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
- --------------------
I. SPONSOR DATA
A. AIM DISTRIBUTORS, INC.
----------------------
Name of Sponsor (or authorized representative)
B. 11 GREENWAY PLAZA SUITE 1919
----------------------------
Address
HOUSTON, TX 77046
------------------
City State
C. (713) 347-1919
--------------
Telephone Number
- --------------------
II. EMPLOYER DATA
A.
----------------------------------------------
(Name of Employer and Employer Identification Number
B.
----------------------------------------------
Address
2. C. ( )
--- ------------------------------------------
Telephone Number
D.
-------------------------------
Employer's Taxable Year End
E.
-------------------------------
Plan Year End
23
<PAGE> 28
F. The Employer is: [ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under
Subchapter S
G.
-----------------------
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
-----------------------
Effective Date of Amendment (should be first day of a Plan Year)
-----------------------
Name of Prior Plan
-----------------------
Effective Date of Prior Plan
I.
-----------------------
Limitation Year, if different from E., above
- ----------------------
III. ELIGIBILITY
A. Employee shall be eligible to participate in the Plan upon completion
of the eligibility requirements (complete 1 and 2)(Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[X] One Year of Service
[ ] ___ Years of Service. (You can require less than or more
than one Year of Service, but not more than two (2). If you
select more than one Year of Service, the Employee must be
100% vested once he becomes eligible, and you must select
vesting schedule B in section IX of this Adoption Agreement.
If the Year of Service is or includes a fractional year, an
Employee will not be required to complete any specified
number of Hours of Service (Section IV, A of this Adoption
Agreement) to receive credit for such fractional year.
2. Age. The Employee must attain age 21 (not greater than age 21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[X] Union Employees. Employees included in a unit of employees
covered by a collective bargaining agreement between the
Employer and the Employee representatives (as defined in section
3.1(b)(i) of the Plan), if retirement benefits were the subject
of good faith bargaining.
[X] Nonresident Aliens. Employees who are nonresident aliens and
who receive no earned income from the Employer which constitutes
income from sources within the United States.
For purposes of this section III, the term "Employee" includes
all employees of this Employer or any employer aggregated with
this Employer under sections 414(b),(c),(m) or (o) of the Code
and individuals who are Leased Employees required to be
considered Employees of any such employer under section 414 (n)
or (o) of the Code.
- --------------------
24
<PAGE> 29
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state the
number here: 1,000 (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method) (Plan section 2.19):
1. [X] On the basis of actual hours of which an Employee is paid or
entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited
with ten (10) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1)
Hour of Service during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19
of the Plan such Employee would be credited with at least
one (1) Hour of Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An Employee
will be credited with ninety-five (95) Hours of Service if
under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the
semimonthly payroll period.
- or -
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under
section 2.19 of the Plan such Employee would be credited
with at least one (1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3
and 8.5):
1. [X] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
---------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
- --------------------------------
V. COMPENSATION
A. Compensation (choose 1 or 2)(Plan section 2.7):
1. [ ] shall include
- or -
2. [X] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includable in the gross income of the Employee under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be __________
(but not earlier than the first day of the first Plan Year beginning
after 1986).
25
<PAGE> 30
VI. CONTRIBUTIONS
A. Formulas (choose 1 or 2)(Plan section 4.1.(a)):
1. [X] Plan no integrated with Social Security
The Employer will contribute ___% of compensation for each
Participant (not less than 3% if the profit sharing Adoption
Agreement is also adopted and, in any event, not more than 25%).
2. [ ] Integrated Plan - The Employer will contribute an amount
equal to ___% (base contribution percentage, not less than
3) of each Participant's Compensation (as defined in
section 2.7 of the Plan) for the Plan Year, up to the
Integration Level plus ___% (not less than 3% and not to
exceed the base contribution percentage by more than the
lesser of: (1) the base contribution percentage, or (2) the
Maximum Disparity Rate of such Participant's Compensation
in excess of the Integration Level.
a. [ ] Taxable Wage Base. (The maximum amount considered as
wages for such year under section 3121(a)(1) of the
Internal Revenue Code (the Social Security taxable
wage base) as of the beginning of the Plan Year).
-or-
b. [ ] $_________(a dollar amount not to exceed the Taxable
Wage Base).
-or-
c. [ ] ______% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan,
only one plan may be integrated with Social Security.
B. Forfeitures for a given Plan Year (choose 1 or 2)(Plan section 5.3(a)):
1. [ ] Shall be applied to reduce the Employer Contribution in that
year, or if in excess of the Employer Contribution for such Plan
Year, the excess amounts shall be used to reduce the Employer
Contribution in the next succeeding Plan Year or Years.
-or-
2. [ ] Shall be added to the Employer Contribution and allocated
accordingly.
C. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[X] Participants who terminate employment during the Plan Year with not
more than 500 Hours of Service and who are not Employees as of the
last day of the Plan Year (other than Participants who die, retire or
become Totally and Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number here:____.
26
<PAGE> 31
- ------------------------------
VII. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 or 2 )(Plan section 2.26):
1. [X] The date a Participant reaches age 65
(not more than 65 or less than 55.) If no age is indicated,
normal retirement age shall be 65.
-or-
2. [] The later of age ______ (not more than 65) or the ______
(not more than 5th) anniversary of the day the Participant
commenced participation in the Plan. The participation
commencement date is the first day of the first Plan Year
in which the Participant commenced participation in the
Plan.
B. Early Retirement (choose 1 or 2)(Plan section 2.10):
1. [] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age 55 (not less than 55) and completes
5 years of service (not more than 15)
-or-
2. [X] Early Retirement will not be permitted under the Plan.
- ------------------------------
VIII. OPTIONAL FEATURES
A. Loans (choose 1 or 2)(Plan ARTICLE 13):
1. [] The Plan permits loans to Participants.
-or-
2. [X] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of noncorporate
entities or to Shareholder-Employees of subchapter S
corporations. If Plan loans are permitted, the Trustee
designated in section XV of this Adoption Agreement may not
be the Sponsor's designated Trustee.]
B. Insurance (choose 1 or 2)(Plan ARTICLE 14):
1. [ The Plan permits Participants to designate a portion of
their Account to purchase life insurance contracts. (MUST
NOT be selected if Sponsor's designated trustee is appointed
as Trustee).
The percentage of the Employer Contributions which may be
applied to purchase life insurance contracts shall be equal
to ___%.
-or-
2. [X] The Plan does not permit Participants to designate a portion
of their Account to purchase life insurance contracts.
NOTE: Section 14.5 of the Plan provides certain limits on the amount
of Employer contributions that can be applied to purchase life
insurance contracts.
27
<PAGE> 32
- ------------------------
IX. VESTING
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability
pursuant to the following schedule (chosen A, B, C or D) Plan section 8.3):
<TABLE>
<CAPTION>
A. [ ] Years of
Service Vested Percentage
-------------------------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
B. [ ] 100% vesting immediately after satisfaction of the eligibility
requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement,
vesting schedule B must be chosen).
C. [ ] 100% vesting after ____ years of service (not to exceed three).
- or -
<TABLE>
<CAPTION>
D. [ ] Years of
Service Vested Percentage
-------------------------
<S> <C>
1 year ___%
2 years ___%(not less than 20)
3 years ___%(not less than 40)
4 years ___%(not less than 60)
5 years ___%(not less than 80)
6 years ___%(not less than 100)
</TABLE>
- ------------------------
X. INVESTMENT CHOICES
A. [X] Investment of Trust assets may be selected only from Shares or
other investments offered by the Sponsor.
B. [ ] ___% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
C. [ ] 50% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
D. [ ] 25% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
The Sponsor may impose additional limitations relating to the
type of permissible investments in the Trust (Plan section 7.3).
28
<PAGE> 33
- ------------------------------
XI. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in accordance
with instructions of the Employer or Plan Administrator except that
(choose [A], [B] or [C])] (Plan section 7.2):
A. [ ] No exceptions; the Employer or Plan Administrator shall make
all investment selections.
B. [ ] The Employer delegates all investment responsibility to the
Trustee. (MUST NOT be selected if Sponsor's designated trustee
is appointed as Trustee.)]
-or-
C. [X] Each Participant [ ] may, [X] shall direct that:
1. [ ] Amounts voluntarily contributed by such Participant
pursuant to section 4.3 of the Plan rollover contributions
pursuant to section 4.4 of the Plan, and direct transfers
pursuant to section 4.5 of the Plan, if any,
-and/or-
2. [X] Employer Contributions on the Participant's behalf shall
be invested in specified investments offered by the
Sponsor. Participants may make or change such directions
by giving written notice to the Plan Administrator.
Reasonable restrictions may be imposed on this privilege
by the Plan Administrator or the Sponsor for purposes of
administrative convenience.
- ------------------------------
XII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation provided
by section 5.2 of the Plan shall receive a minimum contribution under
this Plan equal to 3% of Compensation, or if lesser, the largest
percentage of Compensation allocated on behalf of any Key Employee for
the Plan Year under this Plan and paired defined contribution plan #001.
NOTE: If the Participant also participates in paired defined
contribution plan #001 (the profit sharing plan), the required minimum
contribution must be made under this Plan, even if the integrated plan
combination formula is selected.
- ------------------------------
XIII. ALLOCATION LIMITATIONS
COMPLETED THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #001) IN WHICH ANY PARTICIPANT IN
THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS
SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE
BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL
MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(1)(2) OF THE CODE, UNDER
WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT TO ANY
PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan (choose either 1 or 2)(Plan section 6.3):
1. [ ] The provisions of section 6.2 will apply as if the
other plan were a master or prototype plan.
29
<PAGE> 34
-or-
2. [ ] (On an attachment, provide the method under which the
plans will limit total annual additions to the
permissible amount, and will properly reduce any
excess amounts, in a manner that precludes
Employer discretion).
B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer attach an
explanation of the method under which the plan involved will
satisfy the 1.0 limitation in a manner that precludes Employer
discretion.
- ------------------------------
XIV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose [1], [2], [3]
or [4]) (Plan sections 2.30 and 15.4):
1. [ ] The Trustee
NOTE: If the Trustee designated in section XV of this Adoption
Agreement is the Sponsor's designated Trustee, it may be
appointed as Plan Administrator.
-or-
2. [X] The Employer
-or-
3. [ ] An individual Plan Administrator designated by the
Employer
--------------------------------------------------
Name
--------------------------------------------------
Address
--------------------------------------------------
-or-
4. [ ] A committee of two or more Employees designated by the
Employer:
--------------------------------------------------
Name & Title
--------------------------------------------------
Signature
--------------------------------------------------
Name & Title
--------------------------------------------------
Signature
--------------------------------------------------
Name & Title
--------------------------------------------------
30
<PAGE> 35
[Signature]
NOTE: If no Plan Administrator has been designated or serving at any time,
the Employer will be deemed the Plan Administrator (Plan section 15.4).
B. The Plan Administrator (including all members of a committee, if a
committee is named) is a Named Fiduciary for the Plan. If other persons are
also to be Named Fiduciaries, their names and addresses are:
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
C. The Named Fiduciaries have all of the powers set forth in the Plan. If any
powers or duties are to be allocated among them, or delegated to third
parties, indicate below what the powers or duties are and to whom they are
to be delegated (Plan section 15.3):
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
***************************
XV. THE TRUSTEE
A. The Employer hereby appoints the following to serve as Trustee (Plan
section 2.39):
Name:
------------------------------------
Address:
----------------------------------
----------------------------------------
Dated:
---------------- ----------------------
(Signature of) Trustee
Name:
------------------------------
31
<PAGE> 36
Address:
------------------------------------
-------------------------------------------
Dated:
-------------- ----------------------
(Signature of) Trustee
Name:
--------------------------------------
Address:
-----------------------------------
-------------------------------------------
Dated:
-------------- ----------------------
(Signature of Trustee)
B. The Employer hereby appoints the Sponsor's designated trustee(s) to serve
as Trustee(s):
Name:
-------------------------------------
Address:
------------------------------------
-----------------------------------------
Dated:
--------------- -----------------------
(Signature of Trustee)
Name:
----------------------------------------
Address:
--------------------------------------
--------------------------------------------
Dated:
--------------- ------------------------
(Signature of Trustee)
Name:
----------------------------------------
Address:
--------------------------------------
--------------------------------------------
Dated:
--------------- ------------------------
(Signature of Trustee)
********************************
32
<PAGE> 37
XVI. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial investments
under the Plan and represents that it has delivered a copy thereof to each
Participant in the Plan, and that it will deliver to each Participant
making contributions and each new Participant, a copy of the then current
prospectus of such investment companies. The Employer further represents
that the information in this Adoption Agreement shall become effective
only when approved and countersigned by the Trustee. The right to reject
this Adoption Agreement for any reason is reserved.
This Adoption Agreement must be used only in conjunction with basic plan
document #01.
NOTE: An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for Key Employees, as defined in section 419A(d)(3)
of the Code, or an individual medical account as defined in section
415(l)(2) of the Code), in addition to this Plan (other than paired
plan #001), may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under section 401 of the Internal Revenue Code. If the
Employer who adopts or maintains multiple plans wishes to obtain
reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key District
Director of Internal Revenue.
This Adoption Agreement consists of 17 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption
Agreement to be executed by its duly authorized officers this _
day of ________________.
--------------------------------
(Name of Employer)
By:
--------------------------------
(Name & Title)
Date:
------------------
33
<PAGE> 38
MONEY PURCHASE PENSION AND PROFIT SHARING
PLAN BASIC DOCUMENT
34
<PAGE> 39
AMENDMENT TO THE
INVESTMENT COMPANY INSTITUTE
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN
BASIC DOCUMENT #01
FIRST
The Plan is hereby amended by the word-for-word adoption of the model
language contained in Revenue Procedure 93-12, for distributions made on or
after January 1, 1993, as follows:
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this provision, a
Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee
in a Direct Rollover.
Definitions
(a) Eligible Rollover Distribution. An Eligible Rollover Distribution
is any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint lives
(or joint life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten (10) years or
more; any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(b) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the Code,
an individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution. However, in the case
of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
(c) Distributee. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, are Distributees with regard
to the interest of the spouse or former spouse.
(d) Direct Rollover. A Direct Rollover is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
35
<PAGE> 40
SECOND
The Plan is hereby amended by the word-for-word adoption of the model language
contained in Revenue Procedure 94-13 as follows:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of each
Employee taken into account under the Plan shall not exceed the OBRA '93 Annual
Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as
adjusted by the Commissioner for increases in the cost-of-living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding
12 months, over which Compensation is determine ("Determination Period")
beginning in such calendar year. If a Determination Period consists of fewer
than 12 months, the OBRA '93 Annual Compensation Limit will be multiplied by a
fraction, the numerator of which is the number of months in the Determination
period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA
'93 Annual Compensation Limit set forth in this provision.
If Compensation for any prior Determination Period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior Determination Period is subject to the OBRA '93
Annual Compensation Limit in effect for that prior Determination Period. For
this purpose, for Determination Periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 Annual
Compensation Limit is $150,000.
36
<PAGE> 41
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
PLAN DOCUMENT
37
<PAGE> 42
PROTOTYPE MONEY PURCHASE PENSION
AND PROFIT SHARING PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
ARTICLE 1
GENERAL
<S> <C> <C>
1.1 Purpose ...................................................................... 5
1.2 Trust ........................................................................ 5
ARTICLE 2
DEFINITIONS
2.1 Account ...................................................................... 5
2.2 Adoption Agreement ........................................................... 5
2.3 Affiliated Employers ......................................................... 5
2.4 Beneficiary ................................................................... 5
2.5 Break in Service ............................................................. 5
2.6 Code ......................................................................... 5
2.7 Compensation ................................................................. 5
2.8 Custodian .................................................................... 5
2.9 Determination Date ........................................................... 5
2.10 Early Retirement Date ......................................................... 5
2.11 Earned Income ................................................................ 6
2.12 Effective Date ............................................................... 6
2.13 Eligibility Computation Period ............................................... 6
2.14 Employee ..................................................................... 6
2.15 Employer ..................................................................... 6
2.16 Employer Contributions ....................................................... 6
2.17 Entry Dates .................................................................. 6
2.18 ERISA ........................................................................ 6
2.19 Hour of Service .............................................................. 6
2.20 Integration Level ............................................................ 7
2.21 Key Employee ................................................................. 7
2.22 Leased Employee .............................................................. 7
2.23 Maximum Disparity Rate ....................................................... 8
2.24 Maximum Profit Sharing Disparity Rate ........................................ 8
2.25 Non-Key Employee ............................................................. 8
2.26 Normal Retirement Age ........................................................ 8
2.27 Owner-Employee ............................................................... 8
2.28 Participant .................................................................. 8
2.29 Plan ......................................................................... 8
2.30 Plan Administrator ........................................................... 8
2.31 Plan Year .................................................................... 8
2.32 Self-Employed Individuals .................................................... 8
2.33 Shares ....................................................................... 8
2.34 Sponsor ...................................................................... 9
2.35 Taxable Wage Base ............................................................ 9
2.36 Total and Permanent Disability................................................ 9
2.37 Trust ........................................................................ 9
2.38 Trust Agreement .............................................................. 9
2.39 Trustee ...................................................................... 9
2.40 Valuation Date ............................................................... 9
2.41 Vesting Computation Period ................................................... 9
2.42 Year of Service ............................................................... 9
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility Requirement ...................................................... 9
3.2 Participation and Service Upon Reemployment .................................. 9
3.3 Predecessor Employers ........................................................ 9
ARTICLE 4
CONTRIBUTIONS
4.1 Employer Contributions ....................................................... 9
4.2 Payment ...................................................................... 10
4.3 Nondeductible Voluntary Contributions by Participants......................... 10
4.4 Rollovers..................................................................... 10
</TABLE>
38
<PAGE> 43
<TABLE>
<S> <C> <C>
4.5 Direct Transfers ............................................................ 10
ARTICLE 5
ALLOCATIONS
5.1 Individual Accounts ......................................................... 10
5.2 Minimum Allocation .......................................................... 11
5.3 Allocation of Employer Contributions and Forfeitures ........................ 11
5.4 Coordination of Social Security Integration ................................. 12
5.5 Withdrawals and Distributions ............................................... 12
5.6 Determination of Value of Trust Fund and of Net Earnings or Losses .......... 12
5.7 Allocation of Net Earnings or Losses ........................................ 12
5.8 Responsibilities of the Plan Administrator .................................. 13
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers Who Do Not Maintain Other Qualified Plans ......................... 13
6.2 Employers Who Maintain Other Qualified Master
or Prototype Defined Contribution Plans ..................................... 13
6.3 Employers Who, In Addition to This Plan, Maintain Other Qualified Plans
Which are Defined Contribution Plans Other Than Master or Prototype Plans ... 14
6.4 Employers, Who In Addition To This Plan,
Maintain A Qualified Defined Benefit Plan ................................... 14
6.5 Definitions ................................................................. 14
ARTICLE 7
TRUST FUND
7.1 Receipt of Contributions by Trustee ......................................... 16
7.2 Investment Responsibility ................................................... 16
7.3 Investment Limitations ...................................................... 16
ARTICLE 8
VESTING
8.1 Nondeductible Voluntary Contributions and Earnings .......................... 16
8.2 Rollovers, Transfers and Earnings ........................................... 16
8.3 Employer Contributions and Earnings ......................................... 16
8.4 Amendments to Vesting Schedule .............................................. 17
8.5 Determination of Years of Service ........................................... 17
8.6 Forfeiture of Nonvested Amounts ............................................. 17
8.7 Reinstatement of Benefit..................................................... 18
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General...................................................................... 18
9.2 Qualified Joint and Survivor Annuity ........................................ 18
9.3 Qualified Preretirement Survivor Annuity .................................... 18
9.4 Definitions.................................................................. 18
9.5 Notice Requirements ......................................................... 19
9.6 Safe Harbor Rules ........................................................... 19
9.7 Transitional Rules .......................................................... 20
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting on Distribution Before Break In Service ............................. 21
10.2 Restrictions on Immediate Distributions ..................................... 21
10.3 Commencement of Benefits .................................................... 21
10.4 Early Retirement With Age and Service Requirement ........................... 22
10.5 Nontransferability of Annuities ............................................. 22
10.6 Conflicts With Annuity Contracts ............................................ 22
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General Rules ............................................................... 22
11.2 Required Beginning Date ..................................................... 22
11.3 Limits on Distribution Periods .............................................. 22
11.4 Determination of Amount to be Distributed Each Year ......................... 22
</TABLE>
39
<PAGE> 44
<TABLE>
<S> <C> <C>
11.5 Death Distribution Provisions ............................................... 22
11.6 Designation of Beneficiary ................................................... 23
11.7 Definitions ................................................................. 23
11.8 Transitional Rules .......................................................... 24
11.9 Optional Forms of Benefit ................................................... 25
ARTICLE 12
WITHDRAWALS
12.1 Withdrawal of Nondeductible Voluntary Contributions ......................... 25
12.2 Hardship Withdrawals ........................................................ 25
12.3 Manner of Making Withdrawals ................................................ 25
I2.4 Limitations on Withdrawals .................................................. 26
ARTICLE 13
LOANS
13.1 General Provisions........................................................... 26
13.2 Administration of Loan Program............................................... 26
13.3 Amount of Loan............................................................... 26
13.4 Manner of Making Loans....................................................... 26
13.5 Terms of Loan................................................................ 27
13.6 Security for Loan............................................................ 27
13.7 Segregated Investment........................................................ 27
13.8 Repayment of Loan............................................................ 27
13.9 Default on Loan.............................................................. 27
13.10 Unpaid Amounts............................................................... 27
ARTICLE 14
INSURANCE
14.1 Insurance ................................................................... 27
14.2 Policies .................................................................... 27
14.3 Beneficiary ................................................................. 27
14.4 Payment of Premiums ......................................................... 28
14.5 Limitation on Insurance Premiums ............................................ 28
14.6 Insurance Company ........................................................... 28
14.7 Distribution of Policies .................................................... 28
14.8 Policy Features ............................................................. 29
14.9 Changed Conditions .......................................................... 29
14.10 Conflicts ................................................................... 29
ARTICLE 15
ADMINISTRATION
15.1 Duties and Responsibilities of Fiduciaries;
Allocation of Fiduciary Responsibility ...................................... 29
15.2 Powers and Responsibilities of the Plan Administrator ....................... 29
15.3 Allocation of Duties and Responsibilities ................................... 30
15.4 Appointment of the Plan Administrator ....................................... 30
15.5 Expenses .................................................................... 30
15.6 Liabilities ................................................................. 30
15.7 Claims Procedure ............................................................ 30
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's Power to Amend..................................................... 31
16.2 Amendment by Adopting Employer...............................................
16.3 Vesting Upon Plan Termination................................................ 31
16.4 Vesting Upon Complete Discontinuance of Contributions........................ 31
16.5 Maintenance of Benefits Upon Merger.......................................... 31
16.6 Special Amendments........................................................... 31
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive Benefit of Participants and Beneficiaries ......................... 31
17.2 Nonguarantee of Employment................................................... 32
17.3 Rights to Trust Assets....................................................... 32
17.4 Nonalienation of Benefits.................................................... 32
17.5 Aggregation Rules............................................................ 32
17.6 Failure of Qualification..................................................... 32
17.7 Applicable Law............................................................... 32
</TABLE>
40
<PAGE> 45
ARTICLE 1
GENERAL
1.1 PURPOSE. The Employer hereby establishes this Plan to provide
retirement, death and disability benefits for eligible employees and their
Beneficiaries. This Plan is a standardized prototype paired defined contribution
plan and is designed to permit adoption of profit sharing provisions, money
purchase pension provisions, or both. The provisions herein and the selections
made by the Employer by execution of the money purchase pension or profit
sharing Adoption Agreement or Agreements, shall constitute the Plan. It is
intended that the Plan and Trust qualify under sections 401 and 501 of the
Internal Revenue Code of 1986, as amended and with the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
1.2 TRUST. The Employer has simultaneously adopted a Trust authorizing a
Trustee to receive, invest, and distribute funds in accordance with the Plan.
ARTICLE 2
DEFINITIONS
2.1 ACCOUNT. The aggregate of the individual bookkeeping subaccounts
established for each Participant, as provided in section 5.1.
2.2 ADOPTION AGREEMENT. The written agreement or agreements of the
Employer and the Trustee by which the Employer establishes this Plan and adopts
the Trust Agreement forming a part hereof, as the same may be amended from
time to time. The Adoption Agreement contains all the options that may be
selected by the Employer. The information set forth in the Adoption Agreement
executed by the Employer shall be deemed to be a part of this Plan as if set
forth in full herein.
2.3 AFFILIATED EMPLOYERS. The Employer and any corporation which is a
member of a controlled group of corporations (as defined in section 414(b) of
the Code) which includes the Employer, any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of the
Code) with the Employer, or any service organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
sections 414(m) and (o) of the Code) which includes the Employer.
2.4 BENEFICIARY. The person or persons (natural or otherwise) designated
by a Participant in accordance with section 11.6 to receive any undistributed
amounts credited to the Participant's Account under the Plan at the time of the
Participant's death.
2.5 BREAK IN SERVICE. An Eligibility Computation Period or Vesting
Computation Period in which an Employee fails to complete more than five hundred
(500) Hours of Service.
2.6 CODE. The Internal Revenue Code of 1986, as amended from time to time,
or any successor statute.
2.7 COMPENSATION.
(a) Compensation will mean all of each Participant's W-2 earnings.
For purposes of determining allocations under Section 5.3, only
Compensation while the Employee is a Participant shall be
converted.
(b) For any self-employed individual covered under the Plan,
Compensation will mean Earned Income.
(c) Compensation shall include only that Compensation that is
actually paid to the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer in the
Adoption Agreement, Compensation shall include any amount which is contributed
by the Employer pursuant to a salary reduction agreement and which is not
includable in the gross income of the Employee under sections 125, 402(e)(3),
402(h) or 403(b) of the Code. The effective date of this subsection shall be
elected by the Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed one hundred fifty thousand dollars
($150,000), as adjusted by the Secretary at the same time and in the same manner
as under section 415(d) of the Code. In determining the Compensation of a
Participant for purposes of this limitation, the rules of section 414(q)(6) of
the Code shall apply, except in applying such rules, the term "family" shall
include only the Spouse of the Participant and any lineal descendants of the
Participant who have not attained age nineteen (19) before the close of the
year. If, as a result of the application of such rules, the limitation is
exceeded, then (except for purposes of determining the portion of Compensation
up to the Integration Level to the extent this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under this
section prior to the application of this limitation. The effective date of this
subsection shall be the first Plan Year beginning on or after January 1, 1989.
2.8 CUSTODIAN. The custodian, if any, designated in the Adoption
Agreement.
2.9 DETERMINATION DATE. With respect to any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that Plan Year.
2.10 EARLY RETIREMENT DATE. The first day of the month coincident with or
next following the date upon which the Participant satisfies the early
retirement age and service requirements in the Adoption Agreement; provided,
however, such requirements may not be less than age fifty-five (55), nor more
than fifteen (15) Years of Service.
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2.11 EARNED INCOME. The net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which personal
services of the individual are a material income-producing factor. Net earnings
will be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions to
a qualified plan to the extent deductible under section 404 of the Code. Net
earnings shall be determined with regard to the deduction allowed to the
Employer by section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.12 EFFECTIVE DATE. The first day of the first Plan Year for which the
Plan is effective as specified in the Adoption Agreement.
2.13 ELIGIBILITY COMPUTATION PERIOD. For purposes of determining Years of
Service and Breaks in Service for eligibility to participate, the initial
Eligibility Computation Period shall be the twelve (12) consecutive month period
beginning with the day the Employee first performs an Hour of Service for the
Employer (employment commencement date). The succeeding twelve (12) consecutive
month periods commence with the first and each following anniversary of the
Employee's employment commencement date.
2.14 EMPLOYEE. Any person, including a Self-Employed Individual, who is
employed by the Employer maintaining the Plan or any other employer required to
be aggregated with such Employer under sections 414(b),(c),(m) or (o) of the
Code. The term "Employee" shall also include any Leased Employee deemed to be an
Employee of any Employer described above as provided in sections 414(n) or (o)
of the Code.
2.15 EMPLOYER. The corporation, proprietorship, partnership or other
organization that adopts the Plan by execution of an Adoption Agreement.
2.16 EMPLOYER CONTRIBUTIONS. The contribution of the Employer to the Plan
and Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 ENTRY DATES. The Effective Date shall be the first Entry Date.
Thereafter, the Entry Dates shall be the first day of each Plan Year and the
first day of the seventh month of each Plan Year.
2.18 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
2.19 HOUR OF SERVICE.
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be credited to
the Employee only for the computation period or periods in which the duties are
performed; and
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability), layoff,
jury duty, military duty, or leave of absence. No more than five hundred one
(501) Hours of Service shall be credited under this paragraph to an Employee on
account of any single, continuous period during which the Employee performs no
duties (whether or not such period occurs in a single computation period). Hours
under this paragraph will be calculated and credited pursuant to section
2530.200b-2 of the Department of Labor regulations which are incorporated herein
by this reference.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c). These hours shall be credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement, or payment is made.
(d) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include an uncompensated authorized
leave of absence not in excess of two (2) years, or military leave while the
Employee's reemployment rights are protected by law or such additional or other
periods as granted by the Employer as military leave (credited on the basis of
forty (40) Hours of Service per each week or eight (8) Hours of Service per
working day), provided the Employee returns to employment at the end of his
leave of absence or within ninety (90) days of the end of his military leave,
whichever is applicable.
(e) Hours of Service will be credited for employment with other
members of an affiliated service group (under section 414(m)), a controlled
group of corporations (under section 414(b)), or a group of trades or businesses
under common control (under section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to section 414(o) and the regulations thereunder. Hours of Service will
also be credited for any individual considered an Employee for purposes of this
Plan under section 414(n) or section 414(o) and the regulations thereunder.
(f) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include absence from work for maternity
or paternity reasons, if the absence begins on or after the first day of the
first Plan Year beginning after 1984. During this absence, the Employee shall be
credited with the Hours of Service which would have been credited but for the
absence, or, if such hours cannot be determined with eight (8) hours per day.
An absence from work for maternity or paternity reasons means an absence:
(i) by reason of the pregnancy of an Employee;
(ii) by reason of the birth of a child of the Employee;
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<PAGE> 47
(iii) by reason of the placement of a child with
the Employee in connection with adoption; or
(iv) for purposes of caring for such a child for a
period immediately following such birth or placement.
These Hours of Service shall be credited in the computation period following
the computation period in which the absence begins, except as necessary to
prevent a Break in Service in the computation period in which the absence
begins. However, no more than five hundred one (501) Hours of Service will be
credited for purposes of any such maternity or paternity absence from work.
(g) The Employer may elect to compute Hours of Service by
the use of one of the service equivalencies in the Adoption Agreement. Only one
method may be selected. If selected, the service equivalency must be applied to
all Employees covered under the Plan.
(h) If the Employer amends the method of crediting
service from the elapsed time method described in section 1.410 (a)-7 of the
Treasury regulations to the Hours of Service computation method by the adoption
of this Plan, or an Employee transfers from a plan under which service is
determined on the basis of elapsed time, the following rules shall apply for
purposes of determining the Employee's service under this Plan up to the time
of amendment or transfer:
(i) the Employee shall receive credit, as of the
date of amendment or transfer, for a number of Years of Service equal to the
number of one (1) year periods of service credited to the Employee as of the
date of the amendment or transfer; and
(ii) the Employee shall receive credit in the
applicable computation period which includes the date of amendment or transfer,
for a number of Hours of Service determined by applying the weekly service
equivalency specified in paragraph (g) to any fractional part of a year
credited to the Employee under this paragraph (h) as of the date of amendment
or transfer. The use of the weekly service equivalency shall apply to all
Employees who formerly were credited with service under the elapsed time
method.
2.20 INTEGRATION LEVEL. The Taxable Wage Base or such lesser amount
elected by the Employer in the Adoption Agreement.
2.21 KEY EMPLOYEE.
(a) Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an officer of the Employer if such individual's annual Compensation exceeds
fifty percent (50%) of the dollar limitation under section 415(b)(1)(A) of the
Code; an owner (or considered an owner under section 318 of the Code) of one of
the ten (10) largest interests in the Employer if such individual's
Compensation exceeds one hundred percent (100%) of the dollar limitation under
section 415(c)(1)(A) of the Code; a Five Percent (5%) Owner of the Employer; or
a one percent (1%) owner of the Employer who has annual Compensation of more
than one hundred fifty thousand dollars ($150,000).
(b) For purposes of this section, annual Compensation
means compensation as defined in section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary reduction agreement
which are excludable from the Employee's gross income under sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
(c) For purposes of this section, determination period is
the Plan Year containing the Determination Date and the four (4) preceding Plan
Years.
2.22 LEASED EMPLOYEE.
(a) Any person (other than an Employee of any of the
Affiliated Employers) who, pursuant to an agreement between any of the
Affiliated Employers and any other person ("leasing organization"), has
performed service for any of the Affiliated Employers (or for any of the
Affiliated Employers and related persons determined in accordance with section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one (1) year and such services are of a type historically performed by
employees in the Affiliated Employer's business field. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable
to services performed for the Affiliated Employer shall be treated as provided
by the Affiliated Employer.
(b) A Leased Employee shall not be considered an Employee
of an Affiliated Employer if:
(i) such employee is covered by a money purchase
pension plan providing:
(1) a nonintegrated employer
contribution rate of at least ten percent (10%) of compensation (as defined in
section 415(c)(3) of the Code), but including amounts contributed pursuant to a
salary reduction agreement which are excludable from the employee's gross
income under sections 125, 402(a)(8), 402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employee's do not constitute more than
twenty percent (20%) of the Affiliated
Employees non-Highly-Compensated workforce.
(c) The determination of whether a person is a
Leased Employee will be made pursuant to
section 414(n) of the Code.
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<PAGE> 48
2.23 MAXIMUM DISPARITY RATE. The lesser of.
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance
with the table below:
if the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
- --------- ----------------- --------------
<S> <C> <C>
$0 X * 5.7%
X of TWB 80% Of TWB 4.3%
80% of TWB Y ** 5.4%
</TABLE>
* X = the greater of $10,000 or 20% of the Taxable Wage Base.
** Y = any amount more then 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is five and seven-tenths percent (5.7%).
2.24 MAXIMUM PROFIT SHARING DISPARITY RATE. The lesser of:
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance
with the table below:
If the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More than Percentage Is:
- --------- ----------------- --------------
<S> <C> <C>
$0 X * 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y ** 2.4%
</TABLE>
* X = the greater of $10,000 or 20% of the Taxable Wage Base.
** Y = any amount more than 80% of the Taxable Wage Base but less than
100 of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is two and seven-tenths percent (2.7%).
2.25 NON-KEY EMPLOYEE. Any Employee or former Employee who is not a
Key Employee. In addition, any Beneficiary of a Non-Key Employee shall be
treated as a Non-Key Employee.
2.26 NORMAL RETIREMENT AGE. The age selected in the Adoption
Agreement, but not less than age fifty-five (55). If the Employer enforces a
mandatory retirement age, the Normal Retirement Age is the lesser of that
mandatory age or the age specified in the Adoption Agreement.
2.27 OWNER-EMPLOYEE. An individual who is a sole proprietor, or who
is a partner owning more than ten percent (10%) of either the capital or
profits interest of a partnership.
2.28 PARTICIPANT. A person who has met the eligibility requirements
of section 3.1 and whose Account hereunder has been neither completely
forfeited nor completely distributed.
2.29 PLAN. The prototype paired defined contribution profit sharing
and money purchase pension plan provided under this basic plan document.
References to the Plan shall refer to the profit sharing provisions, the money
purchase pension provisions, or both, as the context may require.
2.30 PLAN ADMINISTRATOR. The person, persons or entity appointed by
the Employer pursuant to ARTICLE 15 to manage and administer the Plan.
2.31 PLAN YEAR. The twelve (12) consecutive month period designated
by the Employer in the Adoption Agreement.
2.32 SELF-EMPLOYED INDIVIDUAL. An individual who has Earned Income
for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income for the taxable
year but for the fact that the trade or business had no net profits for the
taxable year.
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<PAGE> 49
2.33 SHARES. Shares of stock in any regulated investment company
registered under the Investment Company Act of 1940 that are made available for
investment purposes as an investment option under this Plan.
2.34 SPONSOR. The sponsor designated in the Adoption Agreement
which has made this Plan available to the Employer.
2.35 TAXABLE WAGE BASE. The maximum amount of earnings which may be
considered wages for a year under section 3121(a)(1) of the Code in effect as
of the beginning of the Plan Year.
2.36 TOTAL AND PERMANENT DISABILITY. The inability of the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, which condition, in the
opinion of a physician chosen by the Plan Administrator, can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months.
2.37 TRUST. The fund maintained by the Trustee for the investment
of Plan assets in accordance with the terms and conditions of the Trust
Agreement.
2.38 TRUST AGREEMENT. The agreement between the Employer and the
Trustee under which the assets of the Plan are held, administered, and managed.
The provisions of the Trust Agreement shall be considered an integral part of
this Plan as if set forth fully herein.
2.39 TRUSTEE. The individual or corporate Trustee or Trustees
under the Trust Agreement as they may be constituted from time to time.
2.40 VALUATION DATE. The last day of each Plan Year and such other
dates as may be determined by the Plan Administrator, as provided in section
5.6 for valuing the Trust assets.
2.41 VESTING COMPUTATION PERIOD. The Plan Year.
2.42 YEAR OF SERVICE. An Eligible Computation Period, Vesting
Computation Period, or Plan Year, whichever is applicable, during which an
Employee has completed at least one thousand (1,000) Hours of Service (whether
or not continuous). The Employer may, in the Adoption Agreement, specify a
fewer number of hours.
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 ELIGIBILITY REQUIREMENTS.
(a) Each Employee of the Affiliated Employers shall
become a Participant in the Plan as of the first Entry Date after the date on
which the Employee has satisfied the minimum age and service requirements
specified in the Adoption Agreement.
(b) The Employer may elect in the Adoption Agreement to
exclude from participation:
(i) Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee representatives" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer; and
(ii) nonresident aliens who receive no earned
income from the Employer which constitutes income from sources within the
United States.
3.2 PARTICIPATION AND SERVICE UPON REEMPLOYMENT. Upon the
reemployment of any Employee, the following rules shall determine his
eligibility to participate in the Plan and his credit for prior service.
(a) Participation. If the reemployed Employee was a
Participant in the Plan during his prior period of employment, he shall be
eligible upon reemployment to resume participation in the Plan. If the
reemployed Employee was not a Participant in the Plan, he shall be considered a
new Employee and required to meet the requirements of section 3.1 in order to
be eligible to participate in the Plan, subject to the reinstatement of credit
for prior service under paragraph (b) below.
(b) Credit for Prior Service. In the case of any Employee
who is reemployed before or after incurring a Break in Service, any Hour of
Service and Year of Service credited to the Employee at the and of his prior
period of employment shall be reinstated as of the date of his reemployment.
3.3 PREDECESSOR EMPLOYERS. If specified in the Adoption Agreement,
Years of Service with a predecessor employer will be treated as service for the
Employer for eligibility purposes; provided, however, If the Employer maintains
the plan of a predecessor employer, Years of Service with such employer will be
treated as service with the Employer without regard to any election.
ARTICLE 4
CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS.
(a) Money Purchase Pension Contributions. For each Plan
Year, the Employer shall contribute to the Trust an amount equal to such
uniform percentage of Compensation of each eligible Participant as may be
determined by the Employer in accordance with the money purchase pension
contribution formula specified in the Adoption Agreement. Subject to the
limitations of section 5.4, the money purchase pension contribution formula may
be integrated with Social Security, as set forth in the Adoption Agreement.
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<PAGE> 50
(b) Profit Sharing Contribution. For each Plan Year, the
Employer shall contribute to the Trust an amount as may be determined by the
Employer in accordance with the profit sharing formula set forth in the
Adoption Agreement.
(c) Eligible Participants. Subject to the Minimum
Allocation rules of section 5.2 and the exclusions specified in this section,
each Participant shall be eligible to share in the Employer Contribution. An
Employer may elect in the Adoption Agreement that Participants who terminate
employment during the Plan Year with not more than five hundred (500) Hours of
Service and who are not Employees as of the last day of the Plan Year (other
than Participants who die, retire or become totally and Permanently Disabled
during the Plan Year) shall not be eligible to share in the Employer
Contribution. An Employer may further elect in the Adoption Agreement to
allocate a contribution on behalf of a Participant who completes fewer than
five hundred (500) Hours of Service and is otherwise ineligible to share in the
Employer Contribution. If the Employer fails to specify in the Adoption
Agreement the number of Hours of Service required to share in the Employer
Contribution, the number shall be five hundred (500) Hours of Service.
(d) Contribution Limitation. In no event shall any
Employer Contribution exceed the maximum amount deductible from the Employer's
income under section 404 of the Code, or the maximum limitations under section
415 of the Code provided in ARTICLE 6.
4.2 PAYMENT. All Employer Contributions to the Trust for any Plan
Year shall be made either in one lump-sum or in installments in U.S. currency,
by check, or in Shares within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the Employer's federal
income tax return for the taxable year with or within which such Plan Year
ends. All Employer Contributions to the Trust for a money purchase pension plan
for any Plan Year shall be made within the time prescribed by regulations under
section 412(c)(10) of the Code.
4.3 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS.
(a) This Plan will not accept nondeductible Employee
contributions for Plan Years beginning after the Plan Year in which this Plan
is adopted by the Employer. Employee contributions made with respect to Plan
years beginning after December 31, 1986 will be limited so as to meet the
nondiscrimination test of section 401(m).
(b) A separate account shall be maintained by the Trustee
for the nondeductible Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be
fully vested and nonforfeitable at all times.
(d) The provisions of this section shall apply to
Employee contributions made prior to the first Plan Year after the Plan Year in
which the Employer adopts this Plan.
4.4 ROLLOVERS.
(a) Subject to the approval of the Plan Administrator, a
participant who has participated in any other qualified plan described in
section 401(a) of the Code or in a qualified annuity plan described in section
403(a) of the Code shall be permitted to make a rollover contribution in the
form of cash to the Trustee of an amount received by the Participant that is
attributable to participation in such other plan (reduced by any nondeductible
voluntary contributions he made to the plan). provided that the rollover
contribution complies with all requirements of sections 402(c) or 403(a)(4) of
the Code, whichever is applicable.
(b) Before approving such a Participant rollover, the
Plan Administrator may request from the Participant or the Employer any
documents which the Plan Administrator, in its discretion, deems necessary for
such rollover.
(c) Any rollover contribution to the Trust shall be
credited to the Participants rollover subaccount established under section 5.1
and separately accounted for.
4.5 DIRECT TRANSFER.
(a) The Plan shall accept a transfer of assets directly
from another plan qualified under sections 401(a) or 403(a) of the Code only if
the Plan Administrator, in its sole discretion, agrees to accept such a
transfer. In determining whether to accept such a transfer the Plan
Administrator shall consider the administrative inconvenience engendered by
such a transfer and any risks to the continued qualification of the Plan under
section 401(a) of the Code. Acceptance of any such transfer shall not preclude
the Plan Administrator from refusing any subsequent such transfers.
(b) Any transfer of assets accepted under this section
shall be credited to the Participant's direct transfer subaccount and shall be
separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such transfer)
to the extent required by section 411(d)(6) of the Code (including, but not
limited to, any rights to Qualified Joint and Survivor Annuities and qualified
preretirement survivor annuities) as if such provisions were pan of the Plan.
In all other respects, however, such transferred assets will be subject to the
provisions of the Plan.
(c) Assets accepted under this section shall be fully
vested and nonforfeitable.
(d) Before approving such a direct transfer, the Plan
Administrator may request from the Participant or the Employer (or the prior
employer) any documents the Plan Administrator, in its discretion, deems
necessary for such direct transfer.
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<PAGE> 51
ARTICLE 5
ALLOCATIONS
5.1 INDIVIDUAL ACCOUNTS. The Plan Administrator shall establish
and maintain an Account in the name of each Participant. The Account shall
contain the following subaccounts:
(a) A money purchase pension contribution subaccount to
which shall be credited each such Participant's share of (i) Employer
Contributions under section 4.1 (a); (ii) the net comings or net losses on the
investment of the assets of the Trust; (iii) distributions; and (iv) dividends,
capital gain distributions and other earnings received on any Shares credited
to the Participant's subaccount;
(b) A profit sharing contribution subaccount to which
shall be credited each such Participant's share of (i) Employer Contributions
under section 4.1 (b); (ii) forfeitures; (iii) the net earnings or net losses
on the investment of the assets of the mat; (iv) distributions; and (v)
dividends, capital gain distributions and other earnings received on any
Shares credited to the Participant's subaccount;
(c) A nondeductible voluntary contribution subaccount to
which shall be credited (i) nondeductible voluntary contributions by the
Participant under section 4.3; (ii) the net earnings or net losses on the
investment of the assets of the Trust; (iii) distributions; and (iv) dividends,
capital gain distributions and other earnings received on any Shares credited
to the Participant's subaccount;
(d) A direct transfer subaccount to which shall be
credited (i) contributions to the Trust accepted under section 4.5(a); (ii) the
not earnings or net losses on the investment of the assets of the Trust; (iii)
distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount;
(e) A rollover subaccount to which shall be credited (i)
contributions to the Trust accepted under section 4.4(a); (ii) the net earnings
or net losses on the investment of the assets of the Trust; (iii)
distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount.
5.2 MINIMUM ALLOCATION.
(a) Except as otherwise provided in this section, the
Employer Contributions and forfeitures allocated on behalf of any Participant
who is not a Key Employee shall not be less than the lesser of three percent
(3%) of such Participant's Compensation or in the case where the Employer has
no defined benefit plan which designates this Plan to satisfy section 401 of
the Code, the largest percentage of Employer Contributions and forfeitures, as
a percentage of the first one hundred and fifty thousand dollars ($150,000) of
the Key Employee's Compensation, allocated on behalf of any Key Employee for
that year. The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even though, under
other Plan provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because of (i) the Participant's failure to complete one thousand (1,000) Hours
of Service (or any equivalent provided in the Plan); or (ii) the Participant's
failure to make mandatory Employee contributions to the Plan; or (iii)
Compensation less than a stated amount. For purposes of this subsection, all
defined contribution plans required to be included in an aggregation group
under section 416(g)(2)(A)(i) shall be treated as a single plan.
(b) For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in section 6.5(b) of the Plan.
(c) The provision in subsection (a) above shall not apply
to any Participant who was not employed by the Employer on the last day of the
Plan Year.
(d) The provision in subsection (a) above shall not apply
to any Participant to the extent the Participant is covered under any other
plan or plans of the Employer and the Employer has provided in the Adoption
Agreement that the minimum allocation or benefit requirement applicable to
top-heavy plans will be met in the other plan or plans.
(e) The minimum allocation required (to the extent
required to be nonforfeitable under section 416(b)) may not be forfeited under
section 411 (a)(3)(B) or 411(a)(3)(D).
5.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES.
(a) All money purchase pension contributions for a given
Plan Year shall be allocated to the Account of the Participant for whom such
contribution was made. Any forfeiture from a Participant's money purchase
pension contribution subaccount arising under the Plan for a given Plan Year
shall be applied as specified In the Adoption Agreement, either (i) to reduce
the Employer Contribution in that year, or if in excess of the Employer
Contribution for such Plan Year, the excess amounts shall be used to reduce the
Employer Contribution in the next succeeding Plan Year or Years or (ii) to be
added to the Employer Contributions and allocated accordingly.
(b) All profit sharing contributions and forfeitures from
a Participant's profit sharing contribution subaccount will be allocated to the
Account of each Participant in the ratio that such Participant's Compensation
bears to the Compensation of all Participants. However, if the profit sharing
contribution formula selected in the Adoption Agreement is integrated with
Social Security, profit sharing contributions for the Plan Year plus any
forfeitures will be allocated to Participants' Accounts as follows:
(i) Step One. Contributions and forfeitures will
be allocated to each Participant's Account in the ratio that each Participant's
total Compensation bears to all Participants' total Compensation, but not in
excess of three percent (3%) of each Participant's Compensation. (Step One is
not applicable if the Employer enters into the money purchase pension Adoption
Agreement).
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<PAGE> 52
(ii) Step Two. Any contributions and forfeitures
remaining after the allocation in Step One (if any) will be allocated to each
Participant's Account in the ratio that each Participant's Compensation for the
Plan Year in excess of the Integration Level bears to the excess Compensation
of all Participants, but not in excess of three percent (3%). (Step Two is not
applicable if the Employer enters into the money purchase pension Adoption
Agreement).
(iii) Step Three. Any contributions and
forfeitures remaining after the allocation in Step Two (if any) will be
allocated to each Participant's Account in the ratio that the sum of each
Participant's total Compensation and Compensation in excess of the Integration
Level bears to the sum of all Participants' total Compensation and Compensation
in excess of the Integration Level, but not in excess of whichever of the
following is applicable:
(1) if the Employer has not adopted the money
purchase pension Adoption Agreement, then the Maximum Profit Sharing Disparity
Rate; or
(2) If the Employer has adopted the money
purchase pension Adoption Agreement, then the lesser of:
(A) the percentage of each Participant's
Compensation for the Plan Year up to the Integration Level determined by
dividing the allocation by such Compensation (the base contribution
percentage); or
(B) the Maximum Disparity Rate.
(iv) Step Four. Any remaining contributions or
forfeitures will be allocated to each Participant's Account in the ratio that
each Participant's total Compensation for the Plan Year bears to all
Participants' total Compensation for that year.
(c) Notwithstanding anything in (a) or (b) above to the
contrary, forfeitures arising under a Participant's money purchase pension
contribution subaccount will only be used to reduce the contributions of the
Participant's Employer who adopted this Plan, and forfeitures arising under a
Participant's profit sharing contribution subaccount will be reallocated only
for the benefit of Employees of the Participant's Employer who adopted this
Plan.
5.4 COORDINATION OF SOCIAL SECURITY INTEGRATION. If the Employer
maintains plans involving integration with Social Security other than this
Plan, and if any Participant is eligible to participate in more than one of
such plans, all such plans will be considered to be integrated if the extent of
the integration of all such plans does not exceed one hundred percent (100%).
For purposes of the preceding sentence, the extent of integration of a plan is
the ratio (expressed as a percentage) which the actual benefits, benefit rate,
offset rate, or Employer Contribution rate under the plan bears to the
integration limitation applicable to such plan. If the Employer enters into
both the money purchase pension Adoption Agreement and the profit sharing
Adoption Agreement under this Plan, integration with Social Security may only
be selected in one Adoption. Agreement.
5.5 WITHDRAWALS AND DISTRIBUTIONS. Any distribution to a
Participant or his Beneficiary, any amount transferred from a Participant's
Account directly to the Trustee of any other qualified plan described in
section 401(a) of the Code or to a qualified annuity plan described in section
403(a) of the Code, or any withdrawal by a Participant shall be charged to the
appropriate subaccount(s) of the Participant as of the date of the distribution
or the withdrawal.
5.6 DETERMINATION OF VALUE OF TRUST FUND AND OF NET EARNINGS OR
LOSSES. As of each Valuation Date the Trustee shall determine for the period
then ended the sum of the net earnings or losses of the Trust (excluding with
respect to Shares and other assets specifically allocated to a specific
Participant's subaccount, (i) dividends and capital gain distributions from
Shares, (ii) receipts or income attributable to insurance policies, (iii)
income gains and/or losses attributable to a Participant's loans made pursuant
to ARTICLE 13 or to any other Assets) which shall reflect accrued but unpaid
interest, dividends, gains, or losses realized from the sale, exchange or
collection of assets, other income received, appreciation in the fair market
value of assets, depreciation in the fair market value of assets,
administration expenses, and taxes and other expenses paid. Gains or losses
realized and adjustments for appreciation or depreciation in fair market value
shall be computed with respect to the difference between such value as of the
preceding Valuation Date or date of purchase, whichever is applicable, and the
value as of the date of disposition or the current Valuation Date, whichever is
applicable.
5.7 ALLOCATION OF NET EARNINGS OR LOSSES.
(a) As of each Valuation Date the net earnings or losses
of the Trust (excluding with respect to Shares and other assets specifically
allocated to a specific Participant's subaccount, (i) dividends and capital
gain distributions from Shares, (ii) dividends or credits attributable to
insurance policies, (iii) income gains and/or losses attributable to a
Participant's loans made pursuant to ARTICLE 13 or to any other assets, all of
which shall be allocated to such Participant's subaccount) for the valuation
period then ending shall be allocated to the Accounts of all Participants (or
Beneficiaries) having credits in the fund both on such date and at the
beginning of such valuation period. Such allocation shall be made by the
application of a fraction, the numerator of which is the value of the Account
of a specific Participant (or Beneficiary) as of the immediately preceding
Valuation Date, reduced by any distributions therefrom since such preceding
Valuation Date, and the denominator of which is the total value of all such
Accounts as of the preceding Valuation Date, reduced by any distributions
therefrom since such preceding Valuation Date.
(b) To the extent that Shares and other assets are
specifically allocated to a specific Participant's subaccount: (i) dividends
and capital gain distributions from Shares; (ii) dividends or credits
attributable to insurance policies; and (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to any
other assets, all shall be allocated to such Participant's subaccount.
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5.8 RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. The Plan
Administrator shall maintain accurate records with respect to the contributions
made by or on behalf of Participants under the Plan, and shall furnish the
Trustee with written instructions directing the Trustee to allocate all Plan
contributions to the Trust among the separate Accounts of Participants in
accordance with section 5.1 above, In making any such allocation, the Trustee
shall be fully entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or investigation
with respect there to.
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 EMPLOYERS WHO DO NOT MAINTAIN OTHER QUALIFIED PLANS.
(a) If the Participant does not participate in, and has
never participated in another qualified plan or a welfare benefit fund, as
defined in section 419(e) of the Code, maintained by the Employer, or an
individual medical account, as defined in section. 415(1)(2) of the Code,
maintained by the Employer, which provides in Annual Addition as defined in
section 6.5(a), the amount of Annual Additions that may be credited to the
Participant's Account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer Contribution that would otherwise be contributed or allocated to
the Participant's Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year, uniformly determined
for all Participants similarly situated.
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the
allocation of forfeitures, there is an Excess Amount the excess will be
disposed of as follows:
(i) Any nondeductible voluntary Employee
contributions, to the extent they would reduce the Excess Amount, will be
returned to the Participant;
(ii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is covered by the Plan at the
and of the Limitation Year, the Excess Amount in the Participant's Account will
be used to reduce Employer Contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii) if after the application of paragraph (i) an
Excess Amount still exists, and the Participant is not covered by the Plan at
the end of the Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce future
Employer Contributions (including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(iv) if a suspense account is in existence at any
time during the Limitation Year pursuant to this section, it will not
participate in the allocation of the Trust's investment gains and losses. If a
suspense account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated and reallocated to
Participants' Accounts before any Employer or any Employee contributions may be
made to the Plan for that Limitation Year. Excess accounts may not be
distributed to Participants or former Participants.
6.2 EMPLOYERS WHO MAINTAIN OTHER QUALIFIED MASTER OR PROTOTYPE
DEFINED CONTRIBUTION PLANS.
(a) This section applies if, in addition to this Plan,
the Participant is covered under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare benefit fund, as
defined in section 419(e) of the Code maintained by the Employer or an
individual medical account, a defined in section 415(1)(2) of the Code,
maintained by the Employer which provides an Annual Addition as defined in
section 6.5(a), during any Limitation Year. The Annual Additions that may be
credited to a Participant's Account under this Plan for any such Limitation
Year will not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant's Account under the other plans and welfare
benefit funds for the same Limitation Year. If the Annual Additions with
respect to the Participant under other defined contribution plans and welfare
benefit funds maintained by the Employer are less than the Maximum Permissible
Amount and the Employer Contribution that would otherwise be contributed or
allocated to the Participant's Account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual Additions under all
such plans and funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under such
other defined contribution plans and welfare benefit funds in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under this Plan for the
Limitation Year.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described in section 6.1
(b).
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
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(d) If, pursuant to section 6.2(c), or as a result of the
allocation of forfeitures, a Participants Annual Additions under this Plan and
such other plans would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions last allocated,
except that Annual Additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on
an allocation date of this Plan which coincides with an allocation date of
another plan, the Excess Amount attributed to this Plan will be the product of
(i) the total Excess Amount allocated as of such
date, times
(ii) the ratio of (1) the Annual Additions
allocated to the Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified master
or prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in section 6.1 (d).
6.3 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN OTHER
QUALIFIED PLANS WHICH ARE DEFINED CONTRIBUTION PLANS OTHER THAN MASTER OR
PROTOTYPE PLANS. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Master or Prototype
Plan, Annual Additions which may be credited to the Participant's Account under
this Plan for any Limitation Year will be limited in accordance with section
6.2 as though the other plan were a Master or Prototype Plan unless the
Employer provides other limitations in the Adoption Agreement.
6.4 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN A QUALIFIED
DEFINED BENEFIT PLAN. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum
of the Participant's Defined Benefit Fraction and Defined Contribution Fraction
will not exceed 1.0 in any Limitation Year. The Annual Additions which may be
credited to the Participant's Account under this Plan for any Limitation Year
will be limited in accordance with the Adoption Agreement.
6.5 DEFINITIONS. Unless otherwise expressly provided herein, for
purposes of this ARTICLE only, the following definitions and rules of
interpretation shall apply:
(a) Annual Additions. The sum of the following amounts
credited to a Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an
individual medical account; as defined in section 415(l)(2) of the Code, which
is part of a pension or annuity plan maintained by the Employer, are treated as
Annual Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee, as defined in section
419A(d)(3) of the Code, under a welfare benefit fund, as defined in section
419(e) of the Code, maintained by the Employer, are treated as Annual Additions
to a defined contribution plan.
For this purpose, any Excess Amount applied under sections 6.1 (d) or 6.2(f) in
the Limitation Year to reduce Employer Contributions will be considered Annual
Additions for such Limitation Year.
(b) Compensation. A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(i) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for the
taxable year in which contributed, or Employer Contributions under a simplified
employee pension plan to the extent such contributions are excluded from the
Employee's gross income, or any distributions from a plan of deferred
compensation;
(ii) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in section
403(b) of the Code (whether or not the amounts are actually excludable from the
gross income of the Employee).
For purposes of applying the limitations of this
ARTICLE, Compensation for a Limitation Year is the Compensation actually paid
or includable in gross income during such year.
Notwithstanding the preceding sentence, Compensation
for a Participant in a defined contribution plan who is Totally and Permanently
Disabled (as defined in section 22(e)(3) of the Code) is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid Immediately before becoming
permanently and totally disabled; such imputed Compensation for the disabled
Participant may
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be taken into account only if the Participant is not a Highly-Compensated
Employee (as defined in section 414(q) of the Code), and contributions made on
behalf of such Participant are nonforfeitable when made.
(c) DEFINED BENEFIT FRACTION. A fraction, the numerator
of which is the sum of the Participant's Projected Annual Benefits under all the
defined benefit plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of one hundred percent (100%) of the
dollar limitation determined for the Limitation Year under sections 415(b) and
(d) of the Code or one hundred forty percent (140%) of highest average
compensation, including any adjustments under section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than one hundred twenty-five percent (125%) of the
sum of the annual benefits under such plans which the Participant had accrued
as of the close of the last Limitation Year beginning before January 1, 1987
disregarding any changes in the terms and conditions of the plan after May 5,
1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of section 415 of
the Code for all Limitation Years beginning before January 1, 1987.
(d) DEFINED CONTRIBUTION DOLLAR LIMITATION. Thirty
thousand dollars ($30,000) or, if greater, one-fourth (1/4) of the defined
benefit dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
(e) DEFINED CONTRIBUTION FRACTION. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
Account under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's nondeductible
voluntary contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the Annual Additions attributable
to all welfare benefit funds, as defined in section 419(e) of the Code and
individual medical accounts, as defined in section 415(1)(2) of the Code,
maintained by the Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior Limitation Years of
service with the Employer (regardless of whether a defined contribution plan
was maintained by the Employer). The maximum aggregate amount in any Limitation
Year is the lesser of one hundred percent (100%) of the dollar limitation in
effect under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of
the Participant's Compensation for such year.
If the Participant was a Participant as of the end of the
first day of the first Limitation Yew beginning after December 31, 1986, in one
or mom defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal to the
product of (1) the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year beginning before
January 1, 1987, and disregarding any changes in the terms and conditions of
the Plan made after May 5, 1986, but using the section 415 limitation
applicable to the first Limitation Year beginning on or after January 1, 1987.
the Annual Addition for any Limitation Year beginning before January 1, 1987,
shall not be recomputed to treat all Employee contributions as Annual
Additions.
(f) EMPLOYER. For purposes of this ARTICLE, Employer
shall mean the employer that adopts this Plan, and all members of a controlled
group of corporations (as defined in section 414(b) of the Code as modified by
section 415(h) of the Code), all commonly controlled trades or businesses (as
defined in section 414(c) of the Code as modified by section 415(h) of the
Code), or affiliated service groups (as defined in section 414(m) of the Code)
of which the adopting Employer is a part and any other entity required to be
aggregated with the Employer pursuant to regulations under section 414(o) of
the Code.
(g) EXCESS AMOUNT. The excess of the Participant's Annual
Addition for the Limitation Year over the Maximum Permissible Amount.
(h) HIGHEST AVERAGE COMPENSATION. The average
compensation for the three consecutive Plan Years that produce the highest
average.
(i) LIMITATION YEAR. A Plan Year, or the twelve (12)
consecutive month period elected by the Employer in the Adoption Agreement. All
qualified plans maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different twelve (12) consecutive month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
(j) MASTER OR PROTOTYPE PLAN. A plan the form of which
is the subject of a favorable opinion letter from the Internal Revenue Service.
(k) MAXIMUM PERMISSIBLE AMOUNT. The maximum Annual
Addition that may be contributed or allocated to a Participant's Account under
the Plan for any Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation;
or
(ii) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year.
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The Compensation limitation referred to in subsection (b)
shall not apply to any contribution for medical benefits (within the meaning of
section 401(h) or section 419A(f)(2) of the Code) which is otherwise treated as
an Annual Addition under section 415(l)(1) or section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive month
period, the Maximum Permissible Amount will not exceed the Defined Contribution
Dollar Limitation multiplied by the following fraction:
Number of Months in the Short Limitation Year
12
(l) PROJECTED ANNUAL BENEFIT. The annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or Qualified
Joint and Survivor Annuity) to which the Participant would be entitled under
the terms of the Plan assuming:
(i) the Participant will continue employment
until Normal Retirement Age under the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine benefits under
the Plan will remain constant for all future Limitation Years.
ARTICLE 7
TRUST FUND
7.1 RECEIPT OF CONTRIBUTIONS BY TRUSTEE. All contributions to the
Trust that we received by the Trustee, together with any earnings thereon,
shall be held, managed and administered by the Trustee named in the Adoption
Agreement in accordance with the terms and conditions of the Trust Agreement
and the Plan. The Trustee may use a Custodian designated by the Sponsor to
perform recordkeeping and custodial functions. The Trustee shall be subject to
the proper directions of the Employer or the Plan Administrator made in
accordance with the terms of the Plan and ERISA.
7.2 INVESTMENT RESPONSIBILITY.
(a) If the Employer elects in the Adoption Agreement to
exercise investment authority and responsibility, the selection of the
investments in which assets of the Trust are invested shall be the
responsibility of the Plan Administrator and each Participant will have a
ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select the
investments in his Account, no person, including the Trustee and the Plan
Administrator, shall be liable for any loss or for any breach of fiduciary duty
which results from such Participant's or Beneficiary's exercise of control.
(c) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select the
investments in his Account, the Employer or the Plan Administrator must
complete a schedule of Participant designations.
(d) If Participants and Beneficiaries are permitted to
select the investment in their Accounts, all investment related expenses,
including administrative fees charged by brokerage houses, will be charged
against the Accounts of the Participants.
(e) The Plan Administrator may at any time change the
selection of investments in which the assets of the Trust are invested, or
subject to such reasonable restrictions as may be imposed by the Sponsor for
administrative convenience, may submit an amended schedule of Participant
designations. Such amended documents may provide for a variance in the
percentages of contributions to any particular investment or a request that
Shares in the Trust be reinvested in whole or in part in other Shares.
7.3 INVESTMENT LIMITATIONS. The Sponsor may impose reasonable
investment limitations an the Employer and the Plan Administrator relating to
the type of permissible investments in the Trust or the minimum percentage of
Trust assets to be invested in Shares.
ARTICLE 8
VESTING
8.1 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS AND EARNINGS. The
Participant's nondeductible voluntary contribution subaccount shall be fully
vested and nonforfeitable at all times and no forfeitures will occur as a
result of an Employee's withdrawal of nondeductible voluntary contributions.
8.2 ROLLOVERS, TRANSFERS AND EARNINGS. The Participant's rollover
subaccount and direct transfer subaccount shall be fully vested and
nonforfeitable at all times.
8.3 EMPLOYER CONTRIBUTIONS AND EARNINGS. Notwithstanding the
vesting schedule elected by the Employer in the Adoption Agreement, the
Participant's money purchase pension contribution subaccount and profit sharing
contribution subaccount shall be fully vested and nonforfeitable upon the
Participant's death, disability, attainment of Normal Retirement Age, or, if the
Adoption Agreement provides for an Early Retirement Date, attainment of the
required age and completion of the required service, In the absence of any of
the preceding events, the Participant's money purchase contribution subaccount
and his profit sharing contribution subaccount shall vest in accordance with a
minimum vesting
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schedule specified in the Adoption Agreement. The schedule must be at least as
favorable to Participants as either schedule (a) or (b) below.
(a) Graduated vesting according to the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3) Years of
Service.
8.4 AMENDMENTS TO VESTING SCHEDULE.
(a) If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each Participant with
at least three (3) Years of Service with the Employer may elect, within a
reasonable period after the adoption of the amendment or change, to have the
nonforfeitable percentage computed under the Plan without regard to such
amendment or change. For any Participants who do not have at least one (1) Hour
of Service in any Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "five (5) Years of Service" for
"three (3) Years of Service" where such language appears.
(b) The period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and shall end on
the latest of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes effective;
or
(iii) sixty (60) days after the Participant is issued written
notice of the amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the extent that
it has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Account balance may be
reduced to the extent permitted under section 412(c)(8) of the Code. For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's Account balance or eliminating an optional form of benefit,
with respect to benefits attributable to service before the amendment shall be
treated as reducing an accrued benefit. Furthermore, if the vesting schedule of
a Plan is amended, in the case of an Employee who is a Participant as of the
later of the date such amendment is adopted or the date it becomes effective,
the nonforfeitable percentage (determined as of such date) of such Employee's
right to his Employer-derived accrued benefit will not be less than his
percentage computed under the Plan without regard to such amendment.
8.5 DETERMINATION OF YEARS OF SERVICE. For purposes of determining the
vested and nonforfeitable percentage of the Participant's Employer Contribution
subaccounts, all of the Participant's Years of Service with the Employer or an
Affiliated Employer shall be taken into account. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be treated as
service for the Employer; provided, however, if the Employer maintains the plan
of a predecessor employer, Years of Service with such predecessor employer will
be treated as service with the Employer without regard to any election.
8.6 FORFEITURE OF NONVESTED AMOUNTS.
(a) For Plan Years beginning before 1985, any portion of a
Participant's Account that is not vested shall be forfeited by him as of the
last day of the Plan Year in which a Break in Service occurs. For Plan Years
beginning after 1984, any portion of a Participant's Account that is not vested
shall be forfeited by him as of the last day of the Plan Year in which his
fifth consecutive Break in Service occurs. Any amounts thus forfeited shall be
reallocated as provided in ARTICLE 5 and shall not be considered part of a
Participant's Account in computing his vested interest. The remaining portion of
the Participant's Account will be nonforfeitable.
(b) If a distribution is made at a time when a Participant has a
vested right to less than one hundred percent (100%) of the value of the
Participant's Account attributable to Employer Contributions and forfeitures,
as determined in accordance with the provisions of section 8.3, and the
nonvested portion of the Participant's Account has not yet been forfeited in
accordance with paragraph (a) above:
(i) a separate remainder subaccount shall be established
for the Participant's interest in the Plan as of the time of the distribution,
and
(ii) at any relevant time the Participant's vested portion
of the separate remainder subaccount shall be equal to an amount ("X")
determined by the following formula:
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X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested percentage at
the relevant time; AB is the Account balance at the relevant time; D is the
amount of the distribution; and R is the ratio of the Account balance at the
relevant time to the Account balance after distribution.
8.7 REINSTATEMENT OF BENEFIT. If a benefit is forfeited because a
Participant or Beneficiary cannot be found, such benefit will be reinstated if
a claim is made by the Participant or Beneficiary.
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 GENERAL. The provisions of this ARTICLE shall apply to any
Participant who is credited with at least one (1) Hour of Service with the
Employer on or after August 23, 1984, and such other Participants as provided
in section 9.7.
9.2 QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of
benefit is selected pursuant to a Qualified Election within the ninety (90) day
period ending on the Annuity Starting Date, a married Participant's Vested
Account Balance will be paid in the form of a Qualified Joint and Survivor
Annuity and an unmarried Participant's Vested Account Balance will be paid in
the form of a life annuity. The Participant may elect to have such annuity
distributed upon attainment of the Earliest Retirement Age under the Plan.
9.3 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form of
benefit has been selected within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity Starting Date, then the
Participant's Vested Account Balance shall be applied toward the purchase of an
annuity for the life of the Surviving Spouse. The Surviving Spouse may elect to
have such annuity distributed within a reasonable period after the
Participant's death.
9.4 DEFINITIONS.
(a) Election Period.
(i) The period which begins on the first day of the Plan Year
in which the Participant attains age thirty-five (35) and ends on the date of
the Participant's death. If a Participant separates from service prior to the
first day of the Plan Year in which age thirty-five (35) is attained, with
respect to the Account balance as of the date of separation, the Election
Period shall begin on the date of separation.
(ii) A Participant who has not yet attained age thirty-five (35)
as of the end of any current Plan Year may make a special Qualified Election to
waive the qualified preretirement survivor annuity for the period beginning on
the date of such election and ending on the first day of the Plan Year in
which the Participant will attain age thirty-five (35). Such election shall not
be valid unless the Participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under section 9.5. Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age thirty-five (35). Any new waiver
on or after such date shall be subject to the full requirements of this ARTICLE.
(b) Earliest Retirement Age. The earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits.
(c) Qualified Election.
(i) A waiver of a Qualified Joint and Survivor Annuity or a
qualified preretirement survivor annuity. Any waiver of a Qualified Joint and
Survivor Annuity or a qualified preretirement survivor annuity shall not be
effective unless:
(1) the Participant's Spouse consents in writing to the
election;
(2) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent);
(3) the Spouse's consent acknowledges the effect of the
election; and
(4) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver of the
Qualified Joint and Survivor Annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without spousal
consent (or the Spouse expressly permits designations by the participant
without any further spousal consent). If it is established to the satisfaction
of a Plan representative that there is no Spouse or that the Spouse cannot be
located, a waiver will be deemed a Qualified Election.
(ii) Any consent by a Spouse obtained under this provision (or
establishment that the consent of Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights.
A revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
section 9.5.
(d) Qualified Joint And Survivor Annuity. An immediate annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
which equals fifty percent (50%) of the amount of the annuity which is payable
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during the joint lives of the Participant and the Spouse and which is the
amount of benefit which can be purchased with the Participant's Vested Account
Balance.
(e) Spouse(Surviving Spouse). The Spouse or Surviving Spouse of the
Participant, provided that a former spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a qualified domestic relations
order as described in section 414(p) of the Code.
(f) Annuity Starting Date. The first day of the first period for
which an amount is paid as an annuity or any other form.
(g) Vested Account Balance. The aggregate value of the Participant's
Vested Account Balances derived from Employer and Employee contributions
(including rollovers and direct transfers), whether vested before upon death,
including the proceeds of insurance contracts if any, on the Participant's life,
The provisions of this ARTICLE shall apply to a Participant who is vested in
amounts attributable to Employer Contributions, Employee contributions (or both)
at the time of death or distribution.
9.5 Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date, provide each Participant a written
explanation of:
(i) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(ii) the Participant's right to make and the effect of an
election to waive the Qualified Joint and Survivor Annuity form of
benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
(b) In the case of a qualified preretirement survivor annuity as
described in section 9.3, the Plan Administrator shall provide each Participant
within the applicable period for such Participant a written explanation of the
qualified preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
subsection (a) applicable to a Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of the following
periods ends last:
(i) the period beginning with the first day of the Plan Year in
which the Participant attains age thirty-two (32) and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age thirty-five (35);
(ii) a reasonable period ending after the individual becomes a
Participant;
(iii) a reasonable period ending after subsection (e) ceases to
apply to the Participant;
(iv) a reasonable period ending after this ARTICLE first applies
to the Participant.
Notwithstanding the foregoing, notice must be provided within a reasonable
period ending after separation form service in the case of a participant who
separates from service before attaining age thirty-five (35).
(d) For purposes of applying subsection (c), a reasonable period ending
after the enumerated events described above in subsections (ii), (iii) and (iv)
is the end of the two-year period beginning one (1) year prior to the date the
applicable event occurs, and ending on (1) year after that date. In the case of
a Participant who separates from service before the Plan year in which age
thirty-five (35) is attained, notice shall be provided within the two (2) year
period beginning one (1) year prior to separation and ending one (1) year after
separation. If such a participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be redetermined.
(e) Notwithstanding the other requirements of this section, the
respective notices prescribed by this section need not be given to a
Participant if:
(i) the Plan "fully subsidizes" the cost of a Qualified Joint and
Survivor Annuity or qualified preretirement survivor annuity; and
(ii) the Plan does not allow the Participant to waive the Qualified
Joint and Survivor Annuity or qualified preretirement survivor annuity and does
not allow a married Participant to designate a nonspouse Beneficiary.
For purposes of this subsection, plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits to the Participant may
result from the Participant's failure to elect another benefit.
9.6 Safe Harbor Rules
(a) This section shall apply to a Participant in a profit sharing plan,
and to any distribution, made on or after the first day of the first Plan year
beginning after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible Employee contributions, as
defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan (including a target benefit plan)
if the following conditions are satisfied:
(i) the Participant does not or cannot elect payments in the form of
a life annuity; and
(ii) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
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(b) The Surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the ninety (90) day period following the
date of the Participant's death. The Account balance shall be adjusted for
gains or losses occurring after the Participant's death in accordance with the
provisions of the Plan governing the adjustment of Account balances for other
types of distributions.
(c) This section shall not be operative with respect to a
Participant in a profit sharing plan if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, a target benefit
plan, stock bonus, or profit sharing plan which is subject to the survivor
annuity requirements of sections 401(a)(11) and 417 of the Code. If this
section is operative, then the provisions of the ARTICLE, other than section
9.7, shall be inoperative.
(d) The Participant may waive the spousal death benefit described in
this section at any time provided that no such waiver shall be effective unless
it satisfies the conditions of section 9.4(c) (other than the notification
requirement referred to therein) that would apply to the Participant's waiver
of the qualified preretirement survivor annuity.
(e) For purposes of this section, Vested Account Balance shall mean,
in the case of a money purchase pension plan or a target benefit plan, the
Participant's separate Account balance attributable solely to accumulated
deductible Employee contributions within the meaning of section 72(o)(5)(B) of
the Code. In the case of a profit sharing plan, Vested Account Balance shall
have the same meaning as provided in section 9.4(g).
9.7 TRANSITIONAL RULES.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by the previous
sections of this ARTICLE must be given the opportunity to elect to have the
prior sections of this ARTICLE apply if such Participant is credited with at
least one (1) Hour of Service under this Plan or a predecessor plan in a Plan
Year beginning on or after January 1, 1976, and such Participant had at least
ten (10) years of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one (1) Hour of Service under this Plan or
a predecessor plan on or after September 2, 194, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his or her benefits paid in accordance
with subsection (d).
(c) The respective opportunities to elect (as described in
subsections (a) and (b) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending on the
date benefits would otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to subsection (b) and
any Participant who does not elect under subsection (a) or who meets the
requirements of subsection (a) except that such Participant does not have at
least ten (10) years of vesting service when he or she separates from service,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a
life annuity:
(i) Automatic Joint and Survivor Annuity. If benefits in the
form of a life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while still
working for the Employer; or
(3) begins to receive payments on or after the qualified
early retirement age; or
(4) separates from service on or after attaining Normal
Retirement age; (or qualified early retirement age) and under satisfying the
eligibility requirements for the payments of benefits under the Plan and
thereafter dies before beginning to receive such benefits; then such benefits
will be received under this Plan in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during the Election
Period. The Election Period must begin at least six (6) months before the
Participant attains qualified early retirement age and end not more than ninety
(90) days before the commencement of benefits. Any election hereunder will be
in writing and may be changed by the Participant at any time.
(ii) Election of Early Survivor Annuity. A Participant who is
employed after attaining the qualified early retirement age will be given the
opportunity to elect, during the Election Period, to have a survivor annuity
payable on death. If the Participant elects the survivor annuity, payments
under such annuity must not be less than the payments which would have been
made to the Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any election under
this provision will be in writing and may be changed by the Participant at any
time. The Election Period begins on the later of (1) the 90th day before the
Participant attains the qualified early retirement age; or (2) the date on
which participation begins, and ends on the date the Participant terminates
employment.
(e) The following terms shall have the meanings specified herein:
(i) Qualified Early Retirement Age. The latest of:
(1) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits;
(2) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age; or
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(3) the date the Participant begins participation.
(ii) Qualified Joint and Survivor Annuity. An annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
as described in section 9.4(d).
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 VESTING ON DISTRIBUTION BEFORE BREAK IN SERVICE.
(a) If an Employee terminates service, and the value of the
Employee's vested Account balance derived from Employer and Employee
Contributions is not greater than three thousand five hundred dollars ($3,500),
the Employee will receive a distribution of the value of the entire vested
portion of such Account balance and the nonvested portion will be treated as a
forfeiture. For purposes of this section, if the value of an Employee's
vested Account balance is zero, the Employee shall be deemed to have received a
distribution of such vested Account balance. A Participant's vested Account
balance shall not include accumulated deductible Employee contributions within
the meaning of section 72(o)(5)(B) of the Code for Plan Years beginning prior
to January 1, 1989.
(b) If an Employee terminates service and elects, in accordance with
the ARTICLE, to receive the value of his Vested Account Balance, the nonvested
portion will be treated as a forfeiture. If the Employee elects to have
distributed less than the entire vested portion of the Account balance derived
from Employer Contributions, the part of the nonvested portion that will be
treated as a forfeiture is the total nonvested portion multiplied by a
fraction, the numerator of which is the amount of the distribution attributable
to Employer Contributions and the denominator of which is the total value of
the vested Employer derived Account balance.
(c) If an Employee receives a distribution pursuant to this section
and the Employee resumes employment covered under this Plan, the Employee's
Employer-derived Account balance will be restored to the amount on the date of
distribution if the Employee repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of five
(5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date of the
distribution. If an Employee is deemed to receive a distribution to this
section, and the Employee resumes employment covered under this Plan before the
date the Participant incurs five (5) consecutive one (1) year Breaks in
Service, upon the reemployment of such Employee, the Employer-derived Account
balance of the Employee will be restored to the amount on the date of such
deemed distribution.
10.2 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS.
(a) If the value of a Participant's vested Account balance derived
from Employer and Employee contributions exceeds(or at the time of any prior
distribution exceeds) three thousand five hundred dollars (3,500) and the
Account balance is immediately distributable, the Participant and the
Participant's Spouse (or where either the Participant or the Spouse has died,
the survivor) must consent to any distribution of such Account balance. The
consent of the Participant and the Participant's Spouse shall be obtained in
writing within the ninety (90) day period ending on the Annuity Starting Date.
The Annuity Starting Date is the first day of the first period for which an
amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's Account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the Plan in a manner that would satisfy the
notice requirements of section 417(a)(3), and shall be provided no less than
thirty (30) days and no more than ninety (90) days prior to the Annuity
Starting Date.
(b) Notwithstanding the provisions of subsection (a), only the
Participant need consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the Account balance is immediately
distributable. (Furthermore, if payment in the form of a Qualified Joint and
Survivor Annuity is not required with respect to the Participant pursuant to
section 9.6 of the Plan, only the Participant need consent to the distribution
of an Account balance that is immediately distributable).
Neither the consent of the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is required to satisfy section
401(a)(9) or section 415 of the Code. In addition, upon termination of this
Plan if the Plan does not offer an annuity option (purchased from a commercial
provider), the Participant's Account balance may, without the Participant's
consent, be distributed to the Participant or transferred to another defined
contribution plan (other than an employee stock ownership plan as defined in
section 4975(e)(7) of the Code) within the same controlled group.
(c) An Account balance is immediately distributable if any part of
the Account balance could be distributed to the Participant (or Surviving
Spouse) before the Participant attains *or would have attained if not deceased)
the later of Normal Retirement Age or age sixty-two (62).
(d) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the first
Plan Year beginning after December 31, 1988, the Participant's vested Account
balance shall not include amounts attributable to accumulated deductible
Employee contributions within the meaning of section 72*o)(5)(B) of the Code.
10.3 COMMENCEMENT OF BENEFITS.
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the latest of the close of
the Plan Year in which:
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(i) the Participant attains age sixty-five (65) (or
Normal Retirement Age, if earlier);
(ii) the 10th anniversary of the year in which the
Participant commenced participant in the Plan occurs; or
(iii) the Participant terminates service with the
Employer.
(b) Notwithstanding the foregoing, the failure of a
Participant and Spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of section 10.2 of the Plan, shall
be deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this section.
10.4 EARLY RETIREMENT WITH AGE AND SERVICE REQUIREMENT. If a
Participant separates from service before satisfying the age requirement for
early retirement, but has satisfied the service requirement, the Participant
will be entitled to elect an early retirement benefit upon satisfaction of such
age requirement.
10.5 NONTRANSFERABILITY OF ANNUITIES. Any annuity contract
distributed herefrom must be nontransferable.
10.6 CONFLICTS WITH ANNUITY CONTRACTS. The terms of any annuity
contract purchased and distributed by the Plan to a Participant or Spouse shall
comply with the requirements of this Plan.
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 GENERAL RULES.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this ARTICLE apply to calendar years beginning
after December 31, 1984.
(b) All distributions required under this ARTICLE shall be
determined and made in accordance with the income tax regulations under section
401(a)(9) of the Code, including the minimum distribution incidental benefit
requirement of section 1.40(a)(9)-2 of the proposed regulations.
11.2 REQUIRED BEGINNING DATE. The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
Required Beginning Date.
11.3 LIMITS ON DISTRIBUTION PERIODS. As of the first Distribution
Calendar Year, distributions, if not made in single-sum, may only be made over
one of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated Beneficiary;
(c) a period certain not extending beyond the Life Expectancy
of the Participant; or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
11.4 DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR.
(a) Individual Account.
(i) If a Participant's Benefit is to be distributed
over (1) a period not extending beyond the Life Expectancy of the Participant or
the joint life and last survivor expectancy of the Participant and the
Participant's Designated Beneficiary or (2) a period not extending beyond the
Life Expectancy of the Designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with distribution for the first
Distribution Calendar Year, must at least equal the quotient obtained by
dividing the Participant's Benefit by the Applicable Life Expectancy.
(ii) For calendar years beginning before January 1,
1989, if the Participant's Spouse is not the Designated Beneficiary, the method
of distribution selected must assure that at least fifty percent (50%) of the
present value of the amount available for distribution is paid within the Life
Expectancy of the Participant.
(iii) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with distributions for
the first Distribution Calendar Year shall not be less than the quotient
obtained by dividing the Participant's Benefit by the lesser of (1) the
Applicable Life Expectancy or (2) if the Participant's Spouse is not the
Designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of section 1.40(a)(9)-2 of the proposed regulations.
Distributions after the death of the Participant shall be distributed using the
Applicable Life Expectancy in subsection (a)(i) above as the relevant divisor
without regard to proposed regulations section 1.40(a)(9)-2.
(iv) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum distribution for other
calendar years, including the minimum distribution for the Distribution
Calendar Year in which the Employee's Required Beginning Date occurs, must be
made on or before December 31, of that Distribution Calendar Year.
(b) Other Forms. If the Participant's benefit is distributed
in the form of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of section
401(a)(9) of the Code and the proposed regulations thereunder.
11.5 DEATH DISTRIBUTION PROVISIONS.
(a) Distribution Beginning Before Death. If the Participant
dies after distribution of his or her interest has begun, the remaining portion
of such interest will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the Participant's death.
(b) Distribution Beginning After Death. If the Participant
dies before distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of the calendar
year
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containing the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions in accordance with (i) or (ii)
below:
(i) if any portion of the Participant's interest is payable
to a Designated Beneficiary, distributions may be made over the life or over a
period certain not greater than the Life Expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(ii) if the Designated Beneficiary is the Participant's
Surviving Spouse, the date distributions are required to begin in accordance
with (i) above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the Participant
died and (2) December 31 of the calendar year in which the Participant would
have attained age seventy and one-half (70 1/2).
(c) If the Participant has not made an election pursuant to this
section by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to
begin under this section; or (2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the Participant. If the
Participant has no Designated Beneficiary, or if the Designated Beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(d) For purposes of subsection (b) above, if the Surviving Spouse
dies after the Participant, but before payments to such Spouse begin, the
provisions of subsection (b), with the exception of paragraph (ii) therein,
shall be applied as if the Surviving Spouse were the Participant.
(e) For purposes of this section, any amount paid to a child of
the Participant will be treated as if it had been paid to the Surviving Spouse
if the amount becomes payable to the Surviving Spouse when the child reaches the
age of majority.
(f) For the purposes of this section, distribution of a
Participant's interest is considered to begin on the Participant's Required
Beginning Date (or, if subsection (d) above is applicable, the date distribution
is required to begin to the Surviving Spouse pursuant to subsection (b) above).
If distribution is in the form of an annuity described in section 11.4(b) above
irrevocably commences to the Participant before the Required Beginning Date, the
date distribution is considered to begin is the date distribution actually
commences.
11.6 DESIGNATION OF BENEFICIARY. Subject to the rules of ARTICLE 9, a
Participant (or former Participant) may designate from time to time any person
or persons (who may be designated contingently or successively and may be an
entity other than a natural person) as his Beneficiary who will be entitled to
receive any undistributed amounts credited to the Participant's separate
Account under the Plan at any time of the Participant's death. Any such
beneficiary designation by a Participant shall be made in writing in the manner
prescribed by the Plan Administrator, and shall be effective only when filed
with the Plan Administrator during the Participant's lifetime. A Participant
my change or revoke his Beneficiary designation at any time in the manner
prescribed by the Plan Administrator. If any portion of the Participant's
Account is invested in insurance pursuant to ARTICLE 14, the Beneficiary of the
benefits under the insurance policy shall be the person or persons designated
under the policy. If the Designated Beneficiary (or each of the Designated
Beneficiaries) predeceases the Participant, the Participant's Beneficiary
designation shall be ineffective. If no Beneficiary designation is in effect
at the time of the Participant's death, his Beneficiary shall be his estate.
11.7 DEFINITIONS.
(a) APPLICABLE LIFE EXPECTANCY. The Life Expectancy (or
joint and last survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one (1) for
each calendar year which as elapsed since the date Life Expectancy was first
calculated. If Life Expectancy is being recalculated, the Applicable Life
Expectancy shall be the Life Expectancy as so recalculated. The applicable
calendar year shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated such succeeding calendar year.
If annuity payments commence in accordance with section 11.4(b) before the
Required Beginning Date, the applicable calendar year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest, the
applicable calendar year is the year of purchase.
(b) DESIGNATED BENEFICIARY. The individual who is designated
as the Beneficiary under the Plan in accordance with section 401(a)(9) and the
proposed regulations thereunder.
(c) DISTRIBUTION CALENDAR YEAR. A calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant's death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to section 11.5 above.
(d) LIFE EXPECTANCY.
(i) Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in Table V and
VI of section 1.72-9 of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or
Spouse, in the case of distributions described in section 11.5(b)(ii)above) by
the time distributions are required to begin, life expectancies shall be
recalculated
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annually. Such election shall be irrevocable as to the Participant (or Spouse)
and shall apply to all subsequent years. The Life Expectancy of a non-
Spouse Beneficiary may not be recalculated.
(e) Participant's Benefit.
(i) The Account balance as of the last valuation date in the
calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the Account balance as of dates in the valuation
calendar year after the valuation date and decreased by distributions made in
the valuation calendar year after the valuation date.
(ii) For purposes of subsection (i) above, if any portion of
the minimum distribution for the first Distribution Calendar Year is made in
the second Distribution Calendar Year on or before the Required Beginning Date,
the amount of the minimum distribution made in the second Distribution Calendar
Year shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
(f) Required Beginning Date.
(i) General Rule. The Required Beginning Date of a Participant
is the first day of April of the calendar year following the calendar year in
which the Participant attains age seventy and one-half (70 1/2).
(ii) Transitional Rules. The Required Beginning Date of a
Participant who attains age seventy and one-half (70 1/2) before January 1,
1988, shall be determined in accordance with (1) or (2) below:
(1) Non-Five-Percent Owners. The Required Beginning Date
of a Participant who is not a Five Percent (5%) Owner is the first day of April
of the calendar year following the calendar year in which the later of
retirement or attainment of age seventy and one-half (70 1/2) occurs.
(2) Five Percent Owners. The Required Beginning Date of a
Participant who is a Five Percent (5%) Owner during any year beginning after
December 31, 1979, is the first day of April following the later of:
(A) the calendar year in which the Participant
attains age seventy and one-half (70 1/2); or
(B) the earlier of the calendar year with or within
which ends the Plan Year in which the Participant becomes a Five Percent (5%)
Owner, or the calendar year in which the Participant retires. The Required
Beginning Date of a Participant who is not a Five Percent (5%) Owner who
attains age seventy and one-half (70 1/2) during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
(iii) Five Percent Owner. A Participant is treated as a Five
Percent (5%) Owner for purposes of this section if such Participant is a Five
Percent (5%) Owner as defined in section 416(i) of the Code (determined in
accordance with section 416 but without regard to whether the Plan is to-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age sixty-six and one-half (66 1/2) or any subsequent
year.
(iv) Once distributions have begun to a Five Percent (5%) Owner
under this section, they must continue to be distributed, even if the
Participant ceases to be a Five Percent (5%) Owner in a subsequent year.
11.8 Transitional Rule.
(a) Notwithstanding the other requirements of this ARTICLE and
subject to the requirements of ARTICLE 9, distribution on behalf of any
Employee, including a Five Percent (5%) Owner, may be made in accordance with
all of the following requirements (regardless of when such distribution
commences):
(i) The distribution by the Trust is one which would not have
disqualified such trust under section 401(a)(9) of the Internal Revenue Code as
in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the Trust is being
distributed or, if the Employee is deceased, by a Beneficiary of such Employee.
(iii) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(v) The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distributions will be made, and in
the case of any distribution upon the Employee's death, the Beneficiaries of
the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to be
made upon the death of the Employee.
(c) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (a)(v).
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of section 401(a)(9) of the Code and the proposed
regulations thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute by the end of
the calendar year following the calendar year in which the revocation occurs
the total amount not yet distributed which would have been required to have
been distributed to satisfy section 401(a)(9) of the Code and the regulations
thereunder but for the section 242(b)(2) election.
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For calendar years beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the proposed regulations. Any changes in the designation will
be considered to be a revocation of the designation. However, the mere
substitution or addition of another beneficiary (one not named in the
designation)under the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring life). In the
case in which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
11.9 OPTIONAL FORMS OF BENEFIT
(a) Except to the extent benefits are required to be paid in the form
of an automatic joint and survivor annuity under ARTICLE 9, any amount which a
Participant shall be entitled to receive under the Plan shall be distributed in
one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of which
shall be determined by redeeming all Shares credited to the Participant's
Account under the Plan as of the date of distribution;
(ii) in a lump-sum payment including a distribution in kind
of all Shares credited to the Participant's Account under the Plan as of the
date of distribution;
(iii) in substantially equal monthly, quarterly, or annual
installment payments of cash, or the distribution of Shares in kind, over a
period certain not to exceed the Life Expectancy of the Participant or the joint
and last survivor Life Expectancy of the Participant and his Beneficiary,
determined in each case as of the earlier of: (1) the end of the Plan Year in
which occurs the event entitling the Participant to a distribution of benefits,
or (2) the date such installments commence;
(iv) if permitted by the Sponsor, in monthly, quarterly, or
annual installment payments of cash, or the distribution of Shares in kind, so
that the amount distributed in each Plan Year equals the quotient obtained by
dividing the Participant's Account at the beginning of that Plan Year by the
joint and last survivor Life Expectancy of the participant and the Beneficiary
for that Plan Year. The Life Expectancy will be computed using the recomputation
method described in section 11.7(d). Unless the Spouse of the retired
Participant is the Beneficiary, the actuarial present value of all expected
payments to the retired Participant must be more than fifty percent (50%) of the
actuarial present value of payments to the retired Participant and the
Beneficiary; or
(v) by application of the Participant's vested Account to
the purchase of a nontransferable immediate or deferred annuity contract, on an
individual or group basis. Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments to the
retired Participant must be more than fifty percent (50%) of the actuarial
present value of payments to the retired Participant and the Beneficiary.
(b) If the Participant fails to select a method of distribution,
except as may be required by ARTICLE 9, all amounts which he is entitled to
receive under the Plan shall be distributed to him in a lump-sum payment.
ARTICLE 12
WITHDRAWALS
12.1 WITHDRAWAL OF NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS. Subject to the
Qualified Election requirements of ARTICLE 9 and section 12.3, any Participant
who has made nondeductible voluntary contributions may, upon thirty (30) days
notice in writing filed with the Plan Administrator, have paid to him all or
any portion of the fair market value of his nondeductible voluntary contribution
subaccount.
12.2 HARDSHIP WITHDRAWALS. If the Adoption Agreement so provides and
the Employer elects, this section applies only to the profit sharing
contribution subaccount and only if the profit sharing allocation formula
selected in the Adoption Agreement is not integrated with Social Security.
(a) Demonstration of Need. Subject to the Qualified Election
requirements of ARTICLE 9 and section 12.3, if a Participant establishes an
immediate and heavy financial need for funds because of a hardship resulting
form the purchase or renovation of a primary residence, the education of the
participant or a member of his immediate family, or (including special
education), the medial or personal expenses of the Participant or a member of
his immediate family, or other demonstrable emergency as determined by the Plan
Administrator on a uniform and nondiscriminatory basis, the Participant shall
be permitted, subject to the limitations of subsection (b) below, to make a
hardship withdrawal of an amount credited to his profit sharing contribution
subaccount under the Plan.
(b) Amount of Hardship Withdrawal. The amount of any hardship
withdrawal by a Participant under subsection (a) above shall not exceed the
amount required to meet the immediate financial need created by the hardship
and not reasonably available from other resources of the Participant.
(c) Prior Withdrawal of Nondeductible Voluntary Participant
Contributions. A Participant shall not be permitted to make a hardship
withdrawal under subsection (a) above unless he has already withdrawn, in
accordance with section 12.1, any amount credited to his nondeductible
voluntary contributions subaccount.
12.3 MANNER OF MAKING WITHDRAWALS. Any withdrawal by a Participant under
the Plan shall be made only after the Participant files a written request with
the plan Administrator specifying the nature of the withdrawal (and the reasons
therefor, if a hardship withdrawal), and the amount of funds requested to be
withdrawn. Upon approving any withdrawal, the Plan Administrator shall furnish
the Trustee with written instructions directing the Trustee to make the
withdrawal in a lump-sum payment of cash to the Participant. In making any
withdrawal payment, the Trustee shall be fully
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entitled to rely on the instructions furnished by the Plan Administrator, and
shall be under no duty to make any inquiry or investigation with respect
thereto. Unless section 9.6 is applicable, if the Participant is married, his
Spouse must consent to the withdrawal pursuant to a Qualified Election (as
defined in section 9.4(c)) within the ninety (90) day period ending on the date
of the withdrawal.
12.4 LIMITATIONS ON WITHDRAWALS. The Plan Administrator may prescribe
uniform and nondiscriminatory rules and procedures limiting the number of times
a Participant may make a withdrawal under the Plan during any Plan Year, and
the minimum amount a Participant may withdraw on any single occasion.
13.1 GENERAL PROVISIONS.
(a) If the Adoption Agreement so provides and the Employer so elects,
loans shall be made available to any Participant or Beneficiary who is
party-in-interest (as defined in section 3(14) of ERISA) on a reasonably
equivalent basis. A Participant or Beneficiary who is not a party-in-interest
(as defined in section 3(14) of ERISA) shall not be eligible to receive a loan
under this ARTICLE.
(b) Loans shall not be made available to Highly-Compensated
Employees (as defined in section 414(q) of the Code) in an amount greater than
the amount made available to other Employees.
(c) Loans must be adequately secured and bear a reasonable interest
rate.
(d) No participant loan shall exceed the present value of the
Participant's Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must obtain the
consent of his or her Spouse, if any, to use of the Account balance as security
for the loan. Spousal consent shall be obtained no earlier than the beginning
of the ninety(90) day period that ends on the date on which the loan is to be
so secured. The consent must be in writing, must acknowledge the effect of the
loan, and must be witnessed by a Plan representative or notary public. Such
consent shall thereafter be binding with respect to the consenting Spouse or any
subsequent Spouse with respect to that loan. A new consent shall be required if
the Account balance is used for renegotiation, extension, renewal or other
revision of the loan.
(f) In the event of default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs under the Plan.
(g) Loans will not be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a shareholder-employee means
an Employee or officer of an electing small business (subchapter S) corporation
who owns (or is considered as owning within the meaning of section 318(a)(1)
of the Code), on any day during the taxable year of such corporation, more than
five percent(5%) of the outstanding stock of the corporation.
(h) If a valid spousal consent has been obtained in accordance with
subsection (e), then, notwithstanding any other provision of this Plan, the
portion of the Participant's Vested Account Balance used as a security interest
held by the Plan by reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of the Account
balance payable at the time of death or distribution, but only if the reduction
is used as repayment of the loan. If less than one hundred percent (100%) of
the Participant's Vested Account Balance (determined without regard to the
preceding sentence) is payable to the Surviving Spouse, then the Account
balance shall be adjusted by first reducing the Vested Account Balance by the
amount of the security used as repayment of the loan, and then determining the
benefit payable to the Surviving Spouse.
13.2 ADMINISTRATION OF LOAN PROGRAM.
(a) The Plan's loan program will be administered by the Plan
Administrator.
(b) Loan requests shall be made on a form prescribed by the Plan
Administrator and shall comply with section 13.4.
(c) Loan request that comply with all the requirements of this
ARTICLE shall be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be determined
under section 13.5.
(e) The only collateral that may be used as security for a loan, and
the limitations and requirements applicable, are determined under
section 13.6.
(f) The rules regarding defaults are set forth in section 13.9.
13.3 AMOUNT OF LOAN. Loans to any Participant or Beneficiary will not be
made to the extent that such loan, when added to the outstanding balance of all
other loans to the Participant or Beneficiary, would exceed the lesser of:
(a) fifty thousand dollars ($50,000) reduced by the excess (if any) of
the highest outstanding balance of loans during the one (1) year period ending
on the day before the loan is made, over the outstanding balance of loans from
the Plan on the date the loan is made; or
(b) one-half(1/2) the present value of the nonforfeitable accrued
benefit of the Participant.
(c) For the purpose of the above limitation, all loans from all
plans of the Employer and other members of a group of employers described in
sections 414(b), 414(c) and 414(m) of the Code are aggregated.
13.4 MANNER OF MAKING LOANS. A request by a Participant for a loan shall
be made in writing to the Plan Administrator and shall specify the amount of
the loan, and the subaccount(s) or Shares of the Participant from which the loan
should be made. The terms and conditions on which the Plan Administrator shall
approve loans under the Plan shall be applied on a uniform and
nondiscriminatory basis with respect to all Participants. If a Participant's
request for a loan is
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approved by the Plan Administrator, the Plan Administrator shall furnish the
Trustee with written instructions directing the Trustee to make the loan in a
lump-sum payment of cash to the Participant. In making any loan payment under
this ARTICLE, the Trustee shall be fully entitled to rely on the instructions
furnished by the Plan Administrator and shall be under no duty to make any
inquiry or investigation with respect thereto.
13.5 TERMS OF LOAN. Loans shall be made on such terms and subject to
such limitations as the Plan Administrator shall prescribe. Furthermore, any
loan shall, by its terms, require that repayment (principal and interest) be
amortized in level payments, not less frequently than quarterly, over a period
not extending beyond five (5) years from the date of the loan, unless such loan
is used to acquire a dwelling unit which, within a reasonable time (determined
at the time the loan is made) will be used as the principal residence of the
Participant. The rate of interest to be charged shall be determined by the Plan
Administrator in accordance with the rates quoted by representative financial
institutions in the local area for similar loans.
13.6 SECURITY FOR LOAN. Any loan to a Participant under the Plan
shall be secured by the pledge of all the Participant's right, title, and
interest in the Trust. Such pledge shall be evidenced by the execution of a
promissory note by the Participant which shall provide that, in the event of
any default by the participant on a loan repayment, the Plan Administrator
shall be authorized (to the extent permitted by law) to deduct the amount of
the loan outstanding and any unpaid interest due thereon from the Participant's
wages or salary to be thereafter paid by the Employer, and to take any and all
other actions necessary and appropriate to enforce collection of the unpaid
loan. An assignment or pledge of any portion of the Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this
section. In the event the value of the Participant's vested Account at any time
is less than one hundred twenty-five percent (125%) of the outstanding loan
balance, the Plan Administrator shall request additional collateral of
sufficient value to adequately secure the repayment of the loan. Failure to
provide such additional collateral upon a request of the Plan Administrator
shall constitute an event of default.
13.7 SEGREGATED INVESTMENT. Loans shall be considered a Participant
directed investment and, for the limited purposes of allocated earnings and
losses pursuant to ARTICLE 5, shall not be considered a part of the common fund
under the Trust.
13.8 REPAYMENT OF LOAN. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan
repayments, and for notifying the Trustee in the event of any default by the
Participant on the loan. Each loan repayment shall be paid to the Trustee and
shall be accompanied by written instructions from the Plan Administrator that
identify the Participant on whose behalf the loan repayment was being made.
13.9 DEFAULT ON LOAN.
(a) In the event of a termination of the Participant's
employment with the Affiliated Employers or a default by a Participant on a
loan repayment, all remaining payments on the loan shall be immediately due and
payable. The Employer shall, upon the direction of the Plan Administrator, to
the extent permitted by law, deduct the total amount of the loan outstanding
and any unpaid interest due thereon from the wages or salaries payable to the
Participant by the Employer in accordance with the Participant's promissory
note. In addition, the Plan Administrator shall take any and all other actions
necessary and appropriate to enforce collection of the unpaid loan. However,
attachment of the Participant's Account pledged as security will not occur
until a distributable event occurs under the Plan.
(b) For purposes of this section, the term "default" shall
mean failure, by a period of at least ten (10) days, to make any loan payment
(whether principal or interest or both) that is due and payable. Neither the
Plan Administrator nor any other fiduciary is required to give any written or
oral notice of default.
13.10 UNPAID AMOUNTS. Upon the occurrence of a Participant's
retirement or death, or upon a Participant's fifth consecutive Break in Service
or earlier distribution, the unpaid balance of any loan, including any unpaid
interest, shall be deducted from any payment or distribution from the Trust to
which such Participant or his Beneficiary may be entitled. If after charging
the Participant's Account with the unpaid balance of the loan, including any
unpaid interest, there still remains an unpaid balance of any such loan and
interest, then the remaining unpaid balance of such loan and interest shall be
charged against any property pledged as security with respect to such loan.
ARTICLE 14
INSURANCE
14.1 INSURANCE. If the Adoption Agreement so provides and the
Employer elects to allocate or permit Participants to allocate a portion of
their Accounts to purchase life insurance, the ensuing subsections of this
ARTICLE shall apply:
14.2 POLICIES. The Plan Administrator shall instruct the Trustee
to procure one or more life insurance policies on the Participant's life, the
terms of which shall conform to the requirements of the Plan and the Code. The
policies and the companies which write them shall be subject to the approval of
the Plan Administrator and the Trustee. The Trustee shall procure and hold such
policies in the name of the nominee. The Trustee shall be the sole owner of all
contracts purchased hereunder, and it shall be so designated in each policy and
application therefor.
14.3 BENEFICIARY. The Participant shall have the right to name the
Beneficiary and to choose the benefit option under the policy for the
Beneficiary. The Trustee shall designate the Beneficiary of all such policies
in accordance with the written directions of the Plan Administrator and the
policy terms. Such designations may be outlined in the original application as
forwarded to the issuing company. However, the Plan Administrator shall have
available and shall furnish the
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Participant with the necessary forms for any Beneficiary designation or change
of Beneficiary and it will keep a copy of all executed designations as part of
its records. Upon a Participant's death, the Plan Administrator will promptly
furnish the Trustee a copy of the last designation and shall authorize the
Trustee to complete such forms as the insurance company may require in order to
effect the benefit option.
14.4 PAYMENT OF PREMIUMS. Subject to the provisions of sections 7.3 and
14.5, premium payments to the insurer may be made only by the Trustee with
respect to any insurance policy purchased on behalf of a Participant and shall
constitute first an investment of a portion of the funds of the Participant's
Employer Contribution subaccounts up to the maximum amount of such subaccounts
permitted to be applied toward such premium payments, as provided in section
14.5. If a Participant's subaccounts lack sufficient assets to pay premiums on
a life insurance policy due on his behalf, the Trustee, at the direction of the
Plan Administrator, acting upon the request of the Participant, shall borrow
under the policy loan provisions, if any, the amount necessary to pay such
premiums, using the cash value of the insurance as security, or the Trustee may
liquidate assets held in the Participant's Account, in the same order, of
sufficient value to pay such premiums. Any loans shall be repaid by the
application of earnings, contributions, or forfeitures to the Account of the
Participant insured by such policy. In the absence of the Plan administrator's
direction to borrow or to liquidate assets to pay premiums, the life insurance
policy shall be put on a paid-up-basis or, if it has no cash value, canceled.
14.5 LIMITATION ON INSURANCE PREMIUMS. The Trustee shall not pay, nor
shall anyone on behalf of the Trustee pay, any life insurance premium for any
Participant out of the Participant's Employer Contribution subaccounts unless
the amount of such payment, plus all premiums previously so paid on behalf of
the Participant, is less than fifty percent (50%) of the Employer Contributions
and forfeitures allocated to the Participant's Employer Contribution
subaccounts as determined on the date such premium is paid with respect to
reserve life insurance policies and shall be less than twenty-five percent
(25%) thereof with respect to nonreserve (term) policies, or, if both reserve
life and term insurance are purchased on the life of any Participant, the sum
of the term insurance premium plus one-half (1/2) of the reserve life premiums
may not exceed twenty-five percent (25%) of the Employer Contributions made on
behalf of such Participant. For purposes of these incidental insurance
provisions, reserve life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. Dividends received on
life insurance policies shall be considered a reduction of premiums paid in
such computations.
If payment of premiums on a Participant's life insurance policy is
prohibited because of the limitation, the Trustee, as directed by the Plan
Administrator, shall permit the Participant to maintain that part of the
coverage made available by the prohibited premiums, either by payment of the
amount of the prohibited premium by the Participant from sources other than the
Trust or by distributing the policy to the extent of the Participant's vested
interest to the Participant and eliminating it from the Trust.
Nothing contained in the foregoing provisions of section 14.4 and
this section shall be deemed to authorize the payment of any premium or
premiums for any Participant which would result in a failure to maintain any
mandatory investment in Shares required by the Sponsor in the account or
subaccounts of any such Participant.
14.6 INSURANCE COMPANY. No insurance company which may issue any policies
for the purposes of this Plan shall be required to take or permit any action
contrary to the provisions of said policies, nor shall such insurance company
be deemed to be a party to, or responsible for the validity of, this Plan for
any purpose. No such insurance company shall be required to look into the terms
of this Plan or question any action of the Trustee hereunder, nor be
responsible to see that any action of the Trustee is authorized by the terms of
this Plan. Any such issuing insurance company shall be fully discharged from
any and all liability for any amount paid to the Trustee or paid in accordance
with the direction of the Trustee, as the case may be, or for any change made
or action taken by such insurance company upon such direction and no such
insurance company shall be obliged to see the distribution or further
application of any monies paid by it. The certificate of the Trustee signed by
one of its trust officers, assistant secretary, or other authorized
representative thereof, may be received by any insurance company as conclusive
evidence of any of the matters mentioned in the Plan and any insurance company
shall be fully protected in taking or permitting any action on the faith
thereof and shall incur no liability or responsibility for so doing.
14.7 DISTRIBUTION OF POLICIES. Upon a Participant's death, the Trustee,
upon direction of the Plan Administrator, shall procure the payment of the
proceeds of any policy held by the Participant in accordance with its terms and
this Plan. The Trustee shall be required to pay over all the proceeds of any
policy to the Participant's Designated Beneficiary in accordance with the
distribution provisions of the Plan. A Participant's Spouse will be the
Designated Beneficiary unless a Qualified Election has been made in accordance
with section 9.4(c) of the Plan. Under no circumstances shall the Trust retain
any part of the proceeds. Subject to the joint and survivor annuity
requirements of ARTICLE 9, the policies shall be converted or distributed upon
commencement of benefits in accordance with the provisions of this section.
Upon a Participant's retirement at or after his Normal Retirement Age, unless
there is a single sum distribution in which case any policy shall be
distributed, any such policy shall be converted paid-up contract and delivered
to the Participant but the Plan Administrator may, with the Participant's
consent, direct that a portion or all of such cash value of the policy be
converted to provide retirement income as permitted within the terms of the
policy and this Plan. Upon a Participant's retirement due to Total and
Permanent Disability, any such policy shall be held for his account and
assigned or delivered to the Participant in addition to any other benefits
provided by this Plan. Upon a Participant's termination of employment for
reasons other than death, Total and Permanent Disability, or retirement as
stated above, to the extent of life insurance
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purchased by Employer Contributions, he shall be entitled to a vested interest
in any policy held for his account as his interest is vested in the remainder
of his Employer Contribution subaccounts (exclusive of any such policy).
Whenever the Participant is entitled to one hundred percent (100%), then such
policy shall be assigned and delivered to the Participant in accordance with its
terms and the terms of the Plan. Whenever the Participant is entitled to
vesting of less than one hundred percent(100%), then the Participant shall be
entitled to a vested interest of the cash surrender value of any such policy
equal to his percent of vested interest in his Employer Contribution
subaccounts, exclusive of the policy, and one of the following distribution
procedures shall apply:
(a) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account is less than the amount of his
vested termination benefit exclusive of the policies, then, such policy shall
be assigned to the Participant and the remainder of the Participant's vested
interest in the Participant's Employer Contribution subaccounts shall be
reduced by the cash surrender value of the nonvested portion of all policies,
after which it shall be paid or distributed to the Participant in accordance
with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account exceeds the Participant's vested
interest in the Employer Contribution subaccount exclusive of such policies,
the Participant shall be given the opportunity to purchase such policies by
paying to the Trustee the amount of such excess within thirty (30) days after
notice to him of the amount to be paid. Upon receipt of such payment said policy
shall be assigned and delivered to the Participant to the full satisfaction of
all termination benefits under this Plan. Any such policy not so purchased
shall be surrendered by the Trustee for its cash value and the proceeds thereof
deposited in the Trust for reallocation pursuant to ARTICLE 5.
It is the intention hereof that the total termination benefit of a
Participant whose interest is not fully vested shall be equal to the sum of the
vested percentage of his Employer Contribution subaccounts exclusive of all
such policies and the same percentage of the cash value of all such policies
held for his Account. To the extent possible under the foregoing provisions,
such total termination benefits shall be satisfied by the transfer and delivery
to the Participant of one or more such policies with the balance, if any, to be
paid in cash or in kind.
14.8 POLICY FEATURES. The Trustee shall arrange, where possible, that all
policies purchased for the benefit of a Participant shall have the same dividend
option which shall be on the premium reduction plan, and as nearly as may be
possible all policies issued under the Plan shall have the same anniversary
date. To the extent any dividends or credits earned on insurance policies are
not applied toward the next premiums due, they shall be allocated to the
Participant's Employer Contribution subaccount in the same manner as a
Participant's directed investment.
14.9 CHANGED CONDITIONS. From time to time because of changed conditions,
the Trustee, acting at the direction of the Plan Administrator upon the
election of the Participant concerned, shall obtain an additional contract or
policy or make such change in the contracts or policies maintained by the
Trustee on the life of the Participant as may be required by such changed
conditions, within the limits permitted by the insurance company which issued
or is requested to issue a contract and the limits established by this Plan.
14.10 CONFLICTS. In the event of any conflict between the terms of the
Plan and the provisions of any contract issued hereunder, the terms of the Plan
shall control.
ARTICLE 15
ADMINISTRATION
15.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF FIDUCIARY
RESPONSIBILITY. A fiduciary of the Plan shall have only those specific powers,
duties, responsibilities, and obligations as are explicitly given him under the
Plan and Trust Agreement. In general, the Employer shall have the sole
responsibility for making contributions to the Plan required under ARTICLE 4;
appointing the Trustee and the Plan Administrator; and determining the funds
available for investment under the Plan. The Plan Administrator shall have the
sole responsibility for the administration of the Plan, as more fully described
in section 15.2. It is intended that each fiduciary shall be responsible only
for the proper exercise of his own powers duties, responsibilities, and
obligations under the Plan and Trust Agreement, and shall not be responsible
for any act or failure to act of another fiduciary. A fiduciary may serve in
more than one fiduciary capacity with respect to the Plan.
15.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR.
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall have all
powers necessary to administer the Plan, including the power to construe and
interpret the Plan documents; to decide all questions relating to an
individual's eligibility to participate in the Plan; to determine the amount,
manner and timing of any distribution of benefits or withdrawal under the Plan;
to approve and ensure the repayment of any loan to a Participant under the
Plan; to resolve any claim for benefits in accordance with section 15.7; and to
appoint or employ advisors, including legal counsel to render advice with
respect to any of the Plan Administrator's responsibilities under the Plan.
Any construction, interpretation, or application of the Plan by the Plan
Administrator shall be final, conclusive, and binding. All actions by the Plan
Administrator shall be taken pursuant to uniform standards applied to all
persons similarly situated. The Plan Administrator shall have no power to add
to, subtract from, or modify any of the terms of the Plan, or to change or add
to any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan.
(b) RECORDS AND REPORTS. The Plan Administrator shall be responsible
for maintaining sufficient records to reflect the Eligibility Computation
Periods in which an Employee is credited with one or more Years of Service
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<PAGE> 70
for purposes of determining his eligibility to participate in the Plan, and the
Compensation of each Participant for purposes of determining the amount of
contributions that may be made by or on behalf of the Participant under the
Plan. The Plan Administrator shall be responsible for submitting all required
reports and notifications relating to the Plan to Participants or their
Beneficiaries, the Internal Revenue Service and the Department of Labor.
(c) Furnishing Trustee with Instructions. The Plan Administrator
shall be responsible for furnishing the Trustee with written instructions
regarding all contributions to the Trust, all distributions to Participants in
accordance with ARTICLE 10 all withdrawals by Participants in accordance with
ARTICLE 12, all loans to Participants in accordance with ARTICLE 13 and all
purchases of life insurance in accordance with ARTICLE 14. In addition, the
Plan Administrator shall be responsible for furnishing the Trustee with any
further information respecting the Plan which the Trustee may request for the
performance of its duties or for the purpose of making any returns to the
Internal Revenue Service or Department of Labor as may be required of the
Trustee.
(d) Rules and Decisions. The Plan Administrator may adopt such
rules as it deems necessary, desirable, or appropriate in the administration of
the Plan. All rules and decisions of the Plan Administrator shall be applied
uniformly and consistently to all Participants in similar circumstances. When
making a determination or calculation, the Plan Administrator shall be entitled
to rely upon information furnished by a Participant or Beneficiary, the
Employer, the legal counsel of the Employer, or the Trustee.
(e) Application and Forms for Benefits. The Plan Administrator may
require a Participant or Beneficiary to complete and file with it an
application for a benefit, and to furnish all pertinent information requested
by it. The Plan Administrator may rely upon all such information so furnished
to it, including the Participant's or Beneficiary's current mailing address.
(f) Facility of Payment. Whenever, in the Plan Administrator's
opinion, a person entitled to receive a payment of a benefit or installment
thereof is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, it may direct the Trustee to make
payments to such person or to the legal representative or to a relative or
friend of such person for that person's benefit, or it may direct the Trustee
to apply the payment for the benefit of such person in such manner as it
considers advisable.
15.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Plan Administrator
may, by written instrument, allocate among its members or employees any of its
duties and responsibilities not already allocated under the Plan or may
designate persons other than members or employees to carry out any of the Plan
Administrator's duties and responsibilities under the Plan. Any such duties or
responsibilities thus allocated must be described in the written instrument. If
a person other than an Employee of the Employer is so designated, such person
must acknowledge in writing his acceptance of the duties and responsibilities
allocated to him.
15.4 APPOINTMENT OF THE PLAN ADMINISTRATOR. The Employer shall designate
in the Adoption Agreement the Plan Administrator who shall administer the
Employer's Plan. Such Plan Administrator may consist of an individual, a
committee of two or more individuals, whether or not, in either such case, the
individual or any of such individuals are Employees of the Employer, a
consulting firm or other independent agent, the Trustee (with its consent), or
the Employer itself. The Plan Administrator shall be charged with the full
power and the responsibility for administering the Plan in all its details. If
no Plan Administrator has been appointed by the Employer, or if the person
designated as Plan Administrator by the Employer is not serving as such for any
reason, the Employer shall be deemed to be the Plan Administrator of the Plan.
The Plan Administrator may be removed by the Employer, or may resign by giving
notice in writing to the Employer, and in the event of the removal,
resignation, or death, or other termination of service by the Plan
Administrator, the Employer shall, as soon as practicable, appoint a successor
Plan Administrator, such successor thereafter to have all of the rights,
privileges, duties, and obligations of the predecessor Plan Administrator.
15.5 EXPENSES. The Employer shall pay all expenses authorized and
incurred by the Plan Administrator in the administration of the Plan except to
the extent such expenses are paid from the Trust.
15.6 LIABILITIES. The Plan Administrator and each person to whom duties
and responsibilities have been allocated pursuant to section 15.3 may be
indemnified and held harmless by the Employer with respect to any alleged
breach of responsibilities performed or to be performed hereunder. The Employer
and each Affiliated Employer shall indemnify and hold harmless the Sponsor
against all claims, liabilities, fines, and penalties, and all expenses
reasonably incurred by or imposed upon him (including, but not limited to,
reasonable attorney's fees) which arise as a result of actions or failure to
act in connection with the operation and administration of the Plan.
15.7 CLAIMS PROCEDURE.
(a) Filing a Claim. Any Participant or Beneficiary under the Plan
may file a written claim for a Plan benefit with the Plan Administrator or with
a person named by the Plan Administrator to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by any Participant or
Beneficiary under the Plan ("claimant"), claimant shall be given a written
notification containing specific reasons for the denial or limitation of his
benefit. The written notification shall contain specific reference to the
pertinent Plan provisions on which the denial or limitation of his benefit is
based. In addition, it shall contain a description of any other material or
information necessary for the claimant to perfect a claim, and an explanation
of why such material or information is necessary. The notification shall
further provide appropriate information as to the steps to be taken if the
claimant wishes to submit his claim for review. This written notification shall
be given to a claimant within ninety (90)
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<PAGE> 71
days after receipt of his claim by the Plan Administrator unless special
circumstances require an extension of time for processing the claim. If such an
extension of time for processing is required, written notice of the extension
shall be furnished to the claimant prior to the termination of said ninety (90)
day period, and such notice shall indicate the special circumstances which make
the postponement appropriate.
(c) Right of Review. In the event of a denial or limitation of his
benefit, the claimant or his duly authorized representative shall be permitted
to review pertinent documents and to submit to the Plan Administrator issues and
comments in writing. In addition, the claimant or his duly authorized
representative may make a written request for a full and fair review of his
claim and its denial by the Plan Administrator; provided, however, that such
written request must be received by the Plan Administrator (or its delegate to
receive such requests) within sixty (60) days after receipt by the claimant of
written notification of the denial or limitation of the claim. The sixty (60)
day requirement may be waived by the Plan Administrator in appropriate cases.
(d) Decision on Review. A decision shall be rendered by the Plan
Administrator within sixty (60) days after the receipt of the request for
review, provided that where special circumstances require an extension of time
for processing the decision, it may be postponed on written notice to the
claimant (prior to the expiration of the initial sixty (60) day period) for an
additional sixty (60) days, but in no event shall the decision by rendered more
than one hundred twenty (120) days after the receipt of such request for
review. Any decision by the Plan Administrator shall be furnished to the
claimant in writing and shall set forth the specific reasons for the decision
and the specific Plan provisions on which the decision is based.
(e) Court Action. No Participant or Beneficiary shall have the
right to seek judicial review of a denial of benefits, or to bring any action
in any court to enforce a claim for benefits prior to filing a claim for
benefits or exhausting his rights to review under this section.
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 SPONSOR'S POWER TO AMEND. The Sponsor may amend any part of the
Plan. For purposes of Sponsor's amendments, the mass submitted shall be
recognized as the agent of the Sponsor. If the Sponsor does not adopt the
amendments made by the mass submitted, it will no longer be identical to or a
minor modifier of the mass submitted plan.
16.2 AMENDMENT BY ADOPTING EMPLOYER.
(a) The Employer may:
(i) change the choice of options in the Adoption Agreement;
(ii) add overriding language in the Adoption Agreement when
such language is necessary to satisfy section 415 or section 416 of the Code
because of the required aggregation of multiple plans; and
(iii) add certain model amendments published by the Internal
Revenue Service which specifically provide that their adoption will not cause
the Plan to be treated as individually designed.
(b) An Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under section 412(d) of the Code,
will no longer participate in this prototype plan and will be considered to
have an individually designed plan.
16.3 VESTING UPON PLAN TERMINATION. In the event of the termination or
partial termination of the Plan, the Account balance of each affected
Participant will be nonforfeitable.
16.4 VESTING UPON COMPLETE DISCONTINUANCE OF CONTRIBUTIONS. In the event
of a complete discontinuance of contributions under the Plan, the Account
balance of each affected Participant will be nonforfeitable.
16.5 MAINTENANCE OF BENEFITS UPON MERGER. In the event of a merger or
consolidation with, or transfer of assets to any other plan, each Participant
will receive a benefit immediately after such merger, consolidation or transfer
(if the Plan then terminated) which is at least equal to the benefit the
Participant was entitled to immediately before such merger, consolidation or
transfer (if the Plan had been terminated).
16.6 SPECIAL AMENDMENTS. The Employer may from time to time make any
amendment to the Plan that may be necessary to satisfy section 415 or 416 of
the Code. Any such amendment will be adopted by the Employer by completing
overriding Plan language in the Adoption Agreement. In the event of such an
agreement, the Employer must obtain a separate determination letter from the
Internal Revenue Service to continue reliance on the Plan's qualified status.
ARTICLE 17
MISCELLANEOUS
17.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES.
(a) All assets of the Trust shall be retained for the exclusive
benefit of Participants and their Beneficiaries, and shall be used only to pay
benefits to such persons or to pay the fees and expenses of the Trust. The
assets of the Trust shall not revert to the benefit of the Employer, except as
otherwise specifically provided in section 17.1(b).
(b) To the extent permitted or required by ERISA and the Code,
contributions to the Trust under this Plan are subject to the following
conditions:
(i) If a contribution or any part thereof is made to the
Trust by the Employer under a mistake of fact, such contribution or part
thereof shall be returned to the Employer within one (1) year after the date
the contribution is made.
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(ii) In the event the Plan is determined not to meet the initial
qualification requirements of section 401 of the Code, contributions made in
respect of any period for which such requirements are not met shall be returned
to the Employer within one (1) year after the Plan is determined not to meet
such requirements, but only if the application for the qualification is made by
the time prescribed by law for filing the Employer's return for the taxable
year in which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(iii) Contributions to the Trust are specifically conditioned on
their deductibility under the Code and, to the extent a deduction is disallowed
for any such contribution, such amount shall be returned to the Employer within
one (1) year after the date of the disallowance of the deduction.
17.2 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be
construed as a contract of employment between the Employer and any Employee, or
as a right of any Employee to be continued in the employment of the Employer,
or as a limitation of the right of the Employer to discharge any of its
Employees, with or without cause.
17.3 RIGHTS TO TRUST ASSETS. No Employee, Participant, or Beneficiary
shall have any right to, or interest in, any assets of the Trust upon
termination of employment or otherwise, except as provided under the Plan. All
payments of benefits under the Plan shall be made solely out of the assets of
the Trust.
17.4 NONALIENATION OF BENEFITS. No benefit or interest available
hereunder will be subject to assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in section
414(p) of the Code, or any domestic relations order entered before January 1,
1985.
17.5 AGGREGATION RULES.
(a) Except as provided in ARTICLE 6, all Employees of the Employer
or any Affiliated Employer will be treated as employed by a single employer.
(b) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy sections 401(a) and (d) of the Code for the Employees of this
and all other trades or businesses.
(c) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies sections 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than provided for Owner-Employees under this
Plan.
(d) If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for him under the most favorable plan of the
trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), an Owner-Employee,
or two or more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or
business; or
(ii) in the case of a partnership, own more than fifty percent
(50%) of either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning an interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
17.6 FAILURE OF QUALIFICATION. If the Employer's plan fails to attain or
retain qualification, such plan will no longer participate in this
master/prototype plan and will be considered an individually designed plan.
17.7 APPLICABLE LAW. Except to the extent otherwise required by ERISA, as
amended, this Plan shall be construed and enforced in accordance with the laws
of the state in which the Employer's principal place of business is located, as
specified in the Adoption Agreement.
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DETERMINATION LETTERS
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<PAGE> 74
<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE Department of the Treasury
Description: Prototype Standardized Profit Sharing Plan
50241605001 Case: 9012605 EIN: 74-1894784
01 Plan: 001 Letter Serial No: D248294a
Washington D.C. 20224
Person to Contact: Ms. Arrington
AIM DISTRIBUTORS, INC. Telephone Number: (202) 566-4576
ELEVEN GREENWAY PLAZA Refer Reply to: E:EP:Q:ICU
SUITE 1919
HOUSTON, TX 77046 Date: 07/10/90
</TABLE>
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or
(2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3). In such situations, the employer should request a determination as
to whether the plan, considered with all related qualified plans and, if
appropriate, welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code section 415.
The plan identified above is not a replacement plan as defined in section 3.10
of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not
rely on this opinion letter to extend the remedial amendment period under
section 401(b) of the Code and regulations thereunder.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of the plan.
Sincerely yours,
/s/ [ILLEGIBLE]
Chief, Employee Plans Qualifications Branch
<PAGE> 75
<TABLE>
<S> <C>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Standardized Money Purchase Pension Plan
M: 50241605001-002 Case: 9812606 EIN: 74-1894784
BPD: 01 Plan: 802 Letter Serial No: D248295a
Washington DC 20224
Person to Contact: Ms. Arrington
AIM DISTRIBUTORS INC
Telephone Number: (202) 566-4576
ELEVEN GREENWAY PLAZA
SUITE 1919 Refer Reply to: E:EP:Q:ICU
HOUSTON, TX 77046
Date: 07/10/90
</TABLE>
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16). If: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or
(2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3). In such situations, the employer should request a determination as
to whether the plan, considered with all related qualified plans and, if
appropriate, welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code section 415.
The plan identified above is not a replacement plan as defined in section 3.10
of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not
rely on this opinion letter to extend the remedial amendment period under
section 401(b) of the Code and regulations thereunder.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ [ILLEGIBLE]
Chief, Employee Plans Qualifications Branch
<PAGE> 76
TRUST AGREEMENT
70
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PROTOTYPE DEFINED CONTRIBUTION TRUST
71
<PAGE> 78
INVESTMENT COMPANY INSTITUTE
PROTOTYPE DEFINED CONTRIBUTION TRUST
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE I ACCOUNTS
1.1 Establishing Accounts 4
1.2 Charges Against Accounts 4
1.3 Prospectus to be Provided 4
ARTICLE II RECEIPT OF CONTRIBUTIONS 4
ARTICLE III INVESTMENT POWERS OF THE TRUSTEE
3.1 Investment of Account Assets 4
3.2 Directed Investments 5
3.3 General Investment Powers 5
3.4 Investment in Combined Funds 5
3.5 Other Powers of the Trustee 6
3.6 General Powers 6
3.7 Valuation of Trust 6
3.8 Bonding 6
3.9 Duties not Assigned 6
ARTICLE IV DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT 6
ARTICLE V REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR 7
ARTICLE VI TRUSTEE'S FEES AND EXPENSES OF THE TRUST 7
ARTICLE VII DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 Information and Data to be Furnished 7
the Trustee
7.2 Limitation of Duties 7
ARTICLE VIII LIABILITY OF THE TRUST
8.1 Trustee's Liability 7
ARTICLE IX DELEGATION OF POWERS
9.1 Delegation by the Trustee 8
9.2 Delegation with Employer Approval 8
ARTICLE X AMENDMENT 8
ARTICLE XI RESIGNATION OR REMOVAL OF TRUSTEE 8
ARTICLE XII TERMINATION OF THE TRUST
12.1 Term of the Trust 9
12.2 Termination by the Trustee 9
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ARTICLE XIII MISCELLANEOUS
13.1 No Diversion of Assets 9
13.2 Notices 9
13.3 Multiple Trustees 9
13.4 Conflict with Plan 9
13.5 Applicable Law 9
13.6 Returned Contributions 9
13.7 General Undertaking 9
13.8 Invalidity of Certain Provisions 9
13.9 Counterpart Originals 9
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<PAGE> 80
TRUST AGREEMENT
The employer identified at the end of this Trust Agreement (the
"Employer") has established a prototype Money Purchase Pension and/ or Profit
Sharing Plan sponsored by the AIM Family of Funds (the "Plan") for the benefit
of Participants therein pursuant to section 401 of the Internal Revenue Code of
1986. As part of the Plan, the Employer has requested such person or persons
(individual, corporate, or other entity), as may be designated in the Adoption
Agreement, to serve as Trustee pursuant to the Trust established for the
investment of contributions under the Plan upon the terms and conditions set
forth in this Trust Agreement.
Unless the context of this Trust Agreement clearly indicates otherwise,
the terms defined in ARTICLE 2 of the Plan entered into by the Employer, of
which this Trust Agreement forms a part, shall, when used herein, have the same
meaning as in the Plan.
ARTICLE I
ACCOUNTS
1.1 ESTABLISHING ACCOUNTS. The Trustee shall open and maintain a Trust
account for the Plan and, as part thereof, Participants' Accounts for such
individuals as the Plan Administrator shall, from time to time, give written
notice to the Trustee as being Participants in the Plan. The Trustee shall also
open and maintain such other subaccounts as may be appropriate or desirable to
aid in the administration of the Plan. Separate subaccounts shall be maintained
for each Participant and shall be credited with the contributions made by the
Employer and with forfeitures allocated to each such Participant pursuant to
the Plan (and all earnings thereon). If nondeductible voluntary contributions
by Participants are permitted by the Plan, the Trustee shall open and maintain
as a part of the Trust a separate subaccount for each Participant who makes
such nondeductible voluntary contributions, each such subaccount to be credited
with the Participant's voluntary contributions (and all earnings attributable
to such contributions). If trustee transfers or rollover contributions from
another qualified plan are received, the Trustee shall open and maintain a
separate rollover subaccount for each Participant, each such subaccount to be
credited with the Participant's trustee transfers or rollover contributions
(and all earnings attributable to such contributions).
1.2 CHARGES AGAINST ACCOUNTS. Upon receipt of written instructions from
the Plan Administrator, the Trustee shall charge the appropriate subaccount of
the Participant for any withdrawals or distributions made under the Plan and
any forfeiture, which may be required under the Plan, of unvested interests
attributable to Employer Contributions. The Plan Administrator will give
written instructions to the Trustee specifying the manner in which Employer
Contributions and any forfeiture of the nonvested portion of Accounts, as
allocated by the Plan Administrator in accordance with the provisions of the
Plan, are to be credited to the various Accounts maintained for Participants.
1.3 PROSPECTUS TO BE PROVIDED. The Plan Administrator shall ensure that
a Participant who makes a nondeductible voluntary contribution has previously
received or receives a copy of the then current prospectus relating to the
Shares. Delivery of such a nondeductible voluntary contribution, pursuant to
the provisions of the Plan by the Plan Administrator to the Trustee shall
entitle the Trustee to assume that the Participant has received such a
prospectus.
ARTICLE II
RECEIPT OF CONTRIBUTIONS
The Trustee shall accept and hold in the Trust contributions made by the
Employer and Participants under the Plan. The Plan Administrator shall give
written instructions to the Trustee specifying the Participants' Accounts to
which contributions are to be credited, the amount of each such credit which is
attributable to Employer Contributions, and the amount, if any, which is
attributable to the Participant's nondeductible voluntary contributions. If
written instructions are not received by the Trustee, or is such instructions
are received but are deemed by the Trustee to be unclear, upon notice to the
Employer and Plan Administrator, the Trustee may elect to hold all or part of
any such contribution in cash, without liability for rising security prices or
distributions made, pending receipt by it from the Plan Administrator of
written instructions or other clarification, or the Trustee may return the
contribution to the Employer. If any contributions or earnings are less than
any minimum which the then current prospectus for the Shares requires, the
Trustee may hold the specified portion of contributions or earnings in cash,
without interest, until such time as the proper amount has been contributed or
earned so that the investment in the Shares required under the Plan may be
made. All payments to the Trust shall be remitted in U.S. currency or other
property to the Trustee at the address specified by it. Any payments not in U.S.
currency may, in the sole discretion of the Trustee, be refused.
ARTICLE III
INVESTMENT POWERS OF THE TRUSTEE
3.1 INVESTMENT OF ACCOUNT ASSETS. The Trustee shall invest the amount of
each contribution made hereunder and all earnings on the Trust in full and
fractional Shares in accordance with the current prospectus for such Shares, in
such amounts and proportions as shall from time to time be designated by the
Plan Administrator on forms provided by the Sponsor, and shall credit such
Shares to the Accounts of each Participant on whose behalf or by whom the
contributions are made and any forfeitures are allocated. All dividends and
capital gain distributions received on the Shares held by the Trustee in each
Account, shall, if received in cash, be reinvested in such Shares in accordance
with the current prospectus for such Shares and shall in any event be credited
to such Account. If any distribution on Shares may be received at the election
of the shareholder in additional Shares, the Trustee shall so elect. The Trustee
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shall deliver, or cause to be executed and delivered, to the Plan
Administrator, all notices, prospectuses, financial statements, proxies, and
proxy soliciting materials relating to Shares held hereunder. The Trustee shall
not vote any of the Shares held hereunder, except in accordance with the
written instructions of the Plan Administrator. If no such written instructions
are received, such Shares shall not be voted. The obligations of the Trustee
hereunder may be delegated by it as provided in Sections 9.1 and 9.2.
The Trustee shall sell Shares and purchase Shares to accomplish any change
in investments desired by the Employer as indicated on any amended Adoption
Agreement or other instructions in accordance with the terms of the Plan.
Notwithstanding the above, if periodic payments are being made to a
Participant pursuant to ARTICLE IV hereof, any dividends received on Shares held
in such Participant's Account, which dividends are invested at an offering price
which includes a sales charge, need not be invested in additional Shares but may
be held for distribution to the Participant in periodic payments. In such
instances, the Trustee may make any election necessary to receive any such
dividends in cash.
3.2 DIRECTED INVESTMENTS. When so instructed by the Plan Administrator,
the Trustee shall invest all or any portion of the individual Account of any
Participant in accordance with the direction of the Employer or such
Participant in lieu of participation in the general assets of the Trust. Such
directed investments shall be accounted for separately for each Participant.
Except as otherwise provided herein, the Trustee shall not have any discretion,
and is specifically prohibited from exercising any control or discretion, with
respect to such directed investments. Each Participant who directs the
investment of his Account shall be solely and absolutely responsible for the
investment or reinvestment of all directed investment assets held on is behalf
in Trust, and, except as otherwise provided herein, the Trustee shall not
question any such direction, review any securities or other such assets, or make
suggestions with respect to the investment, retention or disposition of any such
assets; provided that:
(a) If any contributions are transmitted to otherwise received or
held as directed investment assets without investment directions from the
Participant, the Trustee shall retain such amounts in a noninterest-bearing
savings account in a federally insured institution for the benefit of the
Participant.
(b) The Trustee may establish such reasonable rules and regulations,
applied on a uniform basis to all Participants, with respect to the
requirements for, and the form and manner of, effectuating any transaction with
respect to directed investment assets including, without limitation, minimum
amounts, rules applicable to conversion of directed investments into general
assets of the Trust, and appropriate adjustments (based on fair market values)
to Accounts to reflect any such conversion, as the Trustee shall determine to
be consistent with the purposes of the Plan. Any such rules and regulations
shall be binding upon all persons interested in the Trust.
(c) The Trustee may establish a procedure for the periodic review of
directed investment assets to determine, in light of the facts and
circumstances reasonably known to it, whether any actual or proposed investment
of such assets constitutes or would constitute a prohibited transaction as that
term is defined in sections 406-408 of ERISA and the corresponding provisions
of the Code. If the Trustee determines that any investment constitutes or would
constitute a prohibited transaction, the Trustee shall promptly communicate
this determination to the Plan Administrator, and shall recommend that the
investment be prevented or disposed of, as the case may be, and may recommend
any other action authorized or required by law, to prevent or remedy the
transaction.
(d) In accordance with and pursuant to uniform and nondiscriminatory
rules established under and in accordance with the Plan, the Trustee may deny
the Plan Administrator's application to allow a directed investment proposed by
a Participant.
(e) Notwithstanding anything herein to the contrary, in no event
shall the Trustee engage in any transaction that would be prohibited under
ERISA.
3.3 GENERAL INVESTMENT POWERS. Subject to any investment limitations or
minimum requirements for investments in Shares imposed by the Sponsor, and
subject to investment instructions given by the Plan Administrator, the Trustee
shall be authorized and empowered to invest and reinvest all or any part of the
Trust in any property, real or personal or mixed, including, but not being
limited to, capital or common stock (whether voting or nonvoting or whether or
not currently paying a dividend), preferred or preference stock (whether voting
or nonvoting or whether or not paying a dividend), Shares of regulated
investment companies, convertible securities, corporate and governmental
obligations, leaseholds, ground rents, mortgages, and other interests in
realty, trust, and participation certificates, oil, mineral or gas properties,
royalty interests or rights, including equipment pertaining thereto, notes and
other evidences of indebtedness or ownership, secured or unsecured, contracts,
choses in action, and warrants, and other instruments entitling the owner
thereof to subscribe to or purchase any of the aforesaid. Subject to any
investment limitations or requirements imposed by the Sponsor relating to the
type of permissible investments in the Trust or the minimum percentage of Trust
assets to be invested in Shares, and subject to the provisions of ARTICLE VIII
hereof, in making and retaining such investments and reinvestments pursuant
hereto, the Trustee shall not be bound as to the character of any investments
by any statute, rule of court, or custom governing the investment of Trust
funds.
3.4 INVESTMENT IN COMBINED FUNDS. If the Trustee is a banking
institution, subject to any investment limitations or minimum requirements for
investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Plan Administrator, it may, subject to the election
of the Sponsor or the Employer, cause funds
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of this Trust to be invested in its commingled funds for qualified employee
benefit plan trusts and such commingled funds are hereby adopted and made a
part of the Plan of which this Trust is a part, and any funds of this Trust
invested in any such commingled funds shall be subject to all the provisions
thereof, as the same may be amended from time to time.
3.5 OTHER POWERS OF THE TRUSTEE. The Trustee is authorized and empowered
with respect to the Trust:
(a) Subject to any investment limitations or minimum requirements
for investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Plan Administrator, to sell, exchange, convey,
transfer, or otherwise dispose of, either at public or private sale, any
property, real or personal or mixed, at any time held by it, for such
consideration and on such terms and conditions as to credit or otherwise as
the Trustee may deem best.
(b) Subject to the provisions of section 3.1, to vote in person or
by proxy any stocks, bonds, or other securities held by it; to exercise any
options appurtenant to any stocks, bonds, or other securities, or to exercise
any rights to subscribe for additional stocks, bonds, or other securities, and
to make any and all necessary payments therefor, to join in, or to dissent
from, and to oppose, the reorganizations, consolidation, liquidation, sale, or
merger of corporations, or properties in which if may be interested as Trustee,
upon such terms and conditions as it may deem wise.
(c) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted.
(d) To register any investment held in the Trust in the name of the
Trust or in the name of a nominee, and to hold any investment in bearer form,
but the books and records of the Trustee shall at all times show that all such
investments are part of the Trust.
(e) To employ suitable agents and counsel (who may also be agents
and/or counsel for the Employer or the Sponsor) and to pay their reasonable
expenses and compensation.
(f) To borrow or raise monies for the purpose of the Trust from any
source and, for any sum so borrowed to issue its promissory note as Trustee and
to secure the repayment thereof by pledging all or any part of the Trust fund,
but nothing herein contained shall obligate the Trustee to render itself liable
individually for the amount of any such borrowing; and no person loaning money
to the Trustee shall be bound to see the application of money loaned or to
inquire into the validity or propriety of any such borrowing.
Each and all of the foregoing powers may be exercised without a court
order or approval. No one dealing with the Trustee need inquire concerning the
validity or propriety of anything that is done or need see to the application
of any money paid or property transferred to or upon the order of the Trustee.
3.6 GENERAL POWERS. The Trustee shall have all of the powers necessary or
desirable to do all acts, take all such proceedings, and exercise all such
rights and privileges, whether or not expressly authorized herein, which it may
deem necessary or proper for the administration and protection of the property
of the Trust and to accomplish any action provided for in the Plan.
3.7 VALUATION OF TRUST. The Trustee, as of the Valuation Date, and at
such other time or times as it determines, shall determine the net worth of the
assets of the Trust. In determining such net worth, the assets of the Trust
shall be evaluated at their fair market value and all expenses shall be
deducted. The Trustee may adopt such methods of valuation as it deems advisable.
3.8 BONDING. Except to the extent otherwise required by law, the Trustee
shall not be required to obtain any bonds in connection with its duties
hereunder. The cost of any bond obtained may be charged as an expense of the
Trust, but if not so charged, shall be paid by the Employer.
3.9 DUTIES NOT ASSIGNED. The duties of the Trustee with respect to the
Plan are limited to those assumed by the Trustee by the terms of this Trust. The
Trustee shall not be deemed, by virtue hereof, to be the administrator or
sponsor of the Plan, and shall not be responsible for filing reports, returns
or disclosures with any government agency except as may otherwise be required
by its duties as Trustee under applicable law.
ARTICLE IV
DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT
Distributions from the Trust shall be made by the Trustee in accordance
with proper written directions of the Plan Administrator in accordance with the
provisions of section 15.2 of the Plan, and the Plan Administrator shall have
the sole responsibility for determining that the directions given conform to
provisions of the Plan and applicable law, including (without limitation)
responsibility for calculating the vested interests of the Participant, for
calculating the amounts payable to a Participant pursuant to ARTICLE 11 of the
Plan, and for determining the proper person to whom benefits are payable under
the Plan. Except to the extent otherwise provided in the Plan, the interest of
Participants and Beneficiaries in the Trust and in the net earnings and profits
thereof may not be assigned or used by a Participant or Beneficiary as
collateral for a loan and shall not be subject to garnishment, attachment, levy
or execution of any kind for the debts or defaults of the Trustee or of any
person, natural or legal, having interest in the Trust.
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ARTICLE V
REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR
The Trustee shall keep accurate and detailed records of all receipts,
investments, disbursements, and other transactions required to be performed
hereunder with respect to the Trust. The Trustee shall file with the Plan
Administrator a written report or reports reflecting the receipts,
disbursements, and other transactions effected by it with respect to the Trust
during such Plan Year and the assets and liabilities of the Trust at the close
of the Plan Year. Such report or reports shall be open to inspection by any
Participant for a period of one hundred eighty (180) days immediately following
the date on which it is filed with the Plan Administrator. Except as otherwise
prescribed by ERISA, upon the expiration of such one hundred eighty (180) day
period, the Trustee shall be forever released and discharged from all liability
and accountability to anyone with respect to its acts, transactions, duties,
obligations, or responsibilities as shown in or reflected by such report,
except with respect to any such acts or transactions as to which the Plan
Administrator shall have filed written objections with the Trustee within such
one hundred eighty (180) day period, and except for willful misconduct or lack
of good faith on the part of the Trustee.
ARTICLE VI
TRUSTEE'S FEES AND EXPENSES OF THE TRUST
The Trustee's fees for performing its duties hereunder shall be such
reasonable amounts as shall be established by it from time to time. The Trustee
shall furnish the Employer with its current schedule of fees and shall give
written notice to the Employer whenever its fees are changed or revised. Such
fees, any taxes of any kind whatsoever which may be levied or assessed upon or
in respect of the Trust, to the extent incurred by the Trustee and any and all
reasonable expenses incurred by the Trustee in the performance of its duties,
including fees for legal services rendered to the Trustee, shall, unless paid by
the Employer, be paid from the Trust in the manner provided in the Plan.
Unless paid by the Employer, all fees of the Trustee and taxes and other
expenses charged to a Participant's Account may be collected by the Trustee
from the amount of any contribution to be credited or distribution to be
charged to such Account or may be paid by redeeming or selling assets credited
to such Account.
ARTICLE VII
DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 INFORMATION AND DATA TO BE FURNISHED THE TRUSTEE. In addition to
making the contributions called for in ARTICLE II hereof, the Employer, through
the Plan Administrator, agrees to furnish the Trustee with such information and
data relative to the Plan as is necessary for the proper administration of the
Trust established hereunder.
7.2 LIMITATION OF DUTIES. Neither the Employer nor any of its officers,
directors, or partners, nor the Plan Administrator shall have any duties or
obligations with respect to this Trust Agreement, except those expressly set
forth herein and in the Plan.
ARTICLE VIII
LIABILITY OF THE TRUST
8.1 TRUSTEE'S LIABILITY
(a) The Employer shall indemnify and save the Trustee (including its
affiliates, representatives and agents) harmless from and against any
liability, cost or other expense, including, but not limited to, the payment of
attorneys' fees that the Trustee may incur in connection with this Trust
Agreement or the Plan unless such liability, cost or other expense (whether
direct or indirect) arises from the Trustee's own willful misconduct or gross
negligence. The Employer recognizes that a burden of litigation may be imposed
upon the Trustee as a result of some act or transaction for which it has no
responsibility or over which it has no control under this Trust Agreement.
Therefore, the Employer agrees to indemnify and hold harmless and, if
requested, defend the Trustee (including its affiliates, representatives and
agents) from any expenses (including counsel fees, liabilities, claims,
damages, actions, suits or other charges) incurred by the Trustee in
prosecuting or defending against any such litigation.
(b) The Trustee shall not be liable for, and the Employer will
indemnify and hold harmless the Trustee (including its affiliates,
representatives and agents) from and against all liability or expense
(including counsel fees) because of (i) any investment action taken or omitted
by the Trustee in accordance with any direction of the Employer or a
Participant, or investment inaction in the absence of directions from the
Employer or a Participant or (ii) any investment action taken by the Trustee
pursuant to an order to purchase or sell securities placed by the Employer or a
Participant directly with a broker, dealer or issuer. It is understood that
although, when the Trustee is subject to the direction of the Employer or a
Participant the Trustee will perform certain ministerial duties with respect to
the portion of the Fund subject to such direction (the "Directed Fund"), such
duties do not involve the exercise of any discretionary authority or other
authority to manage and control assets of the Directed Fund and will be
performed in the normal course of business by officers and employees of the
Trustee or its affiliates, representatives or agents who may be unfamiliar with
investment management. It is agreed that the Trustee is not undertaking any
duty or obligation, express or implied, to review, and will not be deemed to
have any knowledge of or responsibility with respect to, any transaction
involving the investment of the Directed Fund as a result of the performance of
its ministerial duties. Therefore, in the event that "knowledge" of the Trustee
shall be a prerequisite to imposing a duty upon or determining liability of the
Trustee under the Plan or this Trust or any law or regulation regulating the
conduct of the Trustee with
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respect to the Directed Fund, as a result of any act or omission of the
Employer or any Participant, or as a result of any transaction engaged in by
any of them, then the receipt and processing of investment orders and other
documents relating to Plan assets by an officer or other employee of the
Trustee or its affiliates, representatives or agents engaged in the performance
of purely ministerial functions shall not constitutes "knowledge" of the
Trustee.
(c) Notwithstanding the foregoing provisions of this Trust
Agreement, the Trustee shall discharge its duties hereunder with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims. Any
investment selected by the Trustee without specific direction from the Employer
shall be selected to diversify the investments of the Trust fund so as to
minimize the risk of large losses, unless in the circumstances it is clearly
prudent not to do so. The Trustee shall perform its duties in accordance with
this Trust Agreement insofar as this Trust Agreement is consistent with the
provisions of ERISA. To the extent not prohibited by ERISA, the Trustee shall
not be responsible in any way for any action or omission of the Employer or the
Plan Administrator with respect to the performance of their duties and
obligations set forth in the Plan. To the extent not prohibited by ERISA, the
Trustee shall not be responsible for any action or omission of any of its
agents, or with respect to reliance upon advice of its counsel (whether or not
such counsel is also counsel to the Employer or to the Plan Administrator),
provided that such agents or counsel were prudently chosen by the Trustee and
that the Trustee relied in good faith upon the action of such agent or the
advice of such counsel. The Trustee shall be indemnified and held harmless by
the Employer against liability or losses occurring by reason of any act or
omission of the Trustee under this Trust Agreement, unless such act or omission
is due to its own willful nonfeasance, malfeasance, or misfeasance or other
breach of duty under ERISA, to the extent that such indemnification does not
violate ERISA or any other federal or state laws.
ARTICLE IX
DELEGATION OF POWERS
9.1 DELEGATION BY THE TRUSTEE. With respect to Shares held by the Plan,
the Trustee hereby delegates to the custodian or other agent designated by the
Sponsor the functions designated in (a) through (d) hereunder, other than the
investment, management or control of the Trust assets. With respect to assets
other than Shares, the Trustee may delegate in writing pursuant to a procedure
permitted and established by the Sponsor, to a person (individual, corporate,
or other entity) designated by the Sponsor as an agent or custodian, any of the
powers or functions of the Trustee hereunder other than the investment,
management or control of the Trust assets, including (without limitation):
(a) custodianship of all or any part of the assets of the Trust;
(b) maintaining and accounting for the Trust and for Participants
and other Accounts as a part thereof;
(c) distribution of benefits as directed by the Plan Administrator;
and
(d) Preparation of the annual report on the status of the Trust.
The agent or custodian so appointed may act as agent for the Trustee,
without investment responsibility, for fees to be mutually agreed upon by the
Employer and the agent or custodian and paid in the same manner as Trustee's
fees. The Trustee shall not be responsible for any act or omission of the
agent or custodian arising from any such delegation, except to the extent
provided in ARTICLE VIII.
9.2 DELEGATION WITH EMPLOYER APPROVAL. The Trustee (whether or not a bank
or trust company) and the Employer may, by mutual agreement, arrange for the
delegation by the Trustee to the Plan Administrator or any agent of the
Employer of any powers of functions of the Trustee hereunder other than the
investment and custody of the Trust assets. The Trustee shall not be
responsible for any act or omission of such person or persons arising from any
such delegation, except to the extent provided in ARTICLE VIII.
ARTICLE X
AMENDMENT
As provided in section 16.1 of the Plan, and subject to the limitations
set forth herein, the prototype Adoption Agreement, Plan and Trust Agreement
may be amended at any time, in whole or in part, by the Sponsor. The Trustee
hereby delegates authority to the Sponsor, and to any successor Sponsor, to so
amend the prototype Adoption Agreement, Plan and Trust Agreement and the
Trustee hereby agrees that it shall be deemed to have consented to any
amendment so made which does not increase the duties of the Trustee without its
consent.
ARTICLE XI
RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time upon thirty (30) days notice in writing
to the Employer, and may be removed by the Sponsor or Employer at any time upon
thirty (30) days notice in writing to the Trustee. Upon such resignation or
removal, the Sponsor or Employer shall appoint a successor Trustee or
Trustees. Upon receipt by the Trustee of written acceptance of such
appointment by the successor Trustee, the Trustee shall transfer and pay over
to such successor the assets of the Trust and all records pertaining thereto,
provided that any successor Trustee shall agree not to dispose of any such
records without the Trustee's consent. The successor Trustee shall be entitled
to rely upon all accounts, records, and other documents received by it from the
Trustee, and shall not incur any liability whatsoever for such reliance. The
Trustee is authorized, however, to reserve such sum of money or property as it
may deem advisable
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for payment of all its fees, compensation, costs, and expenses, or for payment
of any other liabilities constituting a charge on or against the reasonable
assets of the Trust or on or against the Trustee, with any balance of such
reserve remaining after the payment of all such items to be paid over to the
successor Trustee. Upon the assignment, transfer, and payment over of the
assets of the Trust, and obtaining a receipt thereof from the successor
Trustee, the Trustee shall be released and discharged from any and all claims,
demands, duties, and obligations arising out of the Trust and its management
thereof, excepting only claims based upon the Trustee's willful misconduct or
lack of good faith. The successor Trustee shall hold the assets paid over to
it under terms similar to those of this Trust Agreement under a trust that will
qualify under section 401 of the Code. If within thirty (30) days after the
Trustee's resignation or removal, the Employer or Sponsor has not appointed a
successor Trustee which has accepted such appointment, the Trustee may apply to
a court of competent jurisdiction for appointment or a successor or appoint
such successor itself.
ARTICLE XII
TERMINATION OF THE TRUST
12.1 TERM OF THE TRUST. This Trust shall continue as to the Employer so
long as the Plan is in full force and effect. If the Plan ceases to be in full
force and effect, this Trust shall thereupon terminate unless expressly
extended by the Employer.
ARTICLE XIII
MISCELLANEOUS
13.1 NO DIVERSION OF ASSETS. At no time shall it be possible for any part
of the assets of the Trust to be used for or diverted to purposes other than
for the exclusive benefit of Participants and their Beneficiaries or revert to
the Employer, except as specifically provided in the Plan or this Trust
Agreement.
13.2 NOTICES. Any notice from the Trustee to the Employer or from the
Employer to the Trustee provided for in the Plan and Trust shall be effective
if sent by first class mail to their respective last address of record.
13.3 MULTIPLE TRUSTEES. In the event that there shall be two (2) or more
of the Trustees serving hereunder, any action taken or decision made by any
such Trustee may be taken or made by a majority of them with the same effect as
if all had joined therein, if there be more than two (2), or unanimously if
there be two (2).
13.4 CONFLICT WITH PLAN. In the event of any conflict between the
provisions of the Plan and those of this Trust Agreement, the Plan shall
prevail.
13.5 APPLICABLE LAW. Except to the extent otherwise required by ERISA,
as amended, this Trust Agreement shall be construed in accordance with the laws
of the state where the Trustee has its principal place of business.
13.6 RETURNED CONTRIBUTIONS.
(a) A contribution made by the Employer by a mistake of fact shall,
if the Administrator so directs, be returned to the Employer within one (1)
year after its repayment. The Administrator shall, in its sole discretion,
determine whether the contribution was made by mistake of fact based upon such
evidence as it deems appropriate.
(b) A contribution made by the Employer that is conditioned on
deductibility under section 404 of the Code shall, to the extent such deduction
is disallowed, be returned to the Employer within one (1) year after the
disallowance, if the Administrator so directs.
13.7 GENERAL UNDERTAKING. All parties to this Trust and all persons
claiming any interest whatsoever hereunder agree to perform any and all acts
and execute any and all documents and papers which may be necessary or
desirable for the carrying out of the Trust or any of its provisions.
13.8 INVALIDITY OF CERTAIN PROVISIONS. If any provision of this Trust
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof and the Trust shall be construed
and enforced as if such provisions had not been included.
13.9 COUNTERPART ORIGINALS. This Trust may be executed in one or more
counterpart originals.
IN WITNESS WHEREOF, the Employer and the Trustee(s) have signed this Trust
effective as of the date specified in the Adoption Agreement.
----------------------------
Attest: [NAME OF EMPLOYER]
------------------ BY: ---------------------
Secretary President
TRUSTEE(S)
----------------------------
----------------------------
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-------------------------------------
)
) SS
)
I,_______________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that _____________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
did personally appear before me and do acknowledge that they executed the
foregoing Trust as their free act and deed.
Subscribed and sworn to before me this_____ day of ______________, 19____.
-------------------------------------
Notary Public
My Commission
Expires:
--------------------
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EMPLOYEE NOTICES
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SPD, Pension and Welfare Benefits Administration
Room N-5644
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, DC 20210
Re:
Dear Sir or Madam:
Enclosed is a copy of the _____________ Summary Plan Description. This copy is
(Plan Name)
respectfully being submitted to Department of Labor in order to satisfy the
disclosure requirements of ERISA for Qualified Plans.
Should you have any questions, please feel free to contact me at your earliest
convenience.
Sincerely,
Plan Sponsor
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MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------
[INSERT NAME OF EMPLOYER)
PROFIT SHARING PLAN
Copyright 1990 Investment Company Institute March 1990
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<PAGE> 90
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
I. INTRODUCTION ........................................................... 3
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3
A. Terms With Special Meanings ...................................... 3
B. Participation .................................................... 4
C. Individual Accounts .............................................. 4
D. Contributions .................................................... 4
E. Allocations ...................................................... 5
F. Vesting .......................................................... 7
G. Forfeitures ...................................................... 8
H. Distributions of Benefits ........................................ 8
I. Investment of Plan Assets ........................................ 9
J. Withdrawals ...................................................... 10
K. Loans ............................................................ 10
L. Insurance ........................................................ 10
III. CLAIMS PROCEDURE ....................................................... 11
IV. CHANGES TO THE PLAN .................................................... 11
V. GENERAL INFORMATION .................................................... 11
VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 12
VII. SPECIAL RIGHTS UNDER ERISA ............................................. 12
</TABLE>
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MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------
(INSERT NAME OF EMPLOYER)
PROFIT SHARING PLAN
I. INTRODUCTION
_____________________________[INSERT NAME OF EMPLOYER] (the "Employer") is
pleased to be able to provide you with the ____________________ [INSERT NAME OF
EMPLOYER] Profit Sharing Plan (the "Plan" or the "Profit Sharing Plan"). The
Plan is effective as of ________________________________[INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
Only the main features of the Plan am explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
_________________________________________________(INSERT NAME OF DEPARTMENT OR
PERSONNEL RESPONSIBLE FOR PARTICIPANT INFORMATION), if there is any
inconsistency between the Plan as described in this Summary Plan Description
and the Plan document itself, the terms of the Plan document will govern.
Copies of the Plan document and the Trust Agreement are available for your
inspection during regular working hours.
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS
A. TERMS-WITH SPECIAL MEANINGS
Certain words and terms used in this Summary have special meanings.
Many of these terms am defined in this section, while others are
explained in the text of the Summary. To assist you in identifying
these terms within the text; they are capitalized.
1. BENEFICIARY. Your designated Beneficiary is the person you name
to receive your benefit distribution in the event of your death.
If you are married, you will need written consent from your
spouse to name someone other than your spouse as your
Beneficiary.
2. BREAK IN SERVICE. A Break in Service occurs if you complete
less than 501 Hours of Service with the Employer during a Plan
Year.
3. COMPENSATION. Compensation is the total compensation paid to you
by the Employer during any portion of a Plan Year during which
you were a Plan Participant. If you an self employed, your
Compensation is your earned income less your deductible
contributions to any qualified retirement plans.
4. HOURS OF SERVICE. Each hour for which you are paid or entitled to
be paid by the Employer. In addition, uncompensated authorized
leaves of absence that do not exceed two years, military leave
while your reemployment rights are protected by law, and absences
from work for maternity or paternity reasons may be credited as
Hours of Service for the purpose of determining whether you had a
Break in Service.
5. PARTICIPANT. A Participant is an employee who has met the
requirements for participating in this Plan, and whose account
has been neither completely forfeited nor distributed.
6. PLAN YEAR. The Plan Year is the 12-month period ending on the
date shown in section V of this Summary.
7. SPONSOR. The Sponsor is the organization which has made this Plan
available to the Employer.
8. TRUST. The Trust is a fund maintained by the Trustee for the
investment of Plan assets, including the amount in your account.
9. YEAR OF SERVICE. A Year of Service is the applicable 12-month
period during which you complete 1,000 [INSERT NUMBER OF HOURS)
or more Hours of Service. For eligibility purposes, the
applicable 12-month period Is your first year of employment or
any Plan Year,
85
<PAGE> 92
beginning after your hire date. For vesting purposes, the
applicable 12-month period is the Plan Year.
B. PARTICIPATION
You will be eligible to participate in the Plan after you have met the
following eligibility requirements:
[CHECK ALL APPLICABLE ITEMS]
X You have reached age 21
- -
X You have completed 1 Year (s) of Service.
- -
X You are not a member of a collective bargaining unit.
- -
X You are not a nonresident alien.
- -
The first entry date, or date in which you can first participate in
the Plan if you meet these requirements, is _________________________ [INSERT
EFFECTIVE DATE). Thereafter, the entry date(s) will be January 1 & July 1 of
each year.
Once you become a Participant, you will remain a Participant as long
as you do not incur a Break in Service. If you do incur a Break in Service, and
are later reemployed by the Employer, you will be reinstated as a Participant
and any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. INDIVIDUAL-ACCOUNTS
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be
credited with the different types of contributions that are described
in the next section, the subaccounts that will be maintained for you
are as follows:
1. PROFIT SHARING CONTRIBUTION SUBACCOUNT. This subaccount will be
credited with your share of Employer Profit Sharing
Contributions, forfeitures (if any), distributions from this
subaccount, and the earnings and losses attributable to this
subaccount.
2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will
be credited with any rollover contributions or transfer
contributions you may make to the Plan, any distributions from
this subaccount, and the earnings and losses attributable to this
subaccount. Include the following item if your plan permits
voluntary employee contributions:
3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with your Voluntary Employee Contributions, any
distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
D. CONTRIBUTIONS
X 1. EMPLOYER PROFIT SHARING CONTRIBUTIONS. The Employer will make
- Profit Sharing Contributions to the Plan each Plan Year in
accordance with the following contribution formula:
[CHECK ONE OF THE FOLLOWING]:
X Contributions will be made in an amount to be determined
each year by the Employer.
_ Contributions will be made in an amount equal to ___________
INSERT CONTRIBUTION PERCENTAGE] of each Participant's
Compensation, plus any discretionary amount the Employer may
choose to contribute.
2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have
participated in other pension or profit sharing plans, you will
be permitted to make a rollover contribution to the Plan of
certain amounts you may receive from those other plans. You will
also be permitted, with the approval of
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<PAGE> 93
the Plan Administrator, to authorize a direct transfer to the
Plan of amounts that are attributable to your participation
in other pension or profit sharing plans.
CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY
EMPLOYEE CONTRIBUTIONS:
3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your
retirement benefits from this Plan, you may choose to make
voluntary contributions to the Plan of up to NA [INSERT
MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of your
compensation. Such contributions will not be permitted,
however, for Plan Years beginning after __________ [THE PLAN
YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum contribution
you must make if you choose to make a voluntary,contribution
is as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
___ The minimum voluntary contribution is __________[INSERT
MINIMUM VOLUNTARY CONTRIBUTION PERCENTAGE] of your
Compensation.
X There is no minimum voluntary contribution.
E. ALLOCATIONS.
ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer may make a
Profit Sharing Contribution to the Plan in accordance with the formula
described in the previous section . If the Employer chooses to make a Profit
Sharing Contribution for a year, your account will be allocated a share of
that contribution. If you are an employee as of the last day of the Plan Year.
X Unless you terminate your employment during the Plan year with not more
- than 500 Hours of Service. (You will receive an allocation, however, if
you die, retire or become disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in your
receiving an allocation even if you do not meet any of the requirements set
forth above.
AMOUNT OF ALLOCATION. If you are eligible, your account will be
credited with a portion of the Profit Sharing Contribution (and any
forfeitures) as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
X * Your account will be credited with a portion of the Profit Sharing
- - Contribution that is equal to the ratio of your Compensation to the
Compensation of all Participants for such year.
For example, if your Compensation for a Plan Year was $10,000 and the
total Compensation of all Participants was $100,000, your account would
be credited with $10,000/$100,000 = 1/10 of the total contribution made
by the Employer for that Plan Year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE
NOT ADOPTED THE MONEY PURCHASE PENSION PLAN)
__ * Profit Sharing Contributions WILL be allocated to eligible Participants
in four steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio of your Compensation to
the Compensation of all Participants for such year, but only up to a
maximum of three percent of each Participant's Compensation.
Step Two: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocation in Step One)
that is equal to the ratio of your Compensation in excess of the Plan's
Integration Level to the Compensation in excess of the Plan's
Integration Level of all Participants for such year, but only up to a
maximum of three percent of any Participant's Compensation in excess of
the Plan's Integration Level.
For example, if the Plan's Integration Level were $51,300 and your
Compensation were $61,300, your Compensation in excess of the
Integration Level would be $10,000. If the total Compensation in excess
of the Integration Level of all Participants were $70,000, your account
would be credited with $10,000/$70,000 = 1/7 of the total allocation
made under Step Two (but only up to a maximum of three percent of your
Compensation in excess of the Plan's Integration Level, or $300).
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<PAGE> 94
Step Three: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocations in Step One
and Step Two) that is equal to the ratio that the sum of your
Compensation plus your Compensation in excess of the Plan's Integration
Level bears to the sum of all Participants' Compensation plus their
Compensation in excess of the Plan's Integration Level for such year,
up to a maximum of the Maximum Profit Sharing Disparity Rate.
The Maximum Profit Sharing Disparity Rate is 2.7 percent if the
Integration Level equals the annual earnings subject to Social Security
(FICA) tax (the taxable wage base). If the Integration Level is lower
(see below), then the Maximum Profit Sharing Disparity Rate is
determined by the following formula:
If the Integration is:
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
--------- ----------------- --------------
<S> <C> <C>
$0 X */ 2.7%
-
X of TWB 80% of TWB 1.3%
80% of TWB Y **/ 2.4%
--
</TABLE>
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
- -
**/ Y = any amount more than 80% of the Taxable Wage Base but less
- -- than 100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
For example, if the Maximum Profit Sharing Disparity Rate is 2.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step Three would be:
(61,300 + 10,000)/(700,000 + 70,000) - 9.25%
However, this exceeds the Maximum Profit Sharing Disparity Rate, so 2.7 percent
is applicable instead, and your account would receive 2.7% of the Employer
contribution under this step.
STEP FOUR: Your account will be credited with a portion of the balance of the
Profit Sharing Contribution (after the allocations in Step One, Step Two and
Step Three) that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE ADOPTED THE
MONEY PURCHASE PENSION PLAN]:
__ Profit Sharing Contributions will be allocated to eligible Participants in
two steps as follows:
STEP ONE: Your account will be credited with a portion of the Profit Sharing
Contribution that is equal to the ratio that the sum of your Compensation plus
your Compensation in excess of the Plan's Integration Level bears to the sum of
all Participants' Compensation plus their Compensation in excess of the Plan's
Integration level for such year, up to a maximum that does not exceed the lesser
of two amounts. The first is the percentage determined by dividing the
allocation by your Compensation up to the Plan's Integration Level. The second
is the Maximum Disparity Rate.
The Maximum Disparity Rate is 5.7 percent if the Integration Level equals the
annual earnings subject to Social Security (FICA) tax (the taxable wage base).
If the Integration Level is lower (see below), then the Maximum Disparity Rate
is determined by the following formula:
If the Integration is:
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
--------- ----------------- --------------
<S> <C> <C>
$0 X*/ 5.7%
-
</TABLE>
88
<PAGE> 95
X Of TWB 80% of TWB 4.3%
80% of TWB Y **/ 5.4%
*/ X - the greater of $ 10,000 or 20% of the Taxable
- Wage Base.
**/ Y - any amount more than 80% of the Taxable Wage
-- Base but less than 100% of the Taxable Wage
Base.
"TWB" means the Taxable Wage Base.
For example, if the Maximum Disparity Rate is 5.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the
total Compensation of all Participants is $700,000 and the
Compensation of all Participants that is in excess of the Plan's
Integration Level is $70,000, then the ratio applied under Step One
would be.
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Disparity Rate, so 5.7 percent is
applicable instead. (This assumes the allocation as a percentage of
your Compensation up to the Plan's Integration Level would exceed 5.7
percent).
Step Two: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocation in Step One)
that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
The Plan's Integration Level is equal to:
[CHECK ONE OF THE FOLLOWING ITEMS)
__ The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
__ A dollar amount equal to $__________________________[INSERT DOLLAR AMOUNT].
__ A percentage of the taxable wage base equal to ___% of the annual earnings
subject to Social Security (FICA) tax.
Under some circumstances, special minimum allocation rules may result in your
receiving a larger allocation than you normally would. The amount that can be
allocated to your Account in any Plan Year, including forfeitures (if any), is
limited by rules applying to all qualified plans.
F. VESTING.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the
amount you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest
in the amounts you have in your:
__ * Trustee Transfer and Rollover Subaccounts.
(CHECK THE FOLLOWING ITEM ONLY IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
__ * Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following:
[CHECK ONE OF THE FOLLOWING ITEMS]:
__ * You will always have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount.
89
<PAGE> 96
__ * You will have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount in the event of any of
the following:
* You reach your Normal Retirement Age or Early Retirement Date.
* You die or become disabled.
Otherwise, you will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following schedule:
[CHECK ONE OF THE FOLLOWING ITEMS]:
<TABLE>
<CAPTION>
__ * YEARS 0F SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
For example, if you are employed for six years, you will be entitled
to the entire amount in your Profit Sharing Contribution Subaccount.
However, if you terminate employment with the Employer after only four
years, even though you return to employment with the Employer six
years later, you will be entitled to receive only 60 percent of that
amount.
__ * You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested
interest in your Profit Sharing Contribution Subaccount.
G. FORFEITURES.
[CHECK ONE OF THE FOLLOWING ITEMS]:
__ * You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. Your account therefore will not
be subject to forfeitures.
__ * Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on "Vesting."
Effective for the first Plan Year beginning after 1984, any portion of
your Account that is not vested will be forfeited as of the last day
of the Plan Year in which your fifth consecutive Break in Service
occurs. Forfeited amounts will not be reinstated, even if you return
to service with the Employer. Such forfeitures will be allocated among
the Accounts of other Participants in the same manner as Profit
Sharing Contributions.
H. DISTRIBUTION OF BENEFITS.
1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a
distribution of the vested amounts in your account upon
occurrence of any of the following:
* Your termination of employment with the Employer for any reason.
* Your total and permanent disability.
* Your death.
* Termination of the Plan.
* Your attainment of normal retirement age, which is:
[CHECK ONE OF THE FOLLOWING ITEMS),
X * Age 65
-
__ * Age _____ [INSERT NORMAL RETIREMENT AGE] or the___________
INSERT ANNIVERSARY DATE) of the day you commenced
participation in the plan.
(CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS EARLY RETIREMENT):
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<PAGE> 97
__ * If you elect Early Retirement, attainment of your Early
Retirement Date, which is the first day of the month
coincident with or next following the date you reach age
____________________INSERT EARLY RETIREMENT AGE] and
complete __________ INSERT NUMBER OF YEARS] Years of
Service.
2. TIMING OF DISTRIBUTION. You will begin receiving benefit
distributions in accordance with the following;
* Generally, benefit distributions will commence not later than 60 days
after the end of the Plan Year in which you become eligible to receive
benefits.
* In the event of your death, your spouse, if you are married, will
generally be entitled to receive your benefit distribution. If you are
unmarried, or if your spouse has given written consent, your
designated Beneficiary will receive your benefit distribution, If you
have no spouse or designated Beneficiary, your benefit distribution
will go to your estate.
* If you so elect, you may defer commencement of the distribution of
your benefit beyond the date you first become eligible to receive that
distribution, to a date which you may specify. The date you specify
must not be later than the April 1 following the close of your taxable
year in which you attain age 70-1/2.
* If you attained age 70-1/2 before January 1, 1988, special rules apply
to your distributions.
If you wish to receive benefit distributions before attaining age 59-1/2, you
may be subject to a penalty tax, and you must notify the Plan Administrator in
writing that you am aware of the consequences of this tax.
3. FORM OF DISTRIBUTION. Your benefit will automatically
be distributed or a lump sum payment of cash, or a lump sum payment that
includes an in-kind distribution of all mutual fund shares credited to your
account.
I. INVESTMENT OF PLAN ASSETS
All contributions made to the Plan are kept in the Trust. A separate
account including all of the subaccounts described in the section on
"Participant Accounts," is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
X * You must direct the Plan Administrator to invest the amounts in all of
- - your subaccounts in specified investments offered by the Sponsor.
__ * _____________________ (INSERT PERCENTAGE) of the assets of the Trust
are invested in shares or other investments offered by the Sponsor. The
remaining assets are invested in such other investments as are
acceptable to the Trustee.
__ * You ___ [INSERT "MAY" OR "MUST"] direct the Plan Administrator to
invest the amounts in the following subaccount in specified investments
offered by the Sponsor:
[CHECK ONE OR MORE OF THE FOLLOWING ITEMS]:
__ * The amounts in your Nondeductible Voluntary Contribution
Subaccount.
__ * The amounts in your Profit Sharing Contribution Subaccount.
__ * The amounts in your Trustee Transfer and Rollover
Subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS WITHDRAWALS]:
J. WITHDRAWALS
You may make the following types of withdrawals from your account:
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<PAGE> 98
(CHECK ALL APPLICABLE ITEMS]
__ * If you have made Voluntary Employee Contributions to the Plan, you will
be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent
to the withdrawal.
__ * In the event of an imminent and heavy financial need due to the
purchase or renovation of a primary residence, the educational, medical
or personal expenses of you or a member of your immediate family, or
other hardship, you will be permitted to make a hardship withdrawal of
amounts credited to your Profit Sharing Contribution Subaccount.
All hardship withdrawals are subject to approval by the Plan
Administrator. Such withdrawals can only be made after prior
withdrawal of all amounts in your Nondeductible Voluntary Contribution
Subaccount, and after exhausting all other reasonable sources of
funds. If you are married, your spouse must consent to any withdrawals.
(CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED):
__ K. LOANS.
This Plan contains provisions that permit you to borrow (with the
consent of your spouse) from the Plan part of your vested interest in your
account. Such a loan will not be made, however, if the total of all outstanding
loans to you from all pension and profit sharing plans of the Employer exceed
the lesser of $50,000 (taking into account the highest principal balance of any
loan outstanding at any time during the preceding 12 months) or one-half of the
value of your vested interest in your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator. Your account will be security for the
loan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE LIFE
INSURANCE]:
__ L. INSURANCE.
The Plan contains provisions permitting you to designate a portion of
the amounts in your Profit Sharing Contribution Subaccount to purchase life
insurance. The portion of your Profit Sharing Contribution Subaccount which may
be used to purchase life insurance is equal to____________________ [INSERT
PERCENTAGE] of that subaccount.
III. CLAIMS PROCEDURE
You or your Beneficiary may file a written claim for benefits under
this Plan with the Plan Administrator at any time. If your claim is denied to
any extent by the Plan Administrator, a written notification must be sent to you
within 90 days. If you choose to appeal the decision, a request for review must
be made in writing to the Plan Administrator within 60 days of receipt of
written notification of the denial. Within 60 days after the appeal is filed, or
within 120 days, if there are special circumstances involved, the Plan
Administrator will issue a written decision.
IV. CHANGES TO THE PLAN
A. AMENDMENT OF THE PLAN
The Employer, together with the Sponsor, reserves the right to amend
the Plan at any time. You will be kept informed of any material amendments to
the Plan by updates to this Summary Plan Description.
B. TERMINATION OF THE PLAN
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. if a termination
takes place, or If the Employer discontinues making contributions to the Plan,
you WILL have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. MERGER, CONSOLIDATION OR TRANSFER OF THE PLAN
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. GENERAL INFORMATION
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<PAGE> 99
Name of Plan: ______________________________________________________
[INSERT NAME OF EMPLOYER] Profit Sharing Plan
Employer: ______________________________________________________
______________________________________________________
[INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER)
Type of Plan: Profit Sharing Plan
Type of Administration: Trusteed
Employer's Fiscal Year: ______________________________________________________
Plan Year End: ______________________________________________________
Plan Administrator: ______________________________________________________
[INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: ______________________________________________________
______________________________________________________
[INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF
PRINCIPAL PLACE OF EACH TRUSTEE]
Agent for Service of Legal
Process: ______________________________________________________
[INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT
FOR SERVICE OF LEGAL PROCESS)
Employer Identification # ______________________________________________________
Plan Number: ______________________________________________________
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. Section 1.2520.104-bl and Section
2520.104b-30.
VI. NON-APPLICATION OF PBGC GUARANTEES
Because this Plan is a defined contribution plan, the benefits you will
receive are exempt from and not insured by the Pension Benefit Guaranty
Corporation.
VII. SPECIAL RIGHTS UNDER ERISA
As a participant in the [INSERT NAME OF EMPLOYER] Profit Sharing Plan, you
are entitled to certain rights and protections under the Employee Retirement
Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants
shall be entitled to:
* Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, including insurance
contracts, affecting the individual making the request, and copies of
all documents filed by the Plan with the U.S. Department of Labor,
such as annual reports and Plan descriptions.
* Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.
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<PAGE> 100
* Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a
copy of this summary annual report.
* obtain a statement of the total value of your account under the Plan
and your vested (nonforfeitable) portion of this account. This
statement must be requested in writing and is not required to be
given more than once a year, The Plan will provide the statement free
of charge.
In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. These
people who operate your plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above
rights. For instance, if you request materials from the Plan and do not receive
them within 30 days, you may file suit in a federal court. In such a case, the
court may require the Plan Administrator to provide the materials and pay you up
to $100 a day until you receive the materials unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored in whole or in part, you may file
suit in a state or federal court. If it should happen that Plan fiduciaries
misuse the Plan's money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. if you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
94
<PAGE> 101
MODEL
SUMMARY PLAN DESCRIPTION
OF THE
--------------------------------
[INSERT NAME OF EXPLOYER1
MONEY PURCHASE PENSION PLAN
Copyright 1990 Investment Company Institute March 1990
95
<PAGE> 102
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
I. INTRODUCTION ............................................................. 3
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3
A. Terms With Special Meanings ......................................... 3
B. Participation ....................................................... 4
C. Individual Accounts ................................................. 4
D. Contributions ....................................................... 4
E. Allocations ......................................................... 5
F. Vesting ............................................................. 6
G. Forfeitures ......................................................... 7
H. Distributions of Benefits ........................................... 7
I. Investment of Plan Assets ........................................... 8
J. Withdrawals ......................................................... 9
K. Loans ............................................................... 9
L. Insurance ........................................................... 9
III. CLAIMS PROCEDURE ....................................................... 9
IV. CHANGES TO THE PLAN .................................................... 9
V. GENERAL INFORMATION .................................................... 10
VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 11
VII. SPECIAL RIGHTS UNDER ERISA ............................................. 11
</TABLE>
96
<PAGE> 103
MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------------
[INSERT NAME OF EMPLOYER]
MONEY PURCHASE PENSION PLAN
I. INTRODUCTION
__________________________________ [INSERT NAME OF EMPLOYER] (the
"Employer") is pleased to be able to provide you with the____________________
[INSERT NAME OF EMPLOYER] Money Purchase Pension Plan (the "Plan" or the
"Pension Plan"). The Plan is effective as of ____________________________
[INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account hold in your name. With this type of plan; the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
____________________________ [INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE
FOR PARTICIPANT INFORMATION]. If there is any inconsistency between the Plan as
described in this Summary Plan Description and the Plan document itself, the
terms of the Plan document will govern. Copies of the Plan document and the
Trust Agreement are available for your inspection during regular working hours.
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS
A. TERMS WITH SPECIAL MEANINGS
Certain words and terms used in this Summary have special meanings.
Many of these terms are fined in this section, while others are
explained in the text of the Summary. To assist you in identifying
these terms within the text, they are capitalized.
1. BENEFICIARY. Your designated Beneficiary is the person you name
to receive your benefit distribution in the event of your death.
If you are married, you will need written consent from your
spouse to name someone other than your spouse as your
Beneficiary.
2. BREAK IN SERVICE. A Break in Service occurs if you complete less
than 501 Hours of Service with the Employer during a Plan Year.
3. COMPENSATION. Compensation is the total compensation paid to you
by the Employer during any portion of a Plan Year during which
you were a Plan Participant. If you are self-employed, your
Compensation is your earned income less your deductible
contributions to any qualified retirement plans.
4. HOURS OF SERVICE. Each hour for which you are paid or entitled to
be paid by the Employer. In addition, uncompensated authorized
leaves of absence that do not exceed two years, military leave
while your reemployment rights are protected by law, and absences
from work for maternity or paternity reasons may be credited as
Hours of Service for the purpose of determining whether you had
a Break in Service.
5. PARTICIPANT. A Participant is an employee who has met the
requirements for participating in this Plan, and whose account
has been neither completely forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the
date shown in section V of this Summary.
7. SPONSOR. The Sponsor is the organization which has made this Plan
available to the Employer.
8. TRUST. The Trust is a fund maintained by the Trustee for the
investment of Plan assets, including the amount in your account.
9. YEAR OF SERVICE. A Year of Service is the applicable 12-month
period during which you complete 1,000 or more Hours of Service.
For
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<PAGE> 104
eligibility purposes, the applicable 12-month period is your
first year of employment or any Plan Year, For vesting purposes,
the applicable 12-month period is the Plan Year.
B. PARTICIPATION.
You will be eligible to participate in the Plan after you have met the
following eligibility requirements:
[CHECK ALL APPLICABLE ITEMS]
[X] o You have reached age 21.
[X] o You have completed 1 Year(s) of Service.
[X] o You are not a member of a collective bargaining unit.
[X] o You are not a nonresident alien.
The first entry date, or date in which you can first participate in
the Plan if you meet these requirements, is ________________ [INSERT EFFECTIVE
DATE]. Thereafter, do entry date(s) will be January 1 & July 1 of each Plan
Year.
Once you become a Participant, you will remain a Participant as long
as you do not incur a Break in Service. If you do incur a Break in Service, and
are later reemployed by the Employer, you will be reinstated as a Participant
and any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. INDIVIDUAL ACCOUNTS
A separate account will be maintained for you within the Plan. This account
will be further divided into subaccounts, which will be credited with the
different types of contributions that are described in the next section. The
subaccounts that will be maintained for you are as follows:
1. MONEY PURCHASE PENSION CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with your share of Employer Money Purchase Pension
Contributions, distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will
be credited with any rollover contributions or transfer contributions you
may make to the Plan, any distributions from the subaccount, and the earnings
and losses attributable to the subaccount.
(CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
___ 3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with our Voluntary Employee Contributions, any distributions
from this subaccount, and the earnings and losses attributable to this
subaccount.
D. CONTRIBUTIONS
The Employer will make, or you will be permitted to make, the
following types of contributions. These contributions will be allocated to the
appropriate subaccounts within your account.
1. EMPLOYER MONEY PURCHASE PENSION CONTRIBUTIONS. The Employer
will make Money Purchase Pension Contributions to the Plan each
Plan Year in accordance with a formula based on your
Compensation. This formula is given in the section on
"Allocations."
2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have
participated in other pension or profit sharing plans, you will
be permitted to make a rollover contribution to the Plan of
certain amounts you may receive from those other plans.
You will also be permitted, with the approval of the Plan
Administrator, to authorize a direct transfer to the Plan of
amounts that are attributable to your participation in other
pension or profit sharing plans.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS].
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<PAGE> 105
3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your
--- retirement benefits from this Plan, you may choose to make
voluntary contributions to the Plan of up to _____ (INSERT
MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE) of your
Compensation. Such contributions will not be permitted, however,
for Plan Years beginning after _____________ (THE PLAN YEAR IN
WHICH THE PLAN IS ADOPTED). The minimum contribution you must
make if you choose to make a voluntary contribution is as
follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
- The minimum voluntary contribution is ____ [INSERT MINIMUM
--- VOLUNTARY CONTRIBUTION PERCENTAGE] of your Compensation.
X - There is no minimum voluntary contribution.
---
E. Allocations
1. ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer will make
a Money Purchase Pension Contribution to the Plan in accordance with the
formula based on your Compensation. Your account will be allocated a
contribution if you are an employee as of the last day of the Plan Year.
[X] o Unless you terminate your employment during the Plan Year with not
more than 500 [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service.
(You will receive an allocation, however, if you die, retire or become
disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in your
receiving an allocation, even if you do not meet any of the requirements set
forth above.
2. AMOUNT OF ALLOCATION. If you are eligible, your account will be
credited with a Money Purchase Pension Contribution as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]
o The Employer will make a contribution on your behalf equal to _______
(INSERT CONTRIBUTION PERCENTAGE) of your Compensation.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN IS INTEGRATED WITH SOCIAL
SECURITY]:
o The Employer will make a contribution equal to ______% of your
- --- Compensation up to the Plan's Integration Level, plus ____% of your
Compensation excess of the Plan's Integration Level.
The Plan's Integration Level is equal to:
(CHECK ONE OF THE FOLLOWING ITEMS):
[ ] o The taxable wage base, which is the annual earnings subject
to Social Security (FICA) tax.
[ ] o A dollar amount equal to ____ [INSERT DOLLAR AMOUNT].
[ ] o A percentage of the taxable wage base equal to ___% of the
annual earnings subject to Social Security (FICA) tax.
For example, suppose that the Plan's taxable wage base is
equal to $51,300, and that your Compensation during a Plan
Year totaled $61,300. You would receive an allocation of
____ [INSERT CONTRIBUTION PERCENTAGE] of your first $51,300
in Compensation, and
____ [INSERT EXCESS CONTRIBUTION PERCENTAGE] on the
remainder of $ 10,000.
Under some circumstances, special minimum allocation rules may cause you to
receive a larger allocation than you normally would. The amount that can be
allocated to your account in any Plan Year is limited by rules applying to all
qualified plans.
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<PAGE> 106
F. VESTING.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest
in the amounts you have in your:
o Trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
o Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Money Purchase Pension
Contribution Subaccount in accordance with the following:
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o You will always have a 100 percent vested and nonforfeitable interest
in your Money Purchase Pension Contribution Subaccount.
[ ] o You will have a 100 percent vested and nonforfeitable interest in your
Money Purchase Pension Contribution Subaccount in the event of any of
the following:
o You reach your Normal Retirement Age or Early Retirement Date.
o You die or become disabled.
Otherwise, you will earn a vested interest in your Money Purchase
Pension Contribution Subaccount in accordance with the following schedule:
[CHECK ONE OF THE FOLLOWING ITEMS]
[ ] o YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
1 year 0%
2 years 20%
3 yam 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, If you are employed for six years, you will be entitled
to the entire amount in your Money Purchase Pension Contribution
Subaccount. However, If you terminate employment with the Employer
after only four years, even though you return to employment with the
Employer six years later, you will be entitled to receive only 60
percent of that amount.
[ ] o You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested
amount in your Money Purchase Pension Contribution Subaccount.
Any portion of your Money Purchase Pension Contribution Subaccount in
which you do not have a vested interest will be forfeited by you as of
the last day of the Plan Year in which your fifth consecutive Break in
Service occurs.
G. FORFEITURES
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. You will therefore not be
subject to forfeitures.
[ ] o Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on "Vesting."
Effective for the Trust Plan Year beginning after 1984, any portion of
your account that is not vested will be forfeited as of the last day
of the Plan Year in which your fifth consecutive Break in Service
occurs. Forfeited amounts will not be reinstated, even if you return
to service with the Employer. Such forfeitures either will be:
100
<PAGE> 107
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o Used by the Employer as a credit against its future
contributions to the Plan; or
[ ] o Reallocated among the accounts of remaining Participants in
proportion to their pay.
H. DISTRIBUTION OF BENEFITS.
1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
o Your termination of employment with the Employer for any reason.
o Your total and permanent disability.
o Your death.
o Termination of the Plan.
o Your attainment of normal retirement age, which is:
[CHECK ONE Of THE FOLLOWING ITEMS]:
[X] o Age 65.
[ ] o Age ____ [INSERT NORMAL RETIREMENT AGE] or the ____________
[INSERT ANNIVERSARY DATE] of the day you commenced
participation in the Plan.
[CHECK THE FOLLOWING IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] o If you elect early retirement, attainment of your early
retirement date, which is the first day of the month
coincident with or next following the date you reach age _
(INSERT EARLY RETIREMENT AGE) and complete _________ [INSERT
NUMBER OF YEARS] Years of Service.
2. TIMING OF DISTRIBUTIONS. You will begin receiving benefit
distributions in accordance with the following:
o Generally, benefit distributions will commence not later then 60 days
after the end of the Plan Year in which you become eligible to receive
benefits.
o In the event of your death, your spouse, if you are married, will
generally be entitled to receive your benefit distribution. If you are
unmarried, or if your spouse has given written consent, your
designated Beneficiary will receive your benefit distribution. If you
have no spouse or designated Beneficiary, your benefit distribution
will go to your estate.
o If you so elect, you may defer commencement of the distribution of
your benefit beyond the date you first become eligible to receive that
distribution, to a date which you may specify. The date you specify
must not be later than the April 1 following the close of your taxable
year in which you attain age 70-1/2.
o If you attained age 70-1/2 before January 1, 1988, special rules apply
to your distributions.
If you wish to receive benefit distributions before attaining age
59-1/2, you may be subject to a penalty tax, and you must notify the Plan
Administrator in writing that you are aware of the consequences of this tax.
3. FORM OF DISTRIBUTION. Your benefit will automatically be
distributed in the form of a in a lump sum payment of cash, or a lump sum
payment that includes an in-kind distribution of all mutual fund shares credited
to your account.
I. INVESTMENT OF PLAN ASSETS
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
"Participant accounts," is maintained for you within that Trust. The assets of
the Trust are invested as follows:
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<PAGE> 108
(CHECK ONE OF THE FOLLOWING ITEMS::
[X] o All of the assets of the Trust are invested in shares or other
investments offered by the Sponsor.
[ ] o _________ [INSERT PERCENTAGE] of the assets of the Trust are invested
in shares or other investments offered by the Sponsor. The remaining
assets are invested in such other investments as are acceptable to the
Trustee.
[ ] o You ______ [INSERT "may" OR "must"] direct the Plan Administrator to
invest the amounts in the following subaccount in specified
investments offered by the Sponsor:
(CHECK ONE OR MORE OF THE FOLLOWING ITEMS):
[ ] o The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] o The amounts in your Money Purchase Pension Contribution Subaccount.
[ ] o The amounts in your trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] J. WITHDRAWALS
If you have made Voluntary Employee Contributions to the Plan, you
will be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent to the
withdrawal.
[CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED]
[ ] K. LOANS
The Plan contains provisions that permit you to borrow from the Plan
part of your vested interest in your account. Such a loan will not be made,
however, if the total of all outstanding loans to you from all pension and
profit sharing plans of the Employer exceed the lower of $50,000 (taking into
account the highest principal balance of any loan outstanding at any time during
the preceding 12 months) or one-half of the value of your vested interest in
your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator, your account will be security for the
loan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE
LIFE INSURANCE]:
[ ] L. INSURANCE.
The Plan contains provisions permitting you to designate a portion of
the amounts in your Money Purchase Pension Contribution Subaccount to purchase
life insurance. The portion of your Money Purchase Pension Contribution
Subaccount which may be used to purchase life insurance is equal to ________
[INSERT PERCENTAGE] of that subaccount.
III. CLAIMS PROCEDURE
You or your Beneficiary may file a written claim for benefits under this
Plan with the Plan Administrator at any time. If your claim is denied to any
extent by the Plan Administrator, a written notification must be sent to you
within 90 days. If you choose to appeal the decision, a request for review must
be made in writing to the Plan Administrator within 60 days of receipt for
written notification of the denial. Within 60 days after the appeal is filed, or
within 120 days, if there are special circumstances involved, the Plan
Administrator will issue a written decision.
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<PAGE> 109
IV. CHANGES TO PLAN
A. AMENDMENT OF THE PLAN
The Employer, together with the Sponsor, reserves the right to amend
the Plan at any time. You will be kept informed of any material amendments to
the Plan by updates to this Summary Plan Description.
B. TERMINATION OF THE PLAN
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation, or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. GENERAL INFORMATION
NAME OF PLAN: _____________________________________________________
Money Purchase Pension Plan
EMPLOYER: _____________________________________________________
_____________________________________________________
TYPE OF PLAN: Money Purchase Pension Plan
TYPE OF ADMINISTRATION: Trusteed
EMPLOYER'S FISCAL YEAR: __________________________
PLAN YEAR END: __________________________
PLAN ADMINISTRATOR: _____________________________________________________
_____________________________________________________
_____________________________________________________
Trustees: _____________________________________________________
_____________________________________________________
_____________________________________________________
[INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF
PRINCIPAL PLACE OF BUSINESS OF EACH TRUSTEE)
AGENT FOR SERVICE OF LEGAL PROCESS: __________________________________________
__________________________________________
INSERT NAME AND ADDRESS OF PERSON DESIGNATED
AS AGENT FOR SERVICE OF LEGAL PROCESS)
EMPLOYER IDENTIFICATION NUMBER: __________________________________________
PLAN NUMBER: __________________________________________
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. Section 2520.104b-1 and Section
2520.104b-30.
V1. NON-APPLICATION OF PBGC GUARANTEES
Because this Plan is a defined contribution plan, the benefits you will
receive are exempt from and not insured by the Pension Benefit Guaranty
Corporation.
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<PAGE> 110
VII. SPECIAL RIGHTS UNDER ERISA
As a participant in the ________________________________ [INSERT NAME OF
EMPLOYER] Money Purchase Pension Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provides that all Plan Participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, including insurance
contracts, affecting the individual making the request, and copies of
all documents filed by the Plan with the U.S. Department of Labor, such
as detailed annual reports and Plan descriptions. Obtain copies of all
Plan documents and other Plan information upon written request to the
Plan Administrator. The Plan Administrator may make a reasonable charge
for the copies.
o Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with
a copy of this summary annual report.
o Obtain a statement of the total value of your account under the
Plan and your vested (nonforfeitable) portion of this account. This
statement must be requested in writing and is not required to be
given more than once a year. The Plan will provide the statement
free of charge.
In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. These
people who operate your plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
suit in a state or federal court. If it should happen that Plan fiduciaries
misuse the Plan's money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. If you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
NOTICE TO INTERESTED PARTIES
Current employees of ________________________________ are hereby notified that
(Name of Employer)
___________________________ has adopted the __________________________________
(Name of Adopting Employer) (Name of Plan or Plans)
as its employee retirement benefit plan.
The employee eligible to participate under this Plan are
____________________________________.
(Insert Eligible Class of Employees)
It is not expected that this Plan will be submitted to the Internal Revenue
Service for an advance determination as to whether or not the Plan meets the
qualification requirements of section 401(a) of the Internal Revenue Code.
However, this Plan is a prototype plan and the Internal Revenue Service has
previously issued a favorable opinion letter to the sponsor with regard to the
this plan.
As in interested party, you have the right to submit to the Key District
Director of the Internal Revenue Service, either individually or jointly with
other interested parties, your comments as to whether this Plan meets the
qualification requirements of the Internal Revenue Code.
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<PAGE> 111
You may also, either or jointly with other interested parties, request that the
Department of Labor submit, on your behalf, comments to the Key District
Director regarding qualification of this Plan.
If the Department of Labor declines to comment on all or some of the matters you
raise, you may, individually or jointly if your request was made to the
Department jointly, submit your comments on these matters directly to the Key
District Director as the following address:
___________________________________________
(NAME AND ADDRESS OF KEY DISTRICT DIRECTOR)
The Department of Labor may not comment on behalf of interested parties unless
requested to do so by the lesser of 10 employees or 10 percent of the employees
who qualify as interested parties. The number of persons needed for the
Department of Labor to comment with respect to this Plan is ___________________.
A request to the Department of Labor should be sent to the following address:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
Attention: 3001 Comment Request
Any comment you submit to the Key District to the Key District Director, or any
request to the Department of Labor must include the name of the Plan, the Plan
number, the opinion letter number, the adopting employer's identification
number, the name and address of the sponsor, and the name and address of the
Plan administrator. Any request to the Department of Labor must also include
the address of the Key District Director. This information can be found at the
end of this Notice.
A comment to the Key District must be received by
____________________________________.
(Date 45 Days After Plan is Adopted)
if you wish to preserve your right to comment to the Key District Director, or
by ____________________________________ if you wish to waive that right.
(Date 55 Days After Plan is Adopted)
If there are matters upon which you request the Department of Labor to comment
upon on your behalf, and the Department declines to do so, you may submit
comments on these matters directly to the Key District Director. These comments
must be received by the Key District Director within 15 days from the time the
Department of Labor notifies you that it will not comment on a particular
matter, or by ___________________________________ whichever is later.
(Date 75 Days After The Plan is Adopted).
Detailed instructions regarding the requirements for submitting comments may
be found in sections 6,7, and 8 of Revenue Procedure 80-30.
Additional information concerning this Plan (including, where applicable, a
description of the circumstances which may result in eligibility of loss of
benefits, a description of the source of financing of the plan, and copies of
section 6 of Revenue Procedure 80-30) is available at_________________________
(LOCATION)
during the hours of _________________, for inspection of copying. There may be
a normal charge for copying and/or mailing.
The following information will be needed for correspondence with the Department
of Labor or the Key District Director:
___________________________________
(Name of Adopting Employer)
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<PAGE> 112
______________________________________
(Name of Plan or Plans)
______________________________________
Plan Identification Number(s)
______________________________________
(Opinion Letter Number)
______________________________________
(Name of Sponsor)
______________________________________
(Address of Sponsor)
______________________________________
(Adopting Employer's EIN)
______________________________________
(Name of Plan Administrator)
______________________________________
(Address of Plan Administrator)
______________________________________
(Address of Key District Director)
106
<PAGE> 113
FORMS
107
<PAGE> 114
[AIM LOGO APPEARS HERE]
ASSET TRANSFER FORM
AIM Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Phone Number 1-800-347-1919 (ext. 506)
THIS FORM SHOULD BE USED ONLY IF YOU ARE TRANSFERRING PLAN ASSETS DIRECTLY
TO AIM.
================================================================================
1. PRINT PLAN NAME AND ADDRESS HERE
- --------------------------------------------------------------------------------
Plan Name/Trustees
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
Tax ID Number
-------------------------------------------------------------------
Telephone ( )
-----------------------------------------------------------------
================================================================================
2. ACCOUNT TO BE TRANSFERRED TO AIM
- --------------------------------------------------------------------------------
Account Number
- --------------------------------------------------------------------------------
Name of Resigning Trustee/Custodian
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
Attention Telephone
================================================================================
3. PLEASE TELL US WHERE TO INVEST THE MONEY YOU ARE TRANSFERRING
Please deposit proceeds in my [ ] existing [ ]* new
[ ] Money Purchase Plan
[ ] Profit Sharing
* Application Attached
- --------------------------------------------------------------------------------
Fund Name Account Number
- --------------------------------------------------------------------------------
Fund Name Account Number
If assets are to be invested in multiple participant accounts you must submit a
separate statement identifying each participant and the percentage to be
invested in each fund(s).
If transferred assets are to be invested in "pooled" accounts you must indicate
the percentage (%) to be invested in each funds.
================================================================================
4. PLEASE AUTHORIZE YOUR CURRENT OR CUSTODIAN TO TRANSFER ACCOUNT TO THE AIM
FUNDS
To Resign Trustee or Custodian:
Please transfer [ ] all or [ ] part ($_________________) of our assets listed in
Section 2 to The AIM Funds.
[ ] immediately [ ] at maturity
[ ] Please transfer [ ] all or part (__________________) of the assets to AIM
Fund Acct# ___________________________.
- --------------------------------------------------------------------------------
Signature/Trustee Date
An Important note: Your current investment manager or custodian may require your
signature to be guaranteed.
Call that institution for requirement.
Signature guaranteed by:
- --------------------------------------------------------------------------------
Name of Bank or Firm
- --------------------------------------------------------------------------------
Signature of Officer and Title
================================================================================
5. CUSTODIAN ACCEPTANCE OF PLAN
This to advise you that _______________________, trustee custodian, will accept
the account identified above for: Plan Name ________________________________
Account Number _____________________________
This transfer of assets is to be executed from fiduciary to fiduciary and will
not place the participant in actual receipt of all or any of the plan assets.
NO FEDERAL INCOME TAX IS TO BE WITHHELD FROM THIS TRANSFER OF ASSETS.
If you have any further questions regarding the transfer, please feel free to
contact us at the above toll-free number.
- --------------------------------------------------------------------------------
Authorized Signature/Trustee
- --------------------------------------------------------------------------------
Date
================================================================================
6. RESIGNING TRUSTEE OR CUSTODIAN
Please Indicate Account Number on all documents sent to AIM.
Please attach a copy of this form to the check.
Check Payable to: AIM Funds, FBO: (Plan Name)
c/o AIM Fund Services, Inc,
P.O. Box 4739
Houston, TX 77210-4739
108
<PAGE> 115
PROFIT SHARING AND/OR MONEY PURCHASE PENSION PLAN
CONTRIBUTION TRANSMITTAL FORM
All contributions must be allocated in dollars to the fund(s) selected as
investment options of the plan. For plans using individual mutual fund accounts
for each participant, you must allocate each participant's contribution to their
selected AIM Fund(s). The minimum investment in $25 per fund per contribution
submission for each participant.
Plan Name:
----------------------------------------------------------------------
Tax ID#:
------------------------------------------------------------------------
Contribution for Plan Year:
-----------------------
<TABLE>
<CAPTION>
================================================================================
NAME SS# AIM AIM AIM TOTAL
____ FUND ____ FUND ____ FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ $ $ $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total $ $ $ $
================================================================================
</TABLE>
1
<PAGE> 1
EXHIBIT 14(d)
403(b) PLAN [AIM LOGO APPEARS HERE]
ACCOUNT APPLICATION
To open your AIM 403(b) Plan account.
Employer mail to: A I M Fund Services, Inc., P.O. Box 4399, Houston, TX
77210-4399. Phone: 800-959-4246
ALL sections must be fully completed.
- --------------------------------------------------------------------------------
1. EMPLOYEE INFORMATION (please print)
Participant
--------------------------------- Birth Date / /
First Name Middle Last Name ---- ---- ---
Address
-------------------------------------------------------------------
Street City State Zip Code
Social Security # Daytime Telephone
-------------------- -------------------
Employer
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. INVESTMENT INFORMATION (Minimum investment in any AIM Fund is $25 per pay
period per Fund.)
CONTRIBUTIONS:
[ ] I will be making salary-deferral contributions in the amount of
$_______________ or______% of compensation.
[ ] This is a transfer of 403(b) assets only; no salary-deferral
contribution will be made at this time.
Each contribution to the Custodial Account shall be invested in the
following AIM Funds in the amounts specified.
<TABLE>
<CAPTION>
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES FIXED INCOME FUNDS $ OR % OF ASSETS CLASS OF SHARES
(CHECK ONE) (CHECK ONE)
<S> <C> <C> <C> <C> <C>
AIM Blue Chip Fund $ Class [ ] A [ ] B AIM Balanced Fund $ Class [ ] A [ ] B
------------ ------------
AIM Capital AIM Global Income Fund $ Class [ ] A [ ] B
Development Fund $ Class [ ] A [ ] B ------------
------------ AIM Intermediate
AIM Charter Fund $ Class [ ] A [ ] B Government Fund $ Class [ ] A [ ] B
------------ ------------
AIM High Yield Fund $ Class [ ] A [ ] B
AIM Global Aggressive ------------
Growth Fund $ Class [ ] A [ ] B AIM Income Fund $ Class [ ] A [ ] B
------------ ------------
AIM Global Growth Fund $ Class [ ] A [ ] B
------------ AIM Limited Maturity
AIM Constellation Fund $ Class [ ] A Treasury Shares $ Class [ ] A
------------ ------------
AIM Growth Fund $ Class [ ] A [ ] B MONEY MARKET FUNDS $
------------ ------------
AIM Money Market Fund $ Class [ ] A [ ] B [ ] C
AIM International ------------
Equity Fund $ Class [ ] A [ ] B Total $
------------ ------------
AIM Global Utilities
Fund $ Class [ ] A [ ] B
------------
AIM Value Fund $ Class [ ] A [ ] B
------------
AIM Weingarten Fund $ Class [ ] A [ ] B
------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C Shares will be
purchased.
BILLING: PLEASE CONFIRM WITH YOUR EMPLOYER THAT THIS IS REQUIRED BEFORE
COMPLETING THIS SECTION. MY EMPLOYER HAS REQUESTED THAT AIM FORWARD A
BILLING EACH MONTH FOR SUBMISSION OF MY ON-GOING SALARY-DEFERRAL
CONTRIBUTION. (NOTE: BILLING IS ONLY AVAILABLE WHEN AN ORGANIZATION HAS 10
OR MORE 403(B) PARTICIPANTS WITH AIM.)
PLEASE REMIT THE BILLING TO:
Employer's Name Attention
-------------------------- -------------------
Address Telephone
---------------------------------- -------------------
- --------------------------------------------------------------------------------
3. ACCOUNT OPTIONS
Please indicate options you desire, if any.
TELEPHONE EXCHANGE PRIVILEGE. Unless indicated below, I authorize the
Transfer Agent to accept from any person instructions to exchange shares in
my account(s) by telephone for shares of other AIM Funds within the same
Class of Shares, in accordance with the procedures and conditions set forth
in the Fund's current prospectus.
[ ] I DO NOT want the telephone exchange privilege.
11
<PAGE> 2
REDUCED SALES CHARGE (optional/available for Class A shares only)
Right of Accumulation
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds(--Registered Trademark--):
Fund(s) Account No(s).
--------------------------- -------------------------
LETTER OF INTENT
I agree to the Letter of Intent provisions in the prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
[ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
4. BENEFICIARY DESIGNATION
Primary Beneficiary:
I hereby designate the following individual(s) to receive the full value of
the assets of my 403(b) plan with A I M Distributors, Inc. upon my death.
This revokes any and all prior Beneficiary Designations made by me and
filed with the Custodian. (If you designate a beneficiary other than your
spouse, your spouse must acknowledge the designation by signing this form.)
Full Name
------------------------------------------------------------------
Address
-------------------------------------------------------------------
Social Security #
----------------------------------------------------------
Relationship
---------------------------------------------------------------
Percentage of Assets
-------------------------------------------------------
Please complete and sign the beneficiary designation. We cannot accept this
application without proper designation of beneficiary. If you wish to
identify additional or contingent beneficiaries, please attach a separate
letter identifying the same information requested above.
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I hereby adopt the A I M Distributors, Inc. 403(b)(7) Custodial Agreement
appointing Boston Safe Deposit and Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the 403(b)(7)
custodial agreement and consent to the custodial account fee as specified.
I understand that an annual AIM 403(b)(7) Maintenance Fee (currently $10)
will be deducted in early December from my 403(b)(7) Fund account.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is
required to have the following certification. Please refer to the Fund
prospectus for complete instructions regarding backup withholding. Under
the penalties of perjury, I certify that (i) the number shown in Section 1
is my correct Social Security/Taxpayer Identification Number and (ii) I am
not subject to backup withholding because the Internal Revenue Service (a)
has not notified me that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (b) has notified me that I
am no longer subject to backup withholding (does not apply to real estate
transactions, mortgage interest paid, the acquisition or abandonment of
secured property, contributions to an individual retirement arrangement
[403(b)(7)], and payments other than interest and dividends).
Certification Instructions-You must cross out item (b) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your tax
return.
[ ] Exempt from Backup Withholding (i.e. exempt entity as described in the
prospectus)
[ ] Nonresident alien [Form(s) W-8 attached]
Your Signature Date / /
------------------------------------------- --- --- ---
- --------------------------------------------------------------------------------
6. BROKER/DEALER INFORMATION:
Name of Broker/Dealer Firm
-------------------------------------------------
Branch Address
-------------------------------------------------------------
Rep. Name and Number
-------------------------------------------------------
Rep. Signature
-------------------------------------------------------------
Rep. Telephone
----------------------
12 [AIM LOGO APPEARS HERE] A I M Distributors, Inc.
<PAGE> 3
403(b) PLAN [AIM LOGO APPEARS HERE]
ASSET-TRANSFER FORM
To move assets from another 403(b) custodian to AIM.
Use this form only when transferring assets from an existing 403(b)
(account # __________) to an AIM 403(b) (account # __________).
If you do not already have an AIM 403(b), you must also submit a 403(b)
Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (please print)
Name
-----------------------------------------------------------------------
Address
--------------------------------------------------------------------
City State Zip
----------------------------------- ----------- -----------
Social Security Number Daytime Telephone
----------------- ----------------
- --------------------------------------------------------------------------------
2. CURRENT CUSTODIAN
Name of Resigning Trustee Account Number
--------------- -------------------
Address of Resigning Trustee
-----------------------------------------------
City State Zip
----------------------------------- ----------- -----------
Attention Telephone
------------------------------ -------------------------
- --------------------------------------------------------------------------------
3. 403(b) ACCOUNT INFORMATION
Please deposit proceeds in my
[ ] existing [ ] new*
<TABLE>
<CAPTION>
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES (CHECK ONE)
<S> <C> <C>
AIM Blue Chip Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Capital Development Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Charter Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Constellation Fund $ [ ] Class A
-------------------------------
AIM Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM International Equity Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Utilities Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Value Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Weingarten Fund $ [ ] Class A [ ] Class B
-------------------------------
FIXED INCOME FUNDS CLASS OF SHARES (CHECK ONE)
AIM Balanced Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Income Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Intermediate Government Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM High Yield Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Income Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Limited Maturity Treasury Shares $ [ ] Class A
-------------------------------
MONEY MARKET FUNDS CLASS OF SHARES (CHECK ONE)
AIM Money Market Fund $ [ ] Class A [ ] Class B [ ] Class C
-------------------------------
Total $
-------------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C Shares will be
purchased.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS
To Resigning Trustee or Custodian:
Please liquidate [ ] all or [ ] part of the account(s) listed in Section 2
and transfer the proceeds to my 403(b) account with Boston Safe Deposit and
Trust Company.
13
<PAGE> 4
[ ] Partial amount to transfer $
-------------------
[ ] immediately [ ] at maturity ( / / )
---- ---- ----
[ ] Please transfer "In Kind" [ ] all [ ] part of the shares of the AIM
Fund held in my account to Boston Safe Deposit and Trust Company.
Percent of shares to transfer %
-----
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I have established a 403(b) account with the AIM Funds and have appointed
Boston Safe Deposit and Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
------------------------------------ ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Firm
-------------------------------------------------------
Signature Guaranteed by
----------------------------------------------------
(Name & Title)
- --------------------------------------------------------------------------------
6. CUSTODIAN ACCEPTANCE
This is to advise you that Boston Safe Deposit and Trust Company, as
custodian, will accept the account identified above for:
Depositor's Name Account Number
------------------------------- ------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature
---------------------------------------------------
(Boston Safe Deposit and Trust Company)
Mailing Date / /
---- ---- ----
- --------------------------------------------------------------------------------
7. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check. Indicate account number on
all documents. Return this completed form and completed 403(b) Application
to Boston Safe Deposit and Trust Company, c/o A I M Fund Services, Inc.,
P.O. Box 4399, Houston, TX 77210-4399. Phone: 800-959-4246.
- --------------------------------------------------------------------------------
8. DISTRIBUTION ELECTION INFORMATION
If this participant is age 70-1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation (check one): [ ] declining years
[ ] recalculation
2. Life expectancy (check one): [ ] single life payout
[ ] joint life payout*
3. The amount withheld from this transfer to satisfy this year's required
distribution: $
-------------------
Were any previous distributions made to the participant this year?
[ ] No [ ] Yes $
------------------------------
The factor used to calculate this required payment was
---------------------
Name of Designated Beneficiary
--------------------------------------------
Relationship Date of Birth / /
------------------------------------ --- --- ---
Signature of Current Custodian/Trustee
-------------------------------------
[AIM LOGO APPEARS HERE] A I M Distributors, Inc.
14
<PAGE> 5
403(b) PLAN
EXCHANGE AND CONTRIBUTION CHANGE FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. PARTICIPANT INFORMATION (PLEASE PRINT)
Employee Name
--------------------------------------------------------------
Social Security Number Account Number
---------------------- ---------------
Employer Name
--------------------------------------------------------------
- --------------------------------------------------------------------------------
2. FUND EXCHANGE
An AIM Fund exchange is the transfer of existing fund assets from one AIM
Fund to another AIM Fund. Please consult your investment adviser first.
Fund exchanges will not effect how your future 403(b) contributions are
invested. You must indicate under the 403(b) Contribution Section any
changes with respect to your future contribution.
From AIM Fund to AIM Fund Shares, or $ or %
---------- --------- ----- ---- ----
From AIM Fund to AIM Fund Shares, or $ or %
---------- --------- ----- ---- ----
- --------------------------------------------------------------------------------
3. 403(b) CONTRIBUTIONS
MARK BELOW THE STATEMENT THAT APPLIES
[ ] All future contributions are to be invested as previously indicated.
[ ] All future contributions (indicate % or dollar amount) are to be
invested as indicated below.
INVESTMENT SELECTION
I wish to change the investment of my future 403(b) contributions to the
AIM Funds listed below. This change is to be effective with the first
payroll contribution received following receipt of this form.
A. Fund %
--------------------------------- -----------------------
B. Fund %
--------------------------------- -----------------------
C. Fund %
--------------------------------- -----------------------
D. Fund %
--------------------------------- -----------------------
Total: 100%
Signature Date
--------------------------------------- ------------------
Please return the completed form to A I M Fund Services, Inc.,
Attn: Qualified Plan Services Department, P.O. Box 4399, Houston, TX
77210-4399. Phone: 800-959-4246.
If you have any questions, please call one of our Client Services
Representatives. Please retain a photocopy of this form for your records.
15 A I M Distributors, Inc.
<PAGE> 6
403(b) PLAN
AGREEMENT FOR SALARY DEFERRAL [AIM LOGO APPEARS HERE]
Use this form only if your employer does not supply you with its own form.
Submit this form to your employer.
[ ] Original Authorization
[ ] Amended Authorization
BY THIS AGREEMENT MADE BETWEEN
(the "Employee")
-----------------------------------------------------------
(Please Print)
and
(the "Employer")
-----------------------------------------------------------
the parties hereto agree as follows:
Effective with the paycheck dated ______________________________ , 19_____
(which date is subsequent to the date of execution of this Agreement), the
Employee's basic salary will be deferred by the amount indicated in item
(1) or (2) below, as designated by the Employee.
This Agreement shall be legally binding and irrevocable as to each of the
parties hereto while employment continues; provided, however, that either
party may terminate this Agreement by giving at least 30 days written
notice of the date of termination.
The amount of the Employee's salary deferral cannot exceed the Exclusion
Allowance under Section 403(b) of the Internal Revenue Code or the
limitations under Section 402(g) and 415 of the Internal Revenue Code.
The amount of the Employee's salary deferral will be: (select one)
1. $ per pay period beginning .
------------------- --------------------------
2. % of basic salary beginning .
------------------ -------------------------
It is understood that the amount of such salary deferral will be sent by
the Employer directly to A I M Fund Services, Inc., P.O. Box 4399, Houston,
Texas 77210-4399. Checks should be made payable to Boston Safe Deposit and
Trust Company. If your employer is requesting a billing from AIM, please
indicate this on the application.
Signed this day of , 19 .
---------------------- --------------------------- ----
Employee Signature
---------------------------------------------------------
Signed this day of , 19 .
---------------------- --------------------------- ----
Name of Employer
-----------------------------------------------------------
By
-------------------------------------------------------------------------
(Accepted)
Title
----------------------------------------------------------------------
17 A I M Distributors, Inc.
<PAGE> 7
403(b) PLAN
SALARY-DEFERRAL WORKSHEET [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. INSTRUCTIONS
Under current IRS rules, the maximum amount you may defer from your salary
is based upon a formula using a number of factors, including current
salary, years of service, type of employer, and plan contributions made on
your behalf in past years.
Simplified, the contribution to your 403(b) plan is the lesser of:
o Basic Exclusion Allowance
o 20% of your gross salary
o $9,500
It is important not to exceed the maximum permitted contribution in any tax
year. Excess contributions may be subject to federal taxes unless corrected
by April 15 of the tax year following the tax year for which the
contribution is made. Excess contributions, not corrected, are also subject
to a 6% non-deductible annual excise tax.
Please note that some employees of certain church organizations and
employees of more than one qualified organization are subject to somewhat
different limitations. Also, special "catch-up" provisions may permit you
to exceed the basic limits. If you think you may qualify for such special
treatment, consult your tax adviser for details.
The worksheet below will help you determine the amount you may defer.
However, you may be required to further reduce this amount if your employer
is making plan contributions in addition to your deferrals or you are
currently making salary-deferral contributions to other retirement plans.
You should keep this worksheet for your own records. Do not return it to
AIM.
- --------------------------------------------------------------------------------
2. WORKSHEET DEFINITIONS
Current Salary $ = Current annual salary (before
--------------- salary-deferral contributions)
Service Years = Years of service with current
--------------- employer (enter whole and fractional
years; however, if less than 1 year,
use "1" year).
Prior Contributions $ = All contributions (excluding this
--------------- year's salary deferrals) made by
your present employer to a pension
or profit sharing plan, state
teachers retirement plan,403(b)
plan, 457 deferred compensation
plan or SEP-IRA.
Prior Deferrals $ = All salary deferrals made to 403(b)
--------------- plans, including tax-sheltered
annuities, 457 plans (relating to
state deferred compensation plans),
SAR-SEP, and 401(k) plans on your
behalf by your present employer in
past years.
Current Deferrals $ = Your salary-deferral contributions
--------------- made in the current tax year. This
amount may be zero or the amount
deferred year to date.
- --------------------------------------------------------------------------------
3. BASIC EXCLUSION ALLOWANCE FOR SALARY DEFERRALS:
<TABLE>
<S> <C> <C>
a. $ x x .1667 = $
------------------------------------- --------------- ------------------------------
Current Salary Service Years
b. $ + $ = $
------------------------------------- ----------------------- ------------------------------
Prior Contributions Prior Deferrals
c. $ - $ = $
------------------------------------- ----------------------- ------------------------------
Total Line a Total Line b Basic Exclusion Allowance
d. $ x .20 = $
------------------------------------- ------------------------------
Current Salary Employer's Contribution Limit
e. $9,500 - = $
----------------------------- ------------------------------
Current Year's Salary Deferral Salary Deferral Limit
f. Your Basic Salary Deferral Limit is the lesser of c, d, or e = $
------------------------------
</TABLE>
19
<PAGE> 8
4. SPECIAL INCREASE IN DOLLAR LIMITATION:
This option is only available if you have at least 15 years of service with
the same qualified employer. This Special Increase in the Dollar Limitation
may permit you to exceed the $9,500 salary-deferral limit.
<TABLE>
<S> <C> <C>
g. ($5,000 x ) - $ = $
-------------------------- ------------------------ -----------------------------
Service Years Prior Deferrals
h. Total of Special Increase Dollars(1) used in prior years
under this option = $
-----------------------------
i. $15,000 - $ = $
------------------------ -----------------------------
Amount on Line h
j. Lesser of lines g or i or $3,000 = $
-----------------------------
k. $9,500 + = $
--------------------------- -----------------------------
Amount on Line j Special Deferral Limit
l. The maximum amount you can defer is the lesser of lines
c, d, or k = $
-----------------------------
</TABLE>
- --------------------------------------------------------------------------------
5. "CATCH-UP" OPTIONS
Employees of a qualified organization(2) may elect to use one of three
special "catch-up" options to increase your 403(b) contribution. Each
option is irrevocable and once chosen, no other "catch-up" option may be
used in future years. However, an individual may choose to use the Basic
Exclusion Allowance in any year instead of the "catch-up" option. NOTE: The
"catch-up" options calculate the total amount your employer plus you may
contribute. Your salary deferral may not exceed $9,500 even if the total
"catch-up" amount is greater than $9,500.
<TABLE>
<CAPTION>
OPTION A-May be elected only in the year in which the participant separates
from service.
<S> <C>
m. Amount on line c, recalculated using steps a, b, c based on
only the last 10 years of service = $
------------------------------
n. The option's limit is the lesser of line m or $30,000
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
OPTION B-May be elected in any year of service.
o. Amount on line c = $
------------------------------
p. $3,200 + $ = $
---------------------- ------------------------------
Total Line d
q. Option b overall limit = $ $15,000
------------------------------
r. The maximum contribution under this option is the lesser
of line o, p or q
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
OPTION C-May be elected in any year of service.
s. x .20 = $
--------------------------- ------------------------------
Current Salary
t. The maximum contribution under this option is the lesser
of line s, or $30,000
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
</TABLE>
(1) Special Increase in Dollar Limitation permits you an additional
lifetime contribution up to $15,000, not to exceed $3,000 extra in any one
year. Step h accounts for previous contributions made under this option.
(2) A "qualified organization" is an educational organization [described
in IRC Section 170(b)(1)(A)(ii)], hospital, home health service agency
[described in IRC Section 501(c)(3) and which has been determined by the
Secretary of Health, Education, and Welfare to be a home health agency, as
defined in Section 1861(o) of the Social Security Act], health and welfare
service agency, church or convention or association of churches [described
in IRC Section 414(e)] or an organization which is exempt from tax under
IRC Section 501 and which is controlled by or associated with a church or a
convention or association of churches.
You should review these calculations with your tax adviser. You may also
want to consult the Internal Revenue Service Publication 571 as an
additional source of information. The Custodian, its agent or the sponsor
of the AIM 403(b) Plan will not provide legal or tax advice, nor calculate
your 403(b) plan contributions.
20 [AIM LOGO APPEARS HERE] A I M Distributors, Inc.
<PAGE> 9
403(b)(7) PLAN
CUSTODIAL AGREEMENT
ARTICLE I. EFFECTIVE DATE
This AIM 403(b)(7) Custodial Agreement shall become effective on the date on
which the Custodian or its agent, A I M Distributors, Inc., receives
incorporated AIM 403(b)(7) Application executed by the Employee.
ARTICLE II. DEFINITIONS
2.01. ACCOUNT OR FUND(S) means the separate account or accounts established
and maintained by the Custodian for an Employee pursuant to this Agreement.
2.02. AGREEMENT OR AIM 403(b)(7) AGREEMENT means this document and the
Application.
2.03. AIM FUND(S) means any of the mutual funds which are distributed by
A I M Distributors, Inc. and are part of The AIM Family of Funds--Registered
Trademark--.
2.04. APPLICATION OR AIM 403(b)(7) APPLICATION means the document(s) which
established the Agreement and is (are) executed by the Employer, Employee and
Custodian.
2.05. BENEFICIARY means the person or persons (including entities) designated
by the Employee as entitled to receive the Account balance, if any, at the
Employee's death. If at the time of the Employee's death, no designated
Beneficiary is alive, Beneficiary shall mean the Employee's surviving spouse or,
if the Employee does not have a surviving spouse, the Employee's estate.
2.06. CODE means the Internal Revenue Code of 1986, as amended.
2.07. CONTRIBUTIONS shall mean Salary Reduction Contributions and/or Employer
Contributions.
2.08. CUSTODIAN means the party who executed the Application as Custodian,
and any successor thereto, provide that such successor is either a bank or
another person who satisfies the requirements of Code Section 401(f)(2).
2.09. DESIGNATION OF BENEFICIARY means a form executed and submitted to the
Custodian in accordance with the terms of Article IX.
2.10. DISABILITY means the inability of the Employee to engage in any
substantial gainful activity because of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration. The Employee shall not be considered to
be suffering from Disability until the Custodian has received certification from
the Employer to such effect.
2.11. DISTRIBUTOR means A I M Distributors, Inc. and any successor thereto.
2.12. EMPLOYEE means an individual who is employed by the Employer and who
has properly executed the Application.
2.13. EMPLOYER means the employer who is listed on the Application.
2.14. EMPLOYER CONTRIBUTIONS mean the amount, if any, transmitted by the
Employer to the Custodian for addition to the Employee's Account other than
Salary Reduction Contributions.
2.15. SALARY REDUCTION CONTRIBUTION means the amount not included in the
Employee's compensation pursuant to a written salary reduction agreement and
transmitted by the Employer to the Custodian for addition to the Employee's
Account.
ARTICLE III. MAINTENANCE OF A CUSTODIAL ACCOUNT
3.01. SALARY REDUCTION CONTRIBUTIONS TO THE ACCOUNT. The Employee may make
Salary Reduction Contributions to the Account. Any salary reduction agreement
between the Employer and the Employee shall be effective only as to amounts
earned by the Employee after such agreement becomes effective. Each such
agreement shall be legally binding and irrevocable with respect to compensation
subsequently earned. A salary reduction agreement may be terminated by written
notice received at least 30 days prior to the date of termination. The Employer
and Employee shall not enter into more than one salary reduction agreement in
any one taxable year of the Employee.
3.02. TRANSFERS TO AND FROM THE ACCOUNT. All direct or indirect asset
transfers to an Account from an existing custodial account described in Code
Section 403(b)(7) or an annuity contract qualified under Code Section 403(b)(1)
shall be in cash unless the Custodian otherwise consents. Direct transfers into
an account may be accepted to the extent permitted by the Code. The Employee has
the right by proper written instruction to cause a transfer of cash or, if
agreed to by the Custodian, shares of AIM Fund(s) to another custodial account
described in Code Section 403(b)(7), an annuity contract qualified under Code
Section 403(b)(1), an individual retirement account described in Code Section
408(a) or an individual retirement annuity described in Code Section 408(b).
3.03. ROLLOVERS TO THE ACCOUNT. The Employee shall be permitted to make
rollover contributions to the Account of an amount received by the Employee that
is attributable to participation in another annuity or custodial account which
meets the requirements of Section 403(b) of the Code. Neither the Custodian nor
the Distributor shall have responsibility to ensure that contributions under
3.02 or 3.03 satisfy the applicable provisions of the Code.
3.04. EMPLOYER CONTRIBUTIONS. In addition to Salary Reduction Contributions,
the Employer may make a contribution to the Account on behalf of the Employee in
accordance with any retirement plan, fund or program for which the Employee is
eligible, subject to the limitations under 3.05.
3.05. CONTRIBUTION LIMITS.
(a) Unless the Employee has made a special election as described under
Section 415(c)(4) of the Code, the total amount of annual additions that may be
made to the Account on behalf of the Employee for any limitation year shall not
exceed the lesser of:
(i) $30,000 (or, if greater, one-fourth the defined benefit plan
dollar limitation in effect under Section 415(b)(1) of the Code for the
limitation year); or
(ii) 25 percent of the Employee's compensation (within the meaning of
Section 415(c)(3) of the Code) for the limitation year.
(b) For purposes of this subsection (a) above, the term "annual additions"
shall include contributions to the Account under 3.01 (pertaining to Salary
Reduction Contributions) for the limitation year.
(c) The term "limitation year" shall mean the calendar year, unless the
Employee elects to change the limitation year to another twelve-month period by
attaching a statement to his or her federal income tax return in accordance with
the regulations under Section 415 of the Code. If the Employee is in control of
the Employer (within the meaning of Code Section 414(b) or (c), as modified by
Code Section 415(h)), the limitation year shall be the same as the limitation
year of the Employer under Section 415 of the Code.
(d) If the Employer or any affiliated employer as described in Section
415(h) of the Code makes contributions on behalf of the Employee to any other
annuity contract described in Section 403(b) of the Code, then the contributions
to such annuity contract shall be combined with the contributions to the Account
for purposes of the limitations of subsection (a) above.
3.06. LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS. For any taxable year
beginning after December 31, 1986, Salary Reduction Contributions shall not
exceed the amount of $9,500, as adjusted in accordance with Code Section
402(g)(4), or such greater amount as may be permitted with respect to the
Employee for the taxable year under Code Section 402(g)(8).
ARTICLE IV. INVESTMENT OF CONTRIBUTIONS
4.01. PURCHASE OF SHARES. As soon as is practical after the Custodian
receives a Contribution, it shall invest such Contribution in shares of the
designated AIM Fund(s).
4.02. REPORTS AND VOTING OF SECURITIES. The Custodian shall deliver to
the Employee or, if applicable, his other Beneficiary, any notices,
prospectuses, financial statements, proxies and proxy solicitation materials
received by it with respect to investments made for the Employee's Account.
4.03. DIVIDEND. All capital gain distributions and dividends received on the
shares of the selected AIM Fund(s) shall be automatically reinvested in shares
of the Fund consistent with the Employee's investment instruction in effect on
the date such dividend or distribution is paid.
ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS
5.01. INSTRUCTIONS TO CUSTODIAN. The Custodian shall not be responsible for
making any distributions until such time as it has been notified in writing by
the Employee to begin making distributions. No distribution will be made upon
the death of the Employee unless the Custodian has been notified in writing of
the Employee's death. The Custodian may require adequate verification of such
death. Distributions to the Employee (or, if applicable, his or her Beneficiary)
of amounts in the Account shall be made in cash and/or, if the Distributor
consents, in kind.
5.02. EMPLOYEE WITHDRAWALS.
(a) After Attainment of Age 59-1/2. At any time after the Employee attains
age 59-1/2, he or she may withdraw amounts from his or her Account by making
written instructions to the Custodian as to the amounts to be so withdrawn.
(b) Hardship Withdrawals. An Employee who has a financial hardship,
as determined by the Employer, and who has made all available withdrawals
pursuant to the paragraph above and pursuant to the provisions of any other
plans of the Employer and any related entities of which he is a member and who
has obtained all available loans pursuant to the provisions of any other plans
of the Employer and any related entities of which he or she is a member may
withdraw from his Account an amount not to exceed the lesser of the balance of
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<PAGE> 10
his Account or the amount determined by the Employer as being available for
withdrawal pursuant to this paragraph. For purposes of this paragraph, financial
hardship means the immediate and heavy financial needs of the Employee. A
withdrawal based upon financial hardship pursuant to this paragraph shall not
exceed the amount required to meet the immediate financial need created by the
hardship and not reasonably available from other resources of the Employee. The
determination of the existence of an Employee's financial hardship and the
amount required to be distributed to meet the need created by the hardship shall
be made by the Employer. A withdrawal shall be deemed to be made on account of
an immediate and heavy financial need of an Employee if the withdrawal is on
account of:
(i) medical expenses described in Section 213(d) of the Code incurred by
the Employee, the Employee's spouse or any dependents of the Employee (as
defined in Section 152 of the Code);
(ii) purchase (excluding mortgage payments) of a principal residence of
the Employee;
(iii) payment of tuition for the next semester or quarter of
post-secondary education of the Employee, or the Employee's spouse, children or
dependents (as defined in Section 152 of the Code);
(iv) the need to prevent the eviction of the Employee from his principal
residence or foreclosure on the mortgage of the Employee's principal residence;
(v) such other financial needs which the Commissioner of Internal Revenue
may deem to be immediate and heavy financial needs through the publication of
revenue rulings, notices and other documents of general applicability; or
(vi) such other circumstances as the Employer determines, and certifies,
as an immediate and heavy financial need of the Employee in accordance with
applicable governmental regulations and procedures adopted by the Employer.
The decision of the Employer shall be final and binding, provided that all
Employees similarly situated shall be treated in a uniform and nondiscriminatory
manner. The above notwithstanding, (a) withdrawals under this paragraph from an
Employee's Account shall be limited to the sum of the Employee's Salary
Reduction Contributions to his Account, plus income allocable thereto and
credited to the Employee's Account as of December 31,1988, less any previous
withdrawals of such amounts. An Employee who makes a withdrawal under this
paragraph may not again make Salary Reduction Contributions or employee
contributions to the Account or to any other qualified or nonqualified plan of
the Employer or any related entity for a period of twelve months following such
withdrawal. Further, such Employee may not make Salary Reduction Contributions
to the Account or to any other plan maintained by the Employer or any related
entity for such Employee's taxable year immediately following the taxable year
of the withdrawal in excess of the applicable limit set forth in Section 402(g)
of the Code for such next taxable year less the amount of such Employee's Salary
Reduction Contributions for the taxable year of the withdrawal.All hardship
withdrawals shall be made by executing the Financial Hardship Form prescribed by
AIM Distributors and completed and signed by the Employer and filing such form
with AIM Distributors prior to the proposed date of withdrawal.
5.03. DISTRIBUTIONS AT SEPARATION FROM SERVICE. Unless the Employee otherwise
irrevocably elects in writing within 60 days after the Employee's separation
from service with the Employer, and the Custodian consents to such election,
distribution of the Account shall be made in a lump sum 90 days after the
Employee's separation from service. If the Employee makes such an election,
distribution of the Account shall not commence until the date specified in such
election unless the Employee earlier dies or becomes disabled as defined in this
Agreement.
If the Employee wishes to make such an irrevocable election, he or she may do
so by filing a written notice with the Custodian in a form acceptable to
the Custodian. The written notice to the Custodian shall list the date on which
distribution shall commence, the period over which distribution shall be made,
and amount(s) of each distribution. The Employee may not elect either (a) a date
for commencement of distribution which delays the commencement of distribution
from the Account beyond April 1 following the calendar year during which the
Employee attains age 70-1/2 or (b) a form of distribution which results in the
present value (determined at the time distribution commences) of payments to be
made to the Employee over the Employee's life expectancy (as determined under
Section 1.72-9 of the Treasury Regulations) equaling less than 50% of the
present value of the total payments to be made.
5.04. DISTRIBUTIONS AT THE EMPLOYEE'S DEATH. At the Employee's death, if such
Employee has not already specified the form of distribution, the Beneficiary (or
each beneficiary if there is more than one) may elect the form of distribution.
Such election, which will be irrevocable, must be in writing and provided to the
Custodian within 60 calendar days after the Custodian has received notification
of the Employee's death. If such an election is not made in the time provided,
distribution of the Account shall be made in a lump sum 90 days after the
Custodian receives notification of the Employee's death. Any form of
distribution must comply with the following requirements:
(a) Death While Receiving Distributions. If the Employee had already
begun to receive distributions from the Account and the Employee's spouse is not
the Beneficiary, the Account balance which remains at the time of the Employee's
death shall be distributed to the Beneficiary at least as rapidly as under the
distribution method being used at the time of the Employee's death.
(b) Death Prior to Receiving Distributions. If the Employee had not begun
to receive distributions at his or her death and the Employee's spouse is not
the Beneficiary, the entire Account balance which remains at the time of the
Employee's death shall be distributed to the Beneficiary either (i) within five
(5) years, or (ii) in installments over a period not exceeding the life
expectancy of the Beneficiary (as determined as of the date of the Employee's
death by using the return multiples contained in Section 1.72-9 of the Treasury
Regulations), provided that such distributions commence within one year after
the date of the Employee's death.
(c) Spousal Beneficiary. If the Employee's spouse is the Beneficiary,
regardless of whether distributions to the Employee have already commenced, this
Section 5.04 shall be applied to the spouse as though the spouse were the
Employee and, as though the spouse, as Employee, separated from service with the
Employer on the date of the Employee's death.
5.05. DISTRIBUTION UPON DISABILITY. If the Employee becomes disabled
as defined in this Agreement after his or her separation from service with the
Employer, he or she shall receive a lump sum distribution of the Account 90 days
after the date of such Disability unless, within 60 days after the date of such
Disability, the Employee elects another time for commencement and/or form of
distribution and the Custodian consents to such election. The Employee may not
elect either (a) a date for commencement of distribution which delays the
commencement of distribution from the Account beyond the first April 1 following
the calendar year during which the Employee attains age 70-1/2 or (b) a form of
distribution which results in the present value (determined at the time
distribution commences) of payments to be made to the Employee over the
Employee's life expectancy (as determined under Section 1.72-9 of the Treasury
Regulations) equaling less than 50% of the present value of the total payments
to be made.
5.06. DISTRIBUTION OF EXCESS DEFERRAL. Upon written notice to the Custodian
from the Employee, by the first March 1 following the close of the taxable year
of the Employee, that "excess deferrals" (as that term is defined in Code
Section 402(g)(2)(A)) have been made with respect to the Account for such
taxable year, the Custodian shall distribute to the Employee such "excess
deferrals" not later than the first April 15 following the close of such taxable
year. The Employer shall have sole responsibilities for determining such an
excess deferrals and timely notification to the Custodian.
5.07. DISTRIBUTION TO INCOMPETENTS. If a distribution is payable to a person
known by the Custodian to be a minor or a person under a legal disability, the
Custodian may, in its absolute discretion, make all or any part of the
distribution to (a) a parent of such person, (b) the guardian, committee or
other legal representative, wherever appointed, of such person, including a
custodian for such person under a Uniform Gifts to Minors Act or similar act,
(c) any person having the control and custody of such person, or (d) to such
person directly.
ARTICLE VI. CUSTODIAN
6.01. DUTIES. The Custodian shall:
(a) Receive transmitted Contributions;
(b) Provide safekeeping for the assets in the Account;
(c) Collect income;
(d) Execute orders for purchase, sale or exchange of shares of the AIM
Fund(s) and make settlements in accordance with general practice;
(e) Maintain records of all transactions in the Account;
(f) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation, if any,
charged to the Account;
(g) File with the Internal Revenue Service and/or any other government
agency such returns, reports, forms and other information as may be prescribed
as the responsibility of the Custodian in its capacity as Custodian by the
applicable statue and regulations thereunder; and
(h) Perform all other duties and services consistent with the purposes and
intentions of this Agreement.
The Custodian may perform any of its administrative duties through other persons
designated by the Custodian from time to time, including persons otherwise
unaffiliated with the Custodian.
6.02. SHARE REDEMPTIONS. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
or her Beneficiary pursuant to Article V, the Employee (or Beneficiary, if
applicable) shall redeem shares of the AIM Fund(s) held in the Employee's
Account.
6.03. LIMITATIONS ON LIABILITIES AND DUTIES.
(a) The Custodian shall be fully protected in acting or omitting to take
any action in reliance upon any document, order or other direction believed by
the Custodian to be genuine and properly given. Conversely, the Custodian shall
22
<PAGE> 11
be fully protected in acting or omitting to take any action in reliance on its
belief that any document, order or other direction either is not genuine or was
not properly given.
(b) To the extent permitted by law, 30 days after providing to the Employee
the statements required under Section 6.01(f), the Custodian shall be released
and discharged from all liability to the Employee or any third party as to the
matters contained in such statement unless the Employee files written objections
with the Custodian within such 30-day period.
(c) In no event shall the Custodian or Distributor be under a fiduciary
duty to the Employee in regard to the selection of investments or be liable for
any loss incurred on account of a selected investment.
(d) The Custodian and Distributor shall have no responsibility with regard
to the initial or continued qualification of the Account under Code Section
403(b)(7) or with regard to whether the Account or any Contributions
to the Account satisfy any applicable minimum participation, coverage or
nondiscrimination requirements under the Code.
(e) Neither the Custodian nor the Distributor shall be obligated to
determine the amount of any Contribution due or to collect any Contribution from
the Employee or Employer.
(f) Neither the Custodian nor the Distributor shall be held responsible for
determining the amount, character, or timing of any distribution to the
Employee.
(g) Neither the Custodian nor the Distributor shall have responsibility,
and the Employee shall have sole responsibility, with respect to the computation
of the Employee's "exclusion allowance" as defined in Code Section 403(b)(2),
any applicable limitation(s) on contributions under Code Section 402(g) and Code
Section 415(c), any election available to the Employee under Code Section 415,
or any matters relating to any tax consequences with respect to Contributions,
Account earnings, Account distributions, transfers or rollovers.
(h) The Custodian shall not be required to carry out any instructions not
given in accordance with this Agreement and neither the Custodian nor the
Distributor shall be liable for loss of income, or for appreciation or
depreciation in share value that shall result from the Custodian's failure to
follow instructions not given in accordance with this Agreement.
(i) If instructions are received that, in the opinion of the Custodian, are
unclear, neither the Custodian nor the Distributor shall be liable for loss of
income, or for appreciation or depreciation in share value during the period
preceding the Custodian's receipt of written clarification of the instructions.
(j) The Custodian shall have no responsibility to make any distribution or
process any withdrawal by order of the Employee or Beneficiary unless and until
the requisite written instructions specify the occasion for such action and the
Custodian is furnished with any and all applications, certificates, tax waivers,
signature guarantees and other documents (including proof of any legal
representative's authority) deemed necessary or advisable by the Custodian.
(k) The Custodian shall neither assume nor have any duty of inquiry about
any matter arising under the Plan.
(l) Neither the Custodian nor the Distributor shall have any liability to
the Employee or Beneficiary for any tax penalty or other damages resulting from
any inadvertent failure by the Custodian to make a distribution under this
Agreement.
(m) Neither the Custodian nor the Distributor shall be liable for interest
on temporary cash balances, if any, maintained in the Account.
(n) To the extent permitted by law, the Employee shall always fully
indemnify the Custodian and hold it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement and
matter which it contemplates (except that which arises due to the Custodian's
gross negligence or willful misconduct) or (ii) with respect to making or
failing to make distribution, other than for failure to make distribution in
accordance with instructions therefore which are in full compliance with both
Article IX and this Section 6.03.
(o) Except as required by law, the Custodian shall not be obligated or
expected to commence or to defend a legal action or proceeding in connection
with this Agreement, unless the Custodian and the Employer agree that the
Custodian will defend a given legal action and the Custodian is fully
indemnified for so doing to its satisfaction.
(p) In no event shall the Employee, Employer, or Distributor have any
responsibility or liability for any acts or omissions of the Custodian (or its
agents or designees) hereunder.
6.04. COMPENSATION. In consideration for its services hereunder, the
Custodian shall be entitled to receive the applicable fees specified in its then
current fee schedule, if any. The Custodian may substitute a revised fee
schedule from time to time upon 30 days' written notice to the Employer or
Employee. The Custodian shall be entitled to such reasonable additional fees as
it may from time to time determine for services required of it and not clearly
identified on the fee schedule.
6.05. RESIGNATION AND REMOVAL. The Custodian may resign at any time
by giving at least 30 days' written notice to the Employer or Employee. The
Distributor may remove the Custodian hereunder by giving at least 30 days'
written notice to the Custodian. In each case, the Distributor shall designate a
successor custodian qualified pursuant to Section 2.07 hereof, which successor
custodian shall accept such appointment by a writing to be submitted to the
Employer or Employee and the Custodian.
On the effective date of its resignation or removal, the Custodian shall
transfer to the designated successor custodian the assets and records (or copies
thereof) of the Account provided, however, that the Custodian may retain
whatever assets it deems necessary for payment of its fees, costs, expenses,
compensation and any other liabilities which constitute a charge on or against
the assets of the Account or on or against the Custodian.
ARTICLE VII. FEES, TAXES AND OTHER EXPENSES
Any income taxes or other taxes of any kind whatsoever that may be levied
or assessed upon or in respect of the Account (including any transfer taxes
incurred in connection with the investment and reinvestment of Account assets),
expenses, fees and administrative costs incurred by the Custodian in the
performance of its duties (including fees for legal services rendered to the
Custodian), and the Custodian's compensation as determined under Section 6.04,
if any, shall constitute a charge upon the assets of the Account. At the
Custodian's option, such fee, tax or expense shall be paid from the Account or
directly by the Employee.
ARTICLE VIII. PROTECTION OF EMPLOYEE BENEFITS
At no time shall any part of the Account be used for purposes other than for
the exclusive benefit of the Employee. The Employee's rights to Contributions
shall be nonforfeitable at all times after such Contributions are transferred to
the Custodian.
ARTICLE IX. BENEFICIARY DESIGNATION
Each Employee may submit to the Custodian a properly executed written
Designation of Beneficiary acceptable to the Custodian who will receive any
undistributed assets held in the Account at the time of the Employee's death.
Any such Designation of Beneficiary shall not be effective unless it is filed
during the Employee's lifetime with the Custodian at the Custodian's home
office. Whether or not fully dispositive of the Account, the most recently filed
Designation of Beneficiary accepted by the Custodian shall be controlling and
all previously filed designations shall be considered superseded and shall have
no effect. To the extent that the Account is not fully disposed of at the time
of the Employee's death, it shall go to the Employee's surviving spouse, if any;
otherwise, to the Employee's estate. If a Beneficiary dies while receiving
distributions, the portion of the Account to which the Beneficiary would have
been entitled (had he or she survived) shall be paid to the Beneficiary's
beneficiary or beneficiaries (or if impossible, to the Beneficiary's estate) in
a lump sum within 90 days after the Custodian receives notification of the
Beneficiary's death.
ARTICLE X. AMENDMENT
10.01. BY THE DISTRIBUTOR. The Distributor may amend this Agreement in
its entirety or any portion thereof. The Distributor shall provide copies of
such amendment to the Employer and/or Employee. Neither this Section nor any
other portion of this agreement shall impose on the Distributor an affirmative
obligation to amend the Agreement.
10.02. LIMITATIONS. No amendment shall be made:
(a) Which would cause or permit any part of the Account to be diverted to
purposes other than for the exclusive benefit of the Employee and/or his or her
Beneficiary, or cause or permit any portion of such assets to revert to or
become the property of the Employer;
(b) Without the written consent of the Custodian; or
(c) Which would retroactively deprive any Employee of any benefit to which
he or she was entitled under the Agreement, unless such amendment is necessary,
in the opinion of counsel, to conform the Agreement to, or satisfy the
conditions of, Code Section 403(b), any other law, or any Governmental
regulation or ruling, provided that this prohibition shall not be construed to
prohibit prospective amendment of the Agreement (including prospective amendment
to eliminate a benefit) where such prospective amendment is permitted by law.
ARTICLE XI. TERMINATION
11.01. AUTOMATIC TERMINATION ON DISTRIBUTION. This Agreement shall terminate
when all the assets held in the Account established hereunder have been
distributed or otherwise transferred out of the Account.
11.02. TERMINATION ON DISQUALIFICATION. This Agreement shall terminate if,
after notification by the Internal Revenue Service that the Employee's Account
does not qualify under Code Section 403(b)(7), the Employer and/or Distributor
do not make the amendments necessary to so qualify the Account. On such
23
<PAGE> 12
termination of this Agreement, the Custodian shall distribute in cash or in
kind, to the Employee or, in the event of the Employee's death, to the
Beneficiary, subject to the Custodian's right to reserve funds as provided in
Section 6.05.
ARTICLE XII. LOANS
12.01. LOAN APPLICATION AND CONDITIONS. The Custodian may make a loan to an
Employee from the Employee's Account upon the Custodian's receipt of the
Employee's written application in a form acceptable to the Custodian, provided
the following conditions are satisfied:
(i) each loan shall satisfy rules adopted by the Custodian regarding the
minimum and maximum loan amounts permitted, which rules may be changed at any
time, provided, however, that in no event shall the total of all outstanding
loans to any Employee exceed the lesser of $50,000 (reduced by the highest
outstanding balance of loans from Account during the one year period ending the
day before the day on which such loan is made), or 50% of the balance in the
Employee's Account;
(ii) each loan shall be evidenced by the Employee's execution of a personal
demand note on a form supplied or approved by the Custodian, and each note shall
specify a reasonable rate of interest as determined by the Custodian and shall
require that the loan be repaid by the Employee in approximately equal
installments (not less frequently than quarterly) over a specified period of
time not exceeding five years;
(iii) each loan shall be secured by the Employee's Account balance.
12.02. DEFAULT. If the Employee dies or fails to pay any installment of the
loan when due, the unpaid balance of the loan shall become immediately due and
payable. The Employee may satisfy the loan by paying the outstanding balance of
the loan within such time as may be specified in the note and according to rules
adopted by the Custodian. If the loan and interest are not repaid within the
time specified, the Custodian shall treat the unpaid balance as a deemed
distribution from the Employee's Account, and shall offset the unpaid balance
before making any distribution payment otherwise due under this Agreement to the
Employee or his Beneficiary.
If an Employee does not repay any portion of the principal amount of a loan
within the required term, the Employee shall continue to be liable for the
unpaid balance of the loan including interest owed on principal payments not
made.
12.03. RULES OF ADMINISTRATION. The Custodian shall adopt such rules as from
time to time it deems proper under this Article XII (including, but not limited
to rules regarding maximum and minimum amounts of loans, and permitted number of
loans outstanding) which rules shall be applied on a uniform and
non-discriminatory basis. The Custodian reserves the right to charge an
administrative fee for processing and maintaining loans.
ARTICLE XIII. MISCELLANEOUS
13.01. APPLICABLE LAW. To the extent not preempted by Federal law, this
Agreement shall be construed and administered in accordance with the laws of the
state in which the home office of the Custodian is located. No provision of this
Agreement shall be construed to conflict with any provision of an Internal
Revenue Service regulation, ruling or order affecting the status of this
Agreement under Code Section 403(b)(7).
13.02. EMPLOYER'S SIGNATURE. If the Employer does not sign the Application
and is not required to do so under the Code and the regulations thereunder, the
Employee, to the extent allowed by law, assumes all obligations and
responsibilities of the Employer under this Agreement.
13.03. CHANGE OF ADDRESS. The Employer or if permitted by the Custodian, the
Employee, shall notify the Custodian in writing of any change of address within
30 days of such change.
13.04. NOTICE. Any notice from the Custodian to the Employee pursuant to this
Agreement shall be effective when sent by U.S. Mail to the address of record of
the Employer or Employee. Any notice to the Custodian pursuant to this Agreement
shall be by first class mail addressed to its home of office.
13.05. SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the successors in interest of the parties hereto.
13.06. CONSTRUCTION. It is intended that this Agreement, together with the
other documents that compose the 403(b)(7) arrangement pursuant to which the
Employee's funds are invested under this Agreement, qualify as a custodial
account under Code Section 403(b)(7). This Agreement shall be construed and
limited by applicable laws, and the powers and discretions conferred hereunder
shall be exercised in a manner consistent with that purpose. Subject to the
foregoing provisions of this Section 12.06, in the event of any conflict between
these Articles I through XII and the documents incorporated in this Agreement by
reference, the provisions of these Articles I through Xll shall prevail.
13.07. SEPARABILITY. If any provision of this Agreement shall be held invalid
or illegal for any reason, such determination shall not affect any remaining
provisions of this Agreement, but this Agreement shall be construed and enforced
as if such invalid or illegal provision had never been included in this
Agreement.
13.08. STATUTORY REQUIREMENTS. In the event any applicable state or local
law, regulating or rule conflicts with and/or supplements the terms of this
Agreement, such law, regulation or rule shall be deemed to supersede and/or
supplement the terms of this Agreement, provided that the Distributor and the
Custodian receive written notice of such law, regulation or rule.
13.09. RETIREMENT PLAN PROVISIONS SHALL CONTROL. In the event Contributions
are being made to the Account pursuant to any retirement plan or program
sponsored by the Employer, to the extent any provisions of this Agreement are
inconsistent with such retirement plan or program, the provisions of the
Employer's retirement plan or program shall control, provided:
(a) such provisions are not contrary to the rules and regulations under
Section 403(b)(7) of the Code; and
(b) such provisions do not impose any additional responsibilities or
duties on the Custodian without its prior written consent. The Employer shall be
responsible for delivering the most recent copy of any such retirement plan or
program to the Custodian.
13.10. ERISA REQUIREMENTS. If the Agreement is determined to constitute part
of an "employee benefit plan" established or maintained by the Employer within
the meaning of Title I of the Employee Retirement Income Security Act of 1974,
as amended, then the Employer shall have sole responsibility and be solely
responsible for ensuring that such employee benefit plan complies at all times
within such law, including, but not limited to, any reporting and disclosure
requirement thereunder.
13.11. PLAN ADMINISTRATION. Absent a separate written agreement to the
contrary, neither the Custodian nor the Distributor shall be considered the plan
administrator for any purpose under the Code or the Employee Retirement Income
Security Act of 1974, as amended.
24
<PAGE> 13
AIM 403(b) PLAN
LOAN PROVISION TERMS AND CONDITIONS
Please retain for your records
AMOUNT
o The maximum loan amount is the lesser of:
50% of your AIM 403 (b) Plan Employee account balance or $50,000 (reduced
by the highest outstanding loan balance in past 12 months).
o The minimum loan amount is $1,000.
o Each account may have no more than one outstanding loan at any time.
o Contact our Customer Service department at 1 (800) 949-4246 ext. 5222
for details.
o Loans are not available for AIM B Shares
LOAN DURATION
The maximum loan duration is five years. The AIM 403(b) Plan does not provide
an extended loan term for the purchase of a principal residence.(1)
RATE OF INTEREST
The interest rate shall be based on the prime rate plus one point as quoted in
The Wall Street Journal on the first business day of the month in which the loan
is granted.
AUTOMATIC REPAYMENT METHOD
If you choose this method, loan payments will be deducted directly from your
checking account on or about the twenty-fifth (25th) of each month, starting on
the second month following the issuance of the loan check. Repayments (principal
and interest) are applied to the particular fund from which the loan was
granted or the fund currently selected to receive repayments. IF A LOAN IS FROM
MORE THAN ONE FUND, THE LOAN REPAYMENTS MUST BE MADE TO ONE PREDESIGNATED AIM
FUND ONLY. (Repayments will not be accepted through payroll deductions.)
COUPON REPAYMENT METHOD
If this method is chosen, A I M Fund Services, Inc. (with its affiliates,
referred to in this agreement as "AIM") will provide you with a repayment
coupon booklet that specifies your monthly payment schedule for the duration of
the loan. You will be responsible for mailing your loan repayments and the
coupon stub directly to AIM. Payments must be received by the 25th of each
month, starting on the second month following the issuance of the loan check.
(continued)
[AIM LOGO APPEARS HERE]
<PAGE> 14
AIM 403(b) PLAN
LOAN PROVISION TERMS AND CONDITIONS
Please retain for your records
LOAN APPLICATION FEE
If you choose the Automatic Repayment Method, there is a $50 application fee.
If you choose the Coupon Repayment Method, the application fee is $100. The
application fees are non-refundable and must be paid by check (made payable to
A I M Fund Services, Inc.). The application fee must accompany the loan
application to initiate the loan process.
ANNUAL FEES
For the Automatic Repayment Method the annual fee is $25. The annual fee for
Coupon Repayment Method is $50. The annual fee is deducted directly from your
AIM 403(b) Plan account in early December and cannot be paid with a separate
check.
LOAN PROCESS
Participants wishing to exercise the AIM 403(b) Plan loan provision are required
to complete and sign the Loan Application, Promissory Note and Security
Agreement, Automatic Repayment Method Authorization Form (if applicable), and
Truth in Lending Disclosure Statement. When all documents are received in good
order, a check for the requested loan amount will be mailed to your address of
record within 10 business days.
REPAYMENT PROCEDURE
All loans must be repaid in monthly installments and within the lesser of five
years or by the time required distributions must begin at age 70 1/2 or before
all of the assets are transferred out of the account.
DEFAULT PROCEDURES
A default shall occur upon AIM's failure to receive two consecutive monthly
installments when due. In the event of default, AIM shall serve the Participant
with a written notice of default. Within fifteen (15) days of the date of such
notice, the Participant shall tender to AIM all outstanding principal and
interest payments due as of the date of the notice of default. If the
Participant fails to remit such amount, AIM may deem the outstanding principal
balance to be a distribution of the Participant's account and will generate a
Form 1099R in the amount of the deemed distribution at the end of the year.
PREPAYMENT
Loans may be prepaid at any time. There is no prepayment penalty. Please
contact a Qualified Plans Representative at 1-800-949-4246 ext. 5222 for your
pay-off amount.
SECURITY
As security for the payment of this note, the Participant hereby grants to AIM
a security interest in the Participant's account balance in the account.
IMPORTANT
AIM assumes no responsibility for current or future tax consequences resulting
from this transaction. Participants should consult their tax advisers for
information concerning their particular situations. Participants assume
responsibility for all tax consequences if monthly payments are not made on a
timely basis.
[AIM LOGO APPEARS HERE]
<PAGE> 15
AIM 403(b) PLAN
LOAN APPLICATION
Please complete this loan application and send it with your application fee to
the address below. Once received, AIM will return the necessary documentation
to begin the loan process. Please allow 3-4 weeks for AIM to secure the
necessary documentation and to complete the loan process.
I hereby submit to AIM this application to borrow funds from my AIM 403(b)
Plan account.
Date of Application AIM Account No.
------------------------ -------------------
Social Security Number Date of Birth
--------------------- ---------------------
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
City State Zip
--------------------------------------- ------------- -----------
Phone: Home ( ) Work ( )
-------------------------- ------------------------
Please write in the name of each AIM fund from which the loan will be
withdrawn:
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
Total MUST equal amount of loan $
---------------------
REPAYMENTS: My loan repayments are to be made to the AIM _______________ Fund.
(ONE fund only)
All provisions of the AIM 403(b) Plan Custodial Agreement, as amended from time
to time, are incorporated herein by reference. Applicant assumes responsibility
for all tax consequences. AIM assumes no responsibility for current or future
tax consequences resulting from this transaction. We suggest that you consult
your tax adviser for information concerning your particular situation.
X
-------------------------------------- ----------------------------------
Applicant's Signature Date
IMPORTANT: A check made payable to A I M FUND SERVICES, INC. for your
non-refundable application fee must accompany this application to initiate the
loan process.
My loan repayment method is: [ ] Automatic Repayment ($50 application fee) or
[ ] Coupon Repayment ($100 application fee)
A I M Fund Services, Inc., Attn: 403(b) Loan Applications, P.O. Box 4399,
Houston, TX 77210-4399
[AIM LOGO APPEARS HERE]
<PAGE> 16
AIM 403(b) PLAN
AUTOMATIC REPAYMENT METHOD AUTHORIZATION
The Automatic Repayment Method enables you to make monthly loan repayments via
bank drafts from your checking account. The bank drafts are an electronic
transfer of funds from your bank to AIM's bank through the National Automated
Clearing House Association (NACHA). Please verify whether your bank participates
in the National Automated Clearing House Association (NACHA) before submitting
this authorization. (If it does not, you must repay your loan by monthly check
and the loan application fee is $100.) As soon as your bank has accepted your
authorization, and only if your bank is a member of the National Automated
Clearing House Association (NACHA), the amount of each payment will be
electronically deducted from your checking account on, or about, the
twenty-fifth (25th) of each month, starting the second month following the
issuance of the loan check. The bank will process the Electronic Fund Transfer
and a debit entry will appear on your checking account statement.
Please complete this form to authorize AIM to have your loan repayments
deducted from your personal checking account. Attach a voided personal check
in the space provided below.
Make each of my pre-authorized loan payments for $___________ (amount of
monthly loan repayment), and invest into the:
AIM ____________________ Fund.
ATTACH YOUR VOIDED CHECK HERE.
------------------------------------------------------------------------
John Doe 000
123 Main St.
Anywhere, USA 12345
______________________________________ $_____________________
_________________________________________________________________
___________________________ ___________________________
------------------------------------------------------------------------
Name of Bank
----------------------------------------------------------------
Address of Bank Bank Phone #
------------------------------- --------------------
Bank Account # ABA Routing #
------------------------------- -------------------
Please honor drafts on my account by A I M Fund Services, Inc. ("AIM"). Your
authority to so do shall continue until you receive further notice from me
revoking this authority. You may terminate your participation in this
arrangement by written notice either to AIM or me. I agree that your rights
with respect to each draft shall be the same as if it were drawn by me. I
further agree that should any draft be dishonored, with or without cause,
intentionally or inadvertently, you shall be under no liability whatsoever.
<TABLE>
<S> <C>
- ---------------------------------------- -------------------------------------------------
Depositor's Name (please print) Signature (exactly as it appears on bank records)
-------------------------------------------------
Date
</TABLE>
Please complete and return to:
A I M Fund Services, Inc., P.O. Box 4399, Houston, TX 77210-4399
Phone 800-949-4246 ext. 5242
[AIM LOGO APPEARS HERE]
<PAGE> 1
EXHIBIT 14(e)
SIMPLE IRA APPLICATION [AIM LOGO APPEARS HERE]
Complete Sections 1 - 10
Employee: Return completed application to your employer.
Employer: Return completed applications and check to: A I M Fund Services, Inc.,
P. O. Box 4739, Houston, TX 77210-4739.
Phone: 800-959-4246. Minors cannot open an AIM SIMPLE IRA Account. Make check
payable to INVESCO Trust Company.
- --------------------------------------------------------------------------------
1 PARTICIPANT INFORMATION (Please print or type)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street City State ZIP Code
Social Security Number Birth Date / /
-------------------- ------ ------ ------
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 EMPLOYER INFORMATION (Please print or type)
Name Contact Person
--------------------------------------- ---------------
Address
-------------------------------------------------------------------
Street City State ZIP Code
Phone ( )
---- ------------------------
- --------------------------------------------------------------------------------
3 DEALER INFORMATION (To be completed by registered securities dealer)
Name of Broker/Dealer Firm
------------------------------------------------
Home Office Address
-------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
------------------------------------------------------------
Branch Phone Number ( )
--------- ------------------------
/ / Authorized for NAV purchase (If authorized for NAV purchase, other
than the Broker, please attach NAV Certification Form)
- --------------------------------------------------------------------------------
4 ACCOUNT INFORMATION
Date of Initial Deposit / /
------ ------ ------
Month Day Year
Contribution Type:
/ / Elective Deferral
/ / Employer Contribution
/ / Rollover from SIMPLE IRA
/ / Transfer from SIMPLE IRA
11
<PAGE> 2
5 FUND INVESTMENT
Indicate Fund(s) and contribution amount(s). MAKE CHECK PAYABLE TO INVESCO
TRUST COMPANY (ITC)
<TABLE>
Fund Amount of Investment Class of Shares (check one)
<S> <C> <C> <C> <C>
/ / AIM Advisor Flex Fund $_________________ / / A Shares (522) / / C Shares (322)
/ / AIM Advisor Income Fund _________________ / / A Shares (521) / / C Shares (321)
/ / AIM Advisor International Value Fund _________________ / / A Shares (526) / / C Shares (326)
/ / AIM Advisor Large Cap Value Fund _________________ / / A Shares (520) / / C Shares (320)
/ / AIM Advisor MultiFlex Fund _________________ / / A Shares (524) / / C Shares (324)
/ / AIM Advisor Real Estate Fund _________________ / / A Shares (525) / / C Shares (325)
/ / AIM Aggressive Growth Fund _________________ Fund Currently Closed To New Investors (407)
/ / AIM Blue Chip Fund _________________ / / A Shares (515) / / B Shares (615) / / C Shares (315)
/ / AIM Capital Development Fund _________________ / / A Shares (514) / / B Shares (614) / / C Shares (314)
/ / AIM Constellation Fund _________________ / / A Shares (002) / / B Shares (602) / / C Shares (302)
/ / AIM Limited Maturity Treasury Fund _________________ Only "A Shares" Available (007)
/ / AIM Balanced Fund _________________ / / A Shares (006) / / B Shares (685) / / C Shares (306)
/ / AIM Charter Fund _________________ / / A Shares (010) / / B Shares (645) / / C Shares (310)
/ / AIM Global Aggressive Growth Fund _________________ / / A Shares (081) / / B Shares (691) / / C Shares (381)
/ / AIM Global Growth Fund _________________ / / A Shares (082) / / B Shares (692) / / C Shares (382)
/ / AIM Global Income Fund _________________ / / A Shares (083) / / B Shares (693) / / C Shares (383)
/ / AIM Global Utilities Fund _________________ / / A Shares (408) / / B Shares (655) / / C Shares (308)
/ / AIM Growth Fund _________________ / / A Shares (406) / / B Shares (650) / / C Shares (350)
/ / AIM High Yield Fund _________________ / / A Shares (425) / / B Shares (675) / / C Shares (375)
/ / AIM Income Fund _________________ / / A Shares (402) / / B Shares (665) / / C Shares (365)
/ / AIM Intermediate Government Fund _________________ / / A Shares (404) / / B Shares (660) / / C Shares (360)
/ / AIM International Equity Fund _________________ / / A Shares (016) / / B Shares (694) / / C Shares (316)
/ / AIM Money Market Fund _________________ / / A Shares (401) / / B Shares (680) / / C Shares (380)
/ / AIM Cash Reserve Shares (421)
/ / AIM Value Fund _________________ / / A Shares (405) / / B Shares (690) / / C Shares (305)
/ / AIM Weingarten Fund _________________ / / A Shares (001) / / B Shares (640) / / C Shares (301)
Total $_________________
</TABLE>
(Please note that if no class of shares is selected, Class A shares will be
purchased with the exception of the AIM Money Market Fund where AIM Cash
Reserve Shares will be purchased.)
- --------------------------------------------------------------------------------
6 TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize A I M Fund Services, Inc., to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
AIM Fund's current prospectus.
/ / I DO NOT want the Telephone Exchange Privilege.
- --------------------------------------------------------------------------------
7 REDUCED SALES CHARGE (Optional)
Right of Accumulation (This option is for Class A shares only.) I apply for
Right of Accumulation reduced sales charges based on the following accounts
in The AIM Family of Funds-Registered Trademark-:
<TABLE>
<S> <C>
Fund(s)/Account No(s). Social Security No(s).
-------------- --------------
-------------- --------------
-------------- --------------
</TABLE>
LETTER OF INTENT
I agree to the Letter of Intent provisions in the prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000
/ / $500,000 / / $1,000,000
12
<PAGE> 3
8 BENEFICIARY INFORMATION
I hereby designate the following beneficiary to receive the balance in my
SIMPLE IRA custodial account upon my death. To be effective, the
designation of beneficiary and any subsequent change in designation of
beneficiary must be filed with the Custodian prior to my death. The balance
of my account shall be distributed in equal amounts to the beneficiary(ies)
who survives me. If no beneficiary is designated or no designated
beneficiary or contingent beneficiary survives me, the balance in my IRA
will be distributed to the legal representatives of my estate. This
designation revokes any prior designations. I retain the right to revoke
this designation at any time. I hereby certify that there is no legal
impediment to the designation of this beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
CONTINGENT BENEFICIARY
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my SIMPLE IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts. If more than on, please
attach a list.
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
13
<PAGE> 4
9 AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. SIMPLE Individual
Retirement Account appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the SIMPLE IRA
custodial agreement and disclosure statement and consent to the custodial
account fees as specified. I understand that a $10 annual AIM Fund SIMPLE
IRA Maintenance Fee will be deducted early in each December from my AIM
SIMPLE IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the penalties of perjury I certify by signing this Application as
provided below that:
(1) The number shown in Section 1 of this Application is my correct Social
Security (or Tax Identification) Number, and
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as
a result of a failure to report all interest or dividends, (c) the IRS
has notified me that I am no longer subject to backup withholding.
(This paragraph (2) does not apply to real estate transactions,
mortgage interest paid, the acquisition or abandonment of secured
property, contributions to an individual retirement arrangement and
payments other than interest and dividends.)
YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS
THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
In addition, the Fund hereby incorporates by reference into this section of
the Application either the IRS instructions for Form W-9 or the substance
of those instructions whichever is included in the prospectus.
SIGNATURE PROVISIONS
I, THE UNDERSIGNED DEPOSITOR, HAVE READ AND UNDERSTAND THE FOREGOING
APPLICATION AND THE ATTACHED MATERIAL INCLUDED HEREIN BY REFERENCE. IN
ADDITION, I CERTIFY THAT THE INFORMATION WHICH I HAVE PROVIDED AND THE
INFORMATION WHICH IS INCLUDED WITHIN THE APPLICATION AND THE ATTACHED
MATERIAL INCLUDED HEREIN BY REFERENCE IS ACCURATE INCLUDING BUT NOT LIMITED
TO THE REPRESENTATIONS CONTAINED IN THE WITHHOLDING INFORMATION SECTION OF
THIS APPLICATION. [THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.]
Dated / /
----- ----- -----
Month Day Year
Signature of SIMPLE IRA Shareholder
----------------------------------------
10 SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist
you between 7:30 a.m. and 5:30 p.m. Central time at 800-959-4246.
[AIM LOGO APPEARS HERE]
A I M Distributors, Inc. 12/97
14
<PAGE> 5
AIM SIMPLE IRA ASSET-TRANSFER FORM [AIM LOGO APPEARS HERE]
USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING SIMPLE IRA TO AN
AIM SIMPLE IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian.
Complete Sections 1 - 5.
If you do not already have an AIM SIMPLE IRA, you must also submit an AIM SIMPLE
IRA Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1 INVESTOR INFORMATION (Please print or type.)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street
- --------------------------------------------------------------------------------
City State ZIP Code
Social Security Number Birth Date / /
-------------------- ------ ------ ------
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee
--------------------------------------------------
Account Number of Resigning Trustee
----------------------------------------
Address of Resigning Trustee
-----------------------------------------------
Street
- --------------------------------------------------------------------------------
City State ZIP Code
Attention Telephone
------------------------ ------------------------------
- --------------------------------------------------------------------------------
3 IRA ACCOUNT INFORMATION
Please deposit proceeds in my
/ / New*
/ / Existing AIM SIMPLE IRA Account Number
---------------------------
INVESTMENT ALLOCATION:
<TABLE>
<S> <C> <C>
Fund Name Class %
----------------------------- ------------------- --------
Fund Name Class %
----------------------------- ------------------- --------
Fund Name Class %
----------------------------- ------------------- --------
</TABLE>
*If this is a new AIM SIMPLE IRA account, you must attach a completed AIM
SIMPLE IRA Application. If no class of shares is selected, Class A shares
will be purchased, except in the case of AIM Money Market Fund, where AIM
Cash Reserve Shares will be purchased.
- --------------------------------------------------------------------------------
4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 2 and
issue a check in cash to my SIMPLE IRA with INVESCO Trust Company.
Amount to liquidate: / / All / / Partial amount of $
----------------
When to liquidate: / / Immediately / / At maturity / /
--- --- ---
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FUND SHARES MAY BE TRANSFERRED IN KIND. TO TRANSFER ALL
OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind": / / All / / Partial amount of shares
---------
15
<PAGE> 6
5 AUTHORIZATION AND SIGNATURE
I have established a SIMPLE IRA with the AIM Funds and have appointed
INVESCO Trust Company as the successor Custodian. Please accept this as
your authorization and instruction to liquidate or transfer in kind the
assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
- --------------------------------------------------------------------------------
6 DISTRIBUTION ELECTION INFORMATION
SECTION 6 OF FORM TO BE COMPLETED BY PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section.
Election made by the participant as of the required beginning date:
1. Method of calculation / / declining years / / recalculation
/ / annuitization / / amortization
2. Life expectancy
/ / single life payout / / joint life expectancy factor-Joint birth
date and relationship
--------
3. The amount withheld from this rollover to satisfy this year's required
distribution $
------------------------------------------------------
The life-expectancy ages used to calculate this required payment was
---------------------------------------------------------------------------
Signature of Current Custodian/Trustee
------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
7 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
--------------------------- ---------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature /s/ Illegible Mailing Date / /
---------------------------- ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
8 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P. O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the
SIMPLE IRA holder on all documents.
[AIM LOGO APPEARS HERE]
A I M Distributors, Inc. 12/97
16
<PAGE> 7
SIMPLE INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT [AIM LOGO APPEARS HERE]
FORM 5305-SA (December 1996)
Department of the Treasury
Internal Revenue Service (under Sections 408(a) and 408(p) of the Internal
Revenue Code)
ARTICLE I
1.01 THE CUSTODIAN WILL ACCEPT CASH CONTRIBUTIONS made on behalf of the
participant by the participant's employer under the terms of a SIMPLE plan
described in section 408(p). In addition, the Custodian will accept transfers or
rollovers from other SIMPLE IRAs of the participant. No other contributions will
be accepted by the Custodian.
ARTICLE II
2.01 THE PARTICIPANT'S INTEREST in the balance in the custodial account is
nonforfeitable.
ARTICLE III
3.01 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN LIFE INSURANCE
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
3.02 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN COLLECTIBLES
(within the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
4.01 NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT to the contrary, the
distribution of the participant's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are herein incorporated by reference.
4.02 UNLESS OTHERWISE ELECTED by the time distributions are required to
begin to the participant under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the
participant and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
4.03 THE PARTICIPANT'S ENTIRE INTEREST IN THE CUSTODIAL ACCOUNT must be, or
begin to be, distributed by the participant's required beginning date (April 1
following the calendar year-end in which the participant reaches age 70 1/2). By
that date, the participant may elect, in a manner acceptable to the Custodian,
to have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the participant.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the participant and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the participant's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor expectancy
of the participant and his or her designated beneficiary.
4.04 IF THE PARTICIPANT DIES before his or her entire interest is
distributed to him or her, the entire remaining interest will be distributed as
follows:
(a) If the participant dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the participant dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the
participant or, if the participant has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the participant's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the participant's
death. If, however, the beneficiary is the participant's surviving spouse, then
this distribution is not required to begin before December 31 of the year in
which the participant would have reached age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the participant's
required beginning date, even though payments may actually have been made before
that date.
(d) If the participant dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
4.05 IN THE CASE OF A DISTRIBUTION OVER LIFE EXPECTANCY in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the participant's entire interest in the custodial account as
of the close of business on December 31 of the preceding year by the life
expectancy of the participant (or the joint life and last survivor expectancy of
the participant and the participant's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or joint
life and last survivor expectancy) using the attained ages of the participant
and designated beneficiary as of their birthdays in the year the participant
reaches age 70 1/2. In the case of a distribution in accordance with section
404(b)(ii), determine life expectancy using the attained age of the designated
beneficiary as of the beneficiary's birthday in the year distributions are
required to commence.
4.06 THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
5.01 THE PARTICIPANT AGREES TO PROVIDE THE CUSTODIAN with information
necessary for the Custodian to prepare any reports required under sections
408(i) and 408(l)(2) and Regulations section 1.408-5 and 1.408-6.
5.02 THE CUSTODIAN AGREES TO SUBMIT REPORTS to the Internal Revenue Service
and the participant as prescribed by the Internal Revenue Service.
5.03 THE CUSTODIAN ALSO AGREES TO PROVIDE THE PARTICIPANT'S EMPLOYER the
summary description described in section 408(l)(2) unless this SIMPLE IRA is a
transfer SIMPLE lRA.
ARTICLE VI
6.01 NOTWITHSTANDING ANY OTHER ARTICLES which may be added or incorporated,
the provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with sections 408(a) and 408(p)
and related regulations will be invalid.
ARTICLE VII
7.01 THIS AGREEMENT WILL BE AMENDED from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
8.01 APPLICABLE LAW: This Custodial Agreement shall be governed by the laws
of the state where the Trust resides.
8.02 ANNUAL ACCOUNTING: The Custodian shall, at least annually, provide the
Participant or Beneficiary (in the case of death) with an accounting of such
Participant's account. Such accounting shall be deemed to be accepted by the
Participant, if the Participant or Beneficiary does not object in writing within
60 days after the mailing of such accounting statement.
8.03 AMENDMENT: The Participant irrevocably delegates to the Custodian the
right and power to amend this Custodial Agreement. Except as hereafter provided,
the Custodian will give the Participant 30 days prior written notice of any
amendment. In case of a retroactive amendment required by law, the Custodian
will provide written notice to the Participant of the amendment within 30 days
after the amendment is made or, if later, by the time that notice of the
amendment is required to be given under regulations or other guidance provided
by the IRS. The Participant shall be deemed to have consented to any such
amendment unless the Participant notifies the Custodian to the contrary within
30 days after notice to the Participant and requests a distribution or transfer
of the balance in the account.
17
<PAGE> 8
8.04 RESIGNATION AND REMOVAL OF CUSTODIAN:
(a) The Custodian may resign at any time by giving at least 30 days
notice to the Participant. The Custodian may resign and appoint a successor
trustee or custodian to serve under this agreement or under another governing
instrument selected by the successor trustee or custodian by giving the
Participant written notice at least 30 days prior to the effective date of such
resignation and appointment, which notice shall also include a copy of such
other governing instrument, if applicable, and the related disclosure statement.
The Participant shall then have 30 days from the date of such notice to either
request a complete distribution of the account balance or designate a different
successor trustee or custodian. If the Participant does not request distribution
of the account or designate a different successor within such 30 days, the
Participant shall be deemed to have consented to the appointment of the
successor trustee or custodian and the terms of any new governing instrument,
and neither the Participant nor the successor shall be required to execute any
written document to complete the transfer of the account to the successor
trustee or custodian. The successor trustee or custodian may rely on any
information, including beneficiary designations, previously provided by the
Participant.
(b) The Participant may at any time remove the Custodian and replace
the Custodian with a successor trustee or custodian of the Participant's choice
by giving 30 days written notice to the Custodian. In such event, the Custodian
shall then deliver the assets of the account as directed by the Participant.
However, the Custodian may retain a portion of the assets of the SIMPLE IRA as a
reserve for payment of any anticipated remaining fees and expenses, and shall
pay over any remainder of this reserve to the successor trustee or custodian
upon satisfaction of such fees and expenses.
8.05 CUSTODIAN'S FEES AND EXPENSES:
(a) This Section 8.05 of the Custodial Agreement shall be governed by
the requirements of Section 408(p)(7) and IRS Notice 97-6, Section J, and is
further explained in the accompanying SIMPLE IRA Disclosure Statement.
(b) The Participant agrees to pay the Custodian any and all fees
specified in the Custodian's current published fee schedule for establishing and
maintaining this SIMPLE IRA, including any fees for distributions from,
transfers from, and terminations of this SIMPLE IRA. The Custodian may change
its fee schedule at any time by giving the Participant 30 days prior written
notice.
(c) The Participant agrees to pay any expenses incurred by the
Custodian in the performance of its duties in connection with the account. Such
expenses include, but are not limited to, administrative expenses, such as legal
and accounting fees, and any taxes of any kind whatsoever that may be levied or
assessed with respect to such account.
(d) All such fees, taxes, and other administrative expenses charged to
the account shall be collected either from the assets in the account or from any
contributions to or distributions from such account if not paid by the
Participant, but the Participant shall be responsible for any deficiency.
(e) In the event that for any reason the Custodian is not certain as
to who is entitled to receive all or part of the custodial account, the
Custodian reserves the right to withhold any payment from the custodial account,
to request a court ruling to determine the disposition of the custodial assets,
and to charge the custodial account for any expenses incurred in obtaining such
legal determination.
8.06 WITHDRAWAL REQUESTS: All requests for withdrawal shall be in writing
on the form provided by the Custodian. Such written notice must also contain the
reason for the withdrawal and the method of distribution being requested.
8.07 AGE 70 1/2 DEFAULT PROVISIONS:
(a) Unless the Custodian (or the Participant, if the Custodian
permits) elects otherwise, life expectancies for purposes of calculating the
required minimum distribution shall not be recalculated.
(b) If the Participant does not choose any of the distribution methods
under Section 4.03 of this Custodial Agreement by April 1st following the
calendar year in which he/she reaches age 70 1/2, distribution shall be made to
the Participant based on such Participant's single life expectancy.
8.08 DEATH BENEFIT DEFAULT PROVISIONS: Unless the Custodian (or the
Beneficiary, if the Custodian permits) elects otherwise, life expectancies for
purposes of calculating the required minimum death distribution shall not be
recalculated. If the Participant dies before his or her required beginning date
and the beneficiary does not select a method of distribution described in
section 4.04(b)(i) or (ii) by December 31st following the year of death, then
distributions will be made pursuant to proposed regulation 1.401(a)(9)-1.
8.09 INVESTMENT PROVISIONS: Pursuant to IRS Notice 97-6, Q&A J-4, if the
Custodian is the Designated Financial Institution (DFI) and the Participant
timely elects that his or her balance be transferred without cost or penalty to
another SIMPLE IRA in accordance with the provisions described in the
accompanying SIMPLE IRA Disclosure Statement, the Custodian reserves the right
to restrict the participant's choice of investment alternatives as determined by
the Custodian.
8.10 RESPONSIBILITIES: Participant agrees that all information and
instructions given to the Custodian by the Participant is complete and accurate
and that the Custodian shall not be responsible for any incomplete or inaccurate
information provided by the Participant or Participant's beneficiary(ies).
Participant agrees to be responsible for all tax consequences arising from
contributions to and distributions from this Custodial Account and acknowledges
that no tax advice has been provided by the Custodian.
8.11 DESIGNATION OF BENEFICIARY: Except as may be otherwise required by
State law, in the event of the Participant's death, the balance in the account
shall be paid to the beneficiary or beneficiaries designated by the Participant
on a beneficiary designation acceptable to and filed with the Custodian. The
Participant may change the Participant's beneficiary or beneficiaries at any
time by filing a new beneficiary designation with the Custodian. If no
beneficiary designation is in effect, if none of the named beneficiaries survive
the Participant, or if the Custodian cannot locate any of the named
beneficiaries after reasonable search, any balance in the account will be
payable to the Participant's estate.
ARTICLE IX
SELF-DIRECTED SIMPLE IRA PROVISIONS
9.01 INVESTMENT OF CONTRIBUTIONS: At the direction of the Participant, the
Custodian shall invest all contributions to the account and earnings thereon in
investments acceptable to the Custodian, which may include marketable securities
traded on a recognized exchange or "over the counter" (excluding any securities
issued by the Custodian), covered call options, certificates of deposit, and
other investments to which the Custodian consents, in such amounts as are
specifically selected and specified by Participant in orders to the Custodian in
such form as may be acceptable to the Custodian, without any duty to diversify
and without regard to whether such property is authorized by the laws of any
jurisdiction as a trust investment. The Custodian shall be responsible for the
execution of such orders and for maintaining adequate records thereof. However,
if any such orders are not received as required, or, if received, are unclear in
the opinion of the Custodian, all or a portion of the contribution may be held
uninvested without liability for loss of income or appreciation, and without
liability for interest pending receipt of such orders or clarification, or the
contribution may be returned. The Custodian may, but need not, establish
programs under which cash deposits in excess of a minimum set by it will be
periodically and automatically invested in interest-bearing investment funds.
The Custodian shall have no duty other than to follow the written investment
directions of the Participant, and shall be under no duty to question said
instructions and shall not be liable for any investment losses sustained by the
Participant.
9.02 REGISTRATION: All assets of the account shall be registered in the
name of the Custodian or of a suitable nominee. The same nominee may be used
with respect to assets of other investors whether or not held under agreements
similar to this one or in any capacity whatsoever. However, each Participant's
account shall be separate and distinct; a separate account therefor shall be
maintained by the Custodian, and the assets thereof shall be held by the
Custodian in individual or bulk segregation either in the Custodian's vaults or
in depositories approved by the Securities and Exchange Commission under the
Securities Exchange Act of 1934.
9.03 INVESTMENT ADVISOR: The Participant may appoint an Investment Advisor,
qualified under Section 3(38) of the Employee Retirement Income Security Act of
1974, to direct the investment of his SIMPLE IRA. The Participant shall notify
the Custodian in writing of any such appointment by providing the Custodian a
copy of the instruments appointing the Investment Advisor and evidencing the
Investment Advisor's acceptance of such appointment, an acknowledgement by the
Investment Advisor that it is a fiduciary of the account, and a certificate
evidencing the Investment Advisor's current registration under the Investment
Advisor's Act of 1940. The Custodian shall comply with any investment directions
furnished to it by the Investment Advisor, unless and until it receives written
notification from the Participant that the Investment Advisor's appointment has
been terminated. The Custodian shall have no duty other than to follow the
written investment directions of such Investment Advisor and shall be under no
duty to question said instructions, and the Custodian shall not be liable for
any investment losses sustained by the Participant.
9.04 NO INVESTMENT ADVICE: The Custodian does not assume any responsibility
for rendering advice with respect to the investment and reinvestment of
Participant's account and shall not be liable for any loss which results from
Participant's exercise of control over his account. The Custodian and
Participant may specifically agree in writing that the Custodian shall render
such advice, but the Participant shall still have and exercise exclusive
responsibility for control over the investment of the assets of his account, and
the Custodian shall not have any duty to question his investment directives.
9.05 PROHIBITED TRANSACTIONS: Notwithstanding anything contained herein to
the contrary, the Custodian shall not lend any part of the corpus or income of
the account to; pay any compensation for personal services rendered to the
account to; make any part of its services available on a preferential basis to;
acquire for the account any property, other than cash, from; or sell any
property to, any Participant, any member of a Participant's family, or a
corporation con-
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trolled by any Participant through the ownership, directly or indirectly, of 50%
or more of the total combined voting power of all classes of stock entitled to
vote, or of 50% or more of the total value of shares of all classes of stock of
such corporation.
9.06 UNRELATED BUSINESS INCOME TAX: If the Participant directs investment
of the account in any investment which results in unrelated business taxable
income, it shall be the responsibility of the Participant to so advise the
Custodian and to provide the Custodian with all information necessary to prepare
and file any required returns or reports for the account. As the Custodian may
deem necessary, and at the Participant's expense, the Custodian may request a
taxpayer identification number for the account, file any returns, reports, and
applications for extension, and pay any taxes or estimated taxes owed with
respect to the account. The Custodian may retain suitable accountants,
attorneys, or other agents to assist it in performing such responsibilities.
9.07 DISCLOSURES AND VOTING: The Custodian shall deliver, or cause to be
executed and delivered, to Participant all notices, prospectuses, financial
statements, proxies and proxy soliciting materials relating to assets credited
to the account. The Custodian shall not vote any shares of stock or take any
other action, pursuant to such documents, with respect to such assets except
upon receipt by the Custodian of adequate written instructions from Participant.
9.08 MISCELLANEOUS EXPENSES: In addition to those expenses set out in
section 8.05 of this plan, the Participant agrees to pay any and all expenses
incurred by the Custodian in connection with the investment of the account,
including expenses of preparation and filing any returns and reports with regard
to unrelated business income, including taxes and estimated taxes, as well as
any transfer taxes incurred in connection with the investment or reinvestment of
the assets of the account.
9.09 NONBANK TRUSTEE PROVISION: If the Custodian is a nonbank trustee, the
Participant shall substitute another trustee or custodian in place of the
Custodian upon receipt of notice from the Commissioner of the Internal Revenue
Service or his delegate that such substitution is required because the Custodian
has failed to comply with the requirements of Income Tax Regulations Section
1.408-2(e), or is not keeping such records, making such returns, or rendering
such statements as are required by applicable law, regulations, or other
rulings. The successor trustee or custodian shall be a bank, insured credit
union, or other person satisfactory to the Secretary of the Treasury pursuant to
Section 408(a)(2) of the Code. Upon receipt by the Custodian of written
acceptance by its successor of such successor's appointment, Custodian shall
transfer and pay over to such successor the assets of the account (less amounts
retained pursuant to section 8.04 of the Custodial Agreement) and all records
(or copies thereof) of the Custodian pertaining thereto, provided that the
successor trustee or custodian agrees not to dispose of any such records without
the Custodian's consent.
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GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
PURPOSE OF FORM
Form 5305-SA is a model custodial account agreement that meets the requirements
of sections 408(a) and 408(p) and has been automatically approved by the IRS. A
SIMPLE individual retirement account (SIMPLE IRA) is established after the form
is fully executed by both the individual (participant) and the Custodian. This
account must be created in the United States for the exclusive benefit of the
participant or his or her beneficiaries. Individuals may rely on regulations for
the Tax Reform Act of 1986 to the extent specified in those regulations. Do not
file Form 5305-SA with the IRS. Instead, keep it for your records.
For more information on SIMPLE IRAs, including the required disclosures the
Custodian must give the participant, get Pub. 590, Individual Retirement
Arrangements (IRAs).
DEFINITIONS
Participant - The participant is the person who establishes the custodial
account. Custodian - The Custodian must be a bank or savings and loan
association, as defined in section 408(n), or any person who has the approval of
the IRS to act as Custodian.
TRANSFER SIMPLE IRA
This SIMPLE IRA is a "transfer SIMPLE IRA" if it is not the original recipient
of contributions under any SIMPLE plan. The summary description requirements of
section 408(l)(2) do not apply to transfer SIMPLE IRAs.
SPECIFIC INSTRUCTIONS
Article IV - Distributions made under this article may be made in a single sum,
periodic payment, or a combination of both. The distribution option should be
reviewed in the year the participant reaches age 70 1/2 to ensure that the
requirements of section 408(a)(6) have been met.
Article VIII - Article VIII and any that follow it may incorporate additional
provisions that are agreed to by the participant and Custodian to complete the
agreement. They may include, for example, definitions, investment powers, voting
rights, exculpatory provisions, amendment and termination, removal of the
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the participant, etc. Use additional pages if
necessary and attach them to this form.
FINANCIAL DISCLOSURE
IN GENERAL: IRS regulations require the Custodian to provide you with a
financial projected growth of your SIMPLE IRA account based upon certain
assumptions.
GROWTH IN THE VALUE OF YOUR SIMPLE IRA: Growth in the value of your SIMPLE IRA
is neither guaranteed nor projected. The value of your SIMPLE IRA will be
computed by totaling the fair market value of the assets credited to your
account. At least once a year the Custodian will send you a written report
stating the current value of your SIMPLE IRA assets. The Custodian shall
disclose separately a description of:
(a) The type and amount of each charge;
(b) the method of computing and allocating earnings, and
(c) any portion of the contribution, if any, which may be used for the purchase
of life insurance.
CUSTODIAN FEES: The Custodian may charge reasonable fees or compensation for its
services and it may deduct all reasonable expenses incurred by it in the
administration of your SIMPLE IRA, including any legal, accounting,
distribution, transfer, termination or other designated fees. Any charges made
by the Custodian will be separately disclosed on an attachment hereto. Such fees
may be charged to you or directly to your custodial account. In addition,
depending on your choice of investment vehicles, you may incur brokerage
commissions attributable to the purchase or sale of assets.
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<PAGE> 10
SIMPLE IRA DISCLOSURE STATEMENT [AIM LOGO APPEARS HERE]
RIGHT TO REVOKE YOUR SIMPLE IRA ACCOUNT: You may revoke your SIMPLE IRA within
seven days after you sign the SIMPLE IRA Plan Application by hand delivering or
mailing a written notice to the name and address indicated on the SIMPLE IRA
Plan Application. If you revoke your account by mailing a written notice, such
notice must be postmarked by the seventh day after you sign the Plan
Application. If you revoke your SIMPLE IRA within the seven-day period you will
receive a refund of the entire amount of your contributions to the SIMPLE IRA
without any adjustment for earnings or any administrative expenses. If you
exercise this revocation, we are still required to report certain information to
the IRS.
GENERAL REQUIREMENTS OF A SIMPLE IRA:
1. All SIMPLE contributions must be made in cash, unless you are making a
rollover contribution or transfer, and the Custodian accepts such noncash
assets.
2. The only types of contributions permitted to be made to this SIMPLE IRA are
salary reduction contributions and employer contributions under the
employer's SIMPLE Retirement Plan.
3. The Custodian of your SIMPLE IRA must be a bank, savings and loan
association, credit union or a person who is approved to act in such a
capacity by the Secretary of the Treasury.
4. No portion of your SIMPLE IRA funds may be invested in life insurance
contracts.
5. Your interest in your SIMPLE IRA must be fully vested and is nonforfeitable
at all times.
6. The assets in your SIMPLE IRA may not be commingled with other property
except in a common trust fund or common investment fund.
7. You may not invest the assets of your SIMPLE IRA in collectibles (as
described in Section 408(m) of the Internal Revenue Code.) A collectible is
defined as any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage, or any other tangible personal property specified by
the IRS. However, if the Custodian permits, specially minted U.S. Gold and
Silver bullion coins and certain state-issued coins are permissible SIMPLE
IRA investments.
8. Your interest in your SIMPLE IRA must begin to be distributed to you by the
April 1st following the calendar year you attain the age of 70 1/2. The
methods of distribution, election deadlines and other limitations are
described in detail below.
9. For purposes of the SIMPLE Plan rules, in the case of an individual who is
not a self-employed individual, compensation means the amount described in
section 6051(a)(3) which includes wages, tips and other compensation from
the employer subject to income tax withholding under section 3401(a), and
amounts described in section 6051(a)(8), including elective contributions
made under a SIMPLE plan, and compensation deferred under a section 457
plan. In the case of a self-employed individual, compensation means net
earnings from self-employment determined under section 1402(a), prior to
subtracting any contributions made under the SIMPLE plan on behalf of the
individual.
10. Contributions to a SIMPLE IRA are excludible from federal income tax and
not subject to federal income tax withholding when made to the SIMPLE IRA.
Salary reduction contributions are subject to FICA, FUTA or RRTA tax when
made and must be reported on the employee's Form W-2 wage statement.
Matching and nonelective employer contributions made to a SIMPLE IRA are
not subject to FICA, FUTA or RRTA and are not required to be reported on
Form W-2.
11. A SIMPLE IRA must be established by or on behalf of an employee prior to
the first date by which a contribution is required to be deposited into the
SIMPLE IRA.
ELIGIBLE EMPLOYEES: Under a SIMPLE Retirement Plan established by an Eligible
Employer, all employees of the employer who received at least $5,000 in
compensation from the employer during any two preceding calendar years, whether
or not consecutive, and who are reasonably expected to receive at least $5,000
in compensation during the calendar year, must be eligible to participate in the
SIMPLE Plan for the calendar year. An employer may impose less restrictive
eligibility requirements, such as eliminating or reducing the prior year
compensation requirements, the current year compensation requirement, or both,
under its SIMPLE Plan.
An employer, at its option, may exclude from eligibility employees who are
included in a unit of employees covered by an agreement that the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representatives and such employer or employers; in the case of a trust
established or maintained pursuant to an agreement that the Secretary of Labor
finds to be a collective bargaining agreement between air pilots represented in
accordance with Title II of the Railway Labor Act and one or more employees, all
employees not covered by that agreement; and employees who are nonresident
aliens and who received no earned income from the employer that constitutes
income from sources within the United States.
PARTICIPATION IN ANOTHER PLAN: An eligible employee may participate in an
employer's SIMPLE Plan, even if he or she also participates in a plan of a
different employer for the same year. However, the employee's salary reduction
contributions are subject to the limitation of section 402(g), which provides an
aggregate limit on the exclusion for elective deferrals for any individual.
Also, an eligible employee who participates in an employer's SIMPLE plan and an
eligible deferred compensation plan described in section 457(b) is subject to
the limitation described in section 457(c). The employee is responsible for
monitoring compliance with these limitations.
ELIGIBLE EMPLOYERS: SIMPLE plans may be established by employers (including
tax-exempt employers and governmental entities) that had no more than 100
employees who earned $5,000 or more in compensation during the preceding
calendar year. For purposes of the 100-employee limitation, all employees
employed at any time during the calendar year are taken into account, regardless
of whether they are eligible to participate in the SIMPLE plan. This means that
otherwise excludible employees (i.e., certain union employees, nonresident
aliens with no U.S.-source income, and those employees who have not met the
plan's minimum eligibility requirements) must be taken into account.
SIMPLE PLAN CONTRIBUTIONS:
ELECTIVE DEFERRALS (SALARY REDUCTION CONTRIBUTIONS) - A salary reduction
contribution is a contribution made pursuant to an employee's election to have
an amount contributed to his or her SIMPLE IRA, rather than have the amount paid
directly to the employee in cash. An eligible employee must be permitted to
elect to have salary reduction contributions made at the level specified by the
employee, expressed as a percentage of compensation for the year or as a
specific dollar amount. The maximum salary reduction contribution per calendar
year may not exceed $6,000, subject to cost of living adjustments. Salary
reduction contributions may not begin until the eligible employee completes a
form provided by the employer designed to permit the employee to elect the
salary reduction percentage or specific dollar amount. An employer may not place
any restrictions on the amount of an employee's salary reduction contributions
(e.g., by limiting the contribution percentage), except to the extent needed to
comply with the annual limit.
EMPLOYER CONTRIBUTIONS - TWO OPTIONS
1. MATCHING CONTRIBUTIONS: Under a SIMPLE plan, an employer is generally
required to make a contribution on behalf of each eligible employee in an amount
equal to the employee's salary reduction contributions, up to a limit of 3% of
the employee's compensation for the entire calendar year.
The 3% limit on matching contributions is permitted to be reduced for a
calendar year at the election of the employer, but only if: the limit is not
reduced below 1%; the limit is not reduced for more than two years out of the
five-year period that ends with and includes the year for which the election is
effective; and employees are notified of the reduced limit within a reasonable
period of time before the 60-day election period during which employees can
enter into salary reduction agreements as described below.
In determining whether the limit was reduced below 3% for a year, any year
before the first year in which an employer (or a predecessor employer) maintains
a SIMPLE plan will be treated as a year for which the limit was 3%. If an
employer chooses to make nonelective contributions for a year in lieu of
matching contributions, that year also will be treated as a year for which the
limit was 3%.
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<PAGE> 11
2. NONELECTIVE CONTRIBUTIONS: Under a SIMPLE plan, an employer may make
nonelective contributions in lieu of matching contributions. These nonelective
contributions must be equal to 2% of each eligible employee's compensation for
the entire calendar year, regardless of whether the employee elects to make
salary reduction contributions for the calendar year. The employer may, but is
not required to, limit nonelective contributions to eligible employees who have
at least $5,000 (or some lower amount selected by the employer) of compensation
for the year. For purposes of this 2% nonelective contribution only, the
compensation taken into account must be limited to the amount of compensation
under section 401(a)(17) for the year. For 1997, this limit is $160,000 and will
be adjusted in accordance with the cost of living.
An employer may substitute the 2% nonelective contribution for the matching
contribution for a year only if eligible employees are notified within a
reasonable period of time before the 60-day election period during which
employees can enter into salary reduction agreements that a 2% nonelective
contribution will be made instead of a matching contribution.
EMPLOYEE ELECTIONS: During the 60-day period immediately preceding January 1st
of a calendar year (i.e., November 2 to December 31 of the preceding calendar
year), an eligible employee must be given the right to enter into a salary
reduction agreement for the calendar year, or to modify a prior agreement
(including reducing the amount subject to this agreement to $0). However, for
the year in which the employee becomes eligible to make salary reduction
contributions, the period during which the employee may enter into a salary
reduction agreement or modify a prior agreement is a 60-day period that includes
either the date the employee becomes eligible or the day before that date. For
example, if an employer establishes a SIMPLE plan effective as of July 1, 1997,
each eligible employee becomes eligible to make salary reduction contributions
on that date and the 60-day period must begin no later than July 1 and cannot
end before June 30, 1997.
During these 60-day periods, employees have the right to modify their salary
reduction agreements without restrictions. In addition, for the year in which an
employee becomes eligible to make salary reduction contributions, the employee
must be able to commence these contributions as soon as the employee becomes
eligible, regardless of whether the 60-day period has ended. An employer may,
but is not required to, provide additional opportunities or longer periods for
permitting eligible employees to enter into salary reduction agreements or to
modify prior agreements.
An employee must be given the right to terminate a salary reduction agreement
for a calendar year at any time during the year even if this is outside a SIMPLE
plan's normal election period. The employer's SIMPLE plan may, however, provide
that an employee who terminates a salary reduction agreement at any time other
than the normal election period is not eligible to resume participation until
the beginning of the next calendar year.
EMPLOYER ADMINISTRATIVE AND NOTIFICATION REQUIREMENTS: An employer must notify
each employee, immediately before the employee's 60-day election period, of the
employee's opportunity to enter into a salary reduction agreement or to modify a
prior agreement. If applicable, this notification must disclose an employee's
ability to select the financial institution that will serve as the trustee or
custodian of the employee's SIMPLE IRA. Such notification must also include the
Summary Description required under section 408(l)(2)(B). Such notification must
also include whether the employer will be making either matching contributions
(including the employer's election to reduce the matching contribution below 3%)
or nonelective contributions as previously described.
If an eligible employee who is entitled to a contribution under the
employer's SIMPLE plan is unwilling or unable to establish a SIMPLE IRA with any
financial institution prior to the date on which the contribution is required to
be made to the SIMPLE IRA of the employee, the employer may execute the
necessary SIMPLE IRA documents on the employee's behalf with a financial
institution selected by the employer.
The employer must deliver the salary reduction contributions to the financial
institution maintaining the SIMPLE IRA as of the earliest date on which the
contributions can reasonably be segregated from the employer's general assets,
but no later than the close of the 30-day period following the last day of the
month in which amounts would otherwise have been payable to the employee in
cash.
Matching and nonelective employer contributions must be made to the financial
institution maintaining the SIMPLE IRA no later than the due date for filing the
employer's income tax return, including extensions, for the taxable year that
includes the last day of the calendar year for which the contributions are made.
ROLLOVERS:
ROLLOVER CONTRIBUTIONS FROM ANOTHER SIMPLE IRA - A rollover contribution to this
SIMPLE IRA is only permitted from another SIMPLE IRA. A rollover contribution
from another SIMPLE IRA is any amount the participant receives from one SIMPLE
IRA and redeposits some or all of it into this SIMPLE IRA. The participant is
not required to roll over the entire amount received from the first SIMPLE IRA.
However, any amount you do not roll over will be taxed at ordinary income tax
rates for federal income tax purposes and may also be subject to an additional
tax if the distribution is a premature distribution described below.
ROLLOVER DISTRIBUTIONS FROM A SIMPLE IRA - A distribution from any SIMPLE IRA
may be rolled over only to another SIMPLE IRA during the two-year period the
participant first participated in the employer's SIMPLE plan. Thus, a
distribution from a SIMPLE IRA during that two-year period qualifies as a
rollover contribution (and is not includible in gross income of the participant)
only if the distribution is paid into another SIMPLE IRA and satisfies the other
requirements that apply to all IRA rollovers under section 408(d)(3). SIMPLE
IRAs may never be rolled into an employer's plan, such as a qualified plan or
section 403(b) plan. After this two-year period, a distribution from a SIMPLE
IRA may be rolled over to any IRA maintained by the individual. This two-year
period begins on the first day on which contributions made by the individual's
employer are deposited in the individual's SIMPLE IRA.
SPECIAL RULES THAT APPLY TO ROLLOVERS -
o The rollover must be completed no later than the 60th day after the day the
distribution was received by you.
o You may have only one IRA-to-IRA rollover during a 12-consecutive-month
period measured from the date you received a distribution of an IRA which
was rolled over to another IRA. (See IRS Publication 590 for more
information.)
o The same property you receive in a distribution must be the same property
you roll over into the second IRA. For example, if you receive a
distribution from an IRA of property, such as stocks, that same stock must
be rolled over into the second IRA.
o You are required to make an irrevocable election indicating that this
transaction will be treated as a rollover contribution.
o You are not required to receive a complete distribution from your IRA in
order to make a rollover contribution into another IRA, nor are you
required to roll over the entire amount you received from the first IRA.
o If you inherit an IRA due to the death of the participant, you may not roll
this IRA into your own IRA unless you are the spouse of the decedent.
o If you are age 70 1/2 or older and wish to roll over to another IRA, you
must first satisfy the minimum distribution requirement for that year and
then the rollover of the remaining amount may be made.
o Rollover contributions to a SIMPLE IRA may not be made from a qualified
plan, 403(b) plan, or any other IRA that is not a SIMPLE IRA.
EXCESS DEFERRALS: Excess elective deferrals (amounts in excess of the $6,000
SIMPLE elective deferral limit) are includible in your gross income in the
calendar year of deferral. Income on the excess elective deferrals is includible
in your income in the year of withdrawal from the SIMPLE IRA. You should
withdraw excess elective deferrals and any allocable income, from your SIMPLE
IRA by April 15 following the year to which the deferrals relate. These amounts
may not be transferred or rolled over tax-free to another SIMPLE IRA. If you
fail to withdraw excess elective deferrals, and any allocable income, by the
following April 15th, the excess elective deferrals will be subject to the IRA
contribution limitations of sections 219 and 408 of the Code and thus may be
considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals is includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate. Income withdrawn from the IRA after
that date may be subject to a 10% tax (or 25% if withdrawn within the first two
years of participation) on early distributions. The rules for determining and
allocating income attributable to excess elective deferrals and other excess
SIMPLE contributions are the same as those governing regular IRA excess
contributions. The trustee or custodian of your SIMPLE IRA will inform you of
the income allocable to such excess amounts.
DISTRIBUTIONS: In general, all distributions from a SIMPLE IRA are subject to
federal income tax by the payee or distributee, whichever the case may be. When
you start withdrawing from your SIMPLE IRA, you may take the distributions in
regular payments, random withdrawals or in a single-sum payment. Generally, all
amounts distributed to you from your SIMPLE IRA are included in your gross
income in the taxable year in which they are received. However, if you have made
nondeductible contributions to any regular IRA as permitted under section
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<PAGE> 12
408(o) of the Code, the nontaxable portion of the distribution, if any, will be
a percentage based upon the ratio of your unrecovered nondeductible
contributions to the aggregate of all IRA balances, including SEP, SIMPLE and
rollover contributions, as of the end of the year in which you take the
distribution, plus distributions from the account during the year. All taxable
distributions from your SIMPLE IRA are taxed at ordinary income tax rates for
federal income tax purposes and are not eligible for either capital gains
treatment or 5/10 year averaging. An employer may not require an employee to
retain any portion of the contribution in the SIMPLE IRA or otherwise impose any
withdrawal restrictions.
PREMATURE DISTRIBUTIONS - In general, if you are under age 59 1/2 and receive
a distribution from your SIMPLE IRA account, a 10% additional income tax will
apply to the taxable portion of the distribution, unless the distribution is
received due to death; disability; a series of substantially equal periodic
payments at least annually over your life expectancy or the joint life
expectancy of you and your designated beneficiary; medical expenses that exceed
7.5% of your adjusted gross income; health insurance premiums paid by certain
unemployed individuals; a qualifying rollover distribution; or the timely
withdrawal of an excess deferral plus income attributable. If you request a
distribution in the form of a series of substantially equal payments, and you
modify the payments before five years have elapsed and before attaining age 59
1/2, the 10% additional income tax will apply retroactively to the year payments
began through the year of such modification. In addition, if you request a
distribution from your SIMPLE IRA within your first two years of participation
in the SIMPLE plan and none of the exceptions listed above applies to the
distribution, the normal 10% additional income tax referred to earlier is
increased to 25%.
AGE 70 1/2 REQUIRED MINIMUM DISTRIBUTIONS - You are required to begin
receiving minimum distributions from your SIMPLE IRA by your required beginning
date (the April 1 of the year following the year you attain age 70 1/2). The
year you attain age 70 1/2 is referred to as your "first distribution calendar
year." Your minimum distribution is based upon the value of your account at the
end of the prior year (less any required distributions you received between
January 1 and April 1 of the year following your first distribution calendar
year) by the joint life expectancy of you and your designated beneficiary. If
you do not have a designated beneficiary then the minimum distribution will be
based upon your single life expectancy.
As you can see, who you designate as beneficiary under your SIMPLE IRA will
affect the period over which distributions may be made. If you have more than
one primary beneficiary, generally the beneficiary with the shortest life
expectancy will be the measuring life expectancy used for determining the period
over which distributions will be made. If no beneficiary is named or you name a
beneficiary which is not an individual (i.e., your estate), distributions will
be based upon your single life expectancy.
By the April 1 following your first distribution calendar year, you must make
certain elections on a form provided by the Custodian. If no election is made,
you will be deemed to have elected to take your distributions over a period not
to exceed your single life expectancy. The required distributions for the second
distribution calendar year and for each subsequent distribution calendar year
must be made by December 31 of such year.
Unless otherwise elected by the Custodian (or by you, if the Custodian
permits) in determining the amount to be distributed for the second distribution
calendar year and subsequent distribution calendar years, your life expectancy
(and your designated beneficiary's life expectancy) shall not be recalculated.
If the Custodian elects (or you elect, if the Custodian permits) to recalculate
your life expectancy or your spouse's life expectancy, you will generally have a
longer period of time over which payments will be made and therefore the minimum
distribution will be less.
CAUTION: If you or your spouse should die, the decedent's life expectancy
that is being recalculated is reduced to zero which will reduce the period of
distribution to the survivor's single life expectancy. If recalculation is not
elected, the death of either person will not have an effect on the payment
period.
In any distribution calendar year you may take more than the required
minimum. However, if you take less than the required minimum with respect to any
distribution calendar year, you are subject to a federal excise tax penalty of
50% of the difference between the amount required to be distributed and the
amount actually distributed.
MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE - Basically, this rule
specifies that benefits provided under a retirement plan must be for the primary
benefit of a participant rather than for his/her beneficiaries. If your spouse
is your sole beneficiary, these special MDIB rules do not apply. The amount
required to be distributed under the MDIB rule may in some cases be more than
the amount required under the normal age 70 1/2 required minimum distribution
rules. If someone other than or in addition to your spouse is a named primary
beneficiary, the minimum distribution required is the greater of the amount
determined under the regular 70 1/2 rules and the amount determined under the
MDIB rules. The minimum amount to be distributed under the MDIB rules is the
amount determined by taking the balance in your SIMPLE IRA account and dividing
it by a factor taken from an IRS table specified in IRS regulations. The table
provides life expectancies for you and a beneficiary who is assumed to be 10
years younger.
DEATH DISTRIBUTIONS - If you die after your required beginning date, the
balance in your SIMPLE IRA will be distributed in a manner which is at least as
rapid as the method of distribution being used on the date of your death. If you
die before your required beginning date, the balance in your SIMPLE IRA must
generally be distributed within five years from the date of your death. However
your beneficiary(ies) may elect to receive the balance in your account over the
single life expectancy of your designated beneficiary if distributions begin no
later than the end of the year containing the one year anniversary of your
death. In addition, if your only beneficiary is your surviving spouse,
distributions need not commence until December 31st of the year you would have
attained age 70 1/2.
PROHIBITED TRANSACTIONS - If you or your beneficiary engage in a prohibited
transaction (as defined under Section 4975 of the Internal Revenue Code) with
your SIMPLE IRA, it will lose its tax exemption and you must include the value
of your account in your gross income for that taxable year. If you pledge any
portion of your SIMPLE IRA as collateral for a loan, the amount so pledged will
be treated as a distribution and will be included in your gross income for that
year.
INCOME TAX WITHHOLDING - All withdrawals from your SIMPLE IRA (except a
direct transfer) are subject to federal income tax withholding. You may,
however, elect not to have withholding apply to your SIMPLE IRA distribution in
most cases. If withholding does apply to your distribution, it is at the rate of
10% of the amount of the distribution.
DESIGNATED FINANCIAL INSTITUTION "DFI":
In general, under section 408(p), an employer must permit an employee to select
the financial institution for the SIMPLE IRA to which the employer will make all
contributions on behalf of the employee. In this case, the financial institution
is referred to as a "Non-DFI." Alternatively, under section 408(p)(7), an
employer may require that all SIMPLE contributions initially be made to a single
designated financial institution selected by the employer. In this case, the
financial institution is referred to as a "DFI." Refer to your employer's SIMPLE
Retirement Plan document to determine if the financial institution is a DFI or a
Non-DFI.
USE OF A DESIGNATED FINANCIAL INSTITUTION "DFI" - If an employer requires
that all SIMPLE contributions initially be made to a DFI, the following
requirements must be met:
1. The employer and the financial institution must agree that the
financial institution will be a DFI for the employer's SIMPLE plan;
2. The DFI must agree that, if a participant elects before the expiration
of the employee's 60-day election period, the participant's balance
will be transferred without cost or penalty to another SIMPLE IRA (or
after the two year period no longer applies, to any IRA) to a
financial institution selected by the participant; and
3. Each participant is given written notification describing the
procedures under which, if a participant so elects, the participant's
balance will be transferred without cost or penalty to another SIMPLE
IRA (or after the two year period no longer applies, to any IRA) to a
financial institution selected by the participant.
If the participant elects before the expiration of the 60-day election period
to have the balance transferred without cost or penalty as described above, such
election is valid only with respect to the balance attributable to SIMPLE
contributions for the calendar year following that 60-day election period (or,
for the year in which an employee becomes eligible to make salary reduction
contributions for the remainder of that year) and subsequent calendar years if
such election so provides.
If the participant timely elects the transfer of the balance without cost or
penalty as described above, the participant's balance must be transferred on a
reasonably frequent basis, such as on a monthly basis. If a participant timely
elects this transfer without cost or penalty, the Custodian reserves the right
to restrict the investment to a specified investment option until transferred,
even though a variety of investment options are available with respect to
contributions that the participant has not elected to transfer.
A transfer is deemed to be made without cost or penalty if no liquidation,
transaction, redemption or termination fee, or any commission, load (whether
front-end or back-end) or surrender charge or similar fee or charge is imposed
with respect to the balance being transferred that the participant has filed a
timely election with the DFI. However, the DFI can charge a reasonable annual
administrative fee to a SIMPLE IRA from which balances must be transferred in
accordance with the participant's timely transfer election.
In order to timely elect a transfer without cost or penalty, the participant
must indicate such election on the SIMPLE IRA Plan Application attached hereto
and must be received by the DFI no later than the expiration of the 60-day
election period applicable to the employee. If the participant fails to timely
elect such transfers without cost or penalty, the DFI reserves the right to
charge any or all fees and expenses described in Section 8.05 of this SIMPLE IRA
plan agreement.
USE OF A NONDESIGNATED FINANCIAL INSTITUTION "NON-DFI" - If the employer's
SIMPLE plan permits the participants to select their own financial institution
to serve as trustee or custodian of the SIMPLE IRA, the rules explained above do
not apply and the Custodian may charge any and all fees described in Section
8.05 of the SIMPLE IRA plan agreement.
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<PAGE> 13
TRANSFERS DEFINED - A direct transfer is a payment from this SIMPLE IRA
directly to another trustee or custodian of a SIMPLE IRA (or, after the two-year
period no longer applies, to the trustee or custodian of any IRA). Transfers do
not constitute a distribution since you are never in receipt of the funds. The
monies are transferred directly to the new trustee or custodian. If you should
transfer all or a portion of your SIMPLE IRA to your former spouse's IRA under a
divorce decree (or under a written instrument incident to divorce) or separation
instrument, you will not be deemed to have made a taxable distribution, but
merely a transfer. The portion so transferred will be treated at the time of the
transfer as the IRA of your spouse or former spouse. If your spouse is the
beneficiary of your SIMPLE IRA, in the event of your death, your spouse may
"assume" your SIMPLE IRA. The assumed IRA is then treated as your surviving
spouse's IRA.
SUMMARY DESCRIPTION REQUIREMENTS: In general, the Custodian of any SIMPLE IRA
must annually provide to the employer maintaining the SIMPLE plan a Summary
Description early enough to allow the employer to meet its notification
obligations. If the Custodian of this SIMPLE IRA is a DFI, the Summary
Description will be provided directly to the employer by the Custodian in the
underlying SIMPLE plan agreement. If the Custodian of this SIMPLE IRA is a
Non-DFI, the Summary Description will be provided directly to the employee by
the Custodian. The employee agrees to have the employer complete certain
information contained on the Summary Description with respect to the employer's
SIMPLE plan provisions. A sample Summary Description for a Non-DFI is located on
the following page. The Custodian of a "transfer SIMPLE IRA" is not required to
provide this Summary Description. A SIMPLE IRA is a "transfer SIMPLE IRA" if it
is not a SIMPLE IRA to which the employer has made contributions under the
SIMPLE plan.
PROCEDURES FOR WITHDRAWALS: All distributions from this SIMPLE IRA must be
requested in writing on a form provided to the participant by the Custodian.
After the withdrawal form has been completed and executed by the recipient, the
form must be either hand delivered to the Custodian during normal business hours
or mailed to the Custodian by first class mail, certified or registered mail
prepaid through the U.S. Postal Service, or through any means of an expedited
delivery service. After receipt of a properly executed withdrawal form, the
Custodian will process the distribution as soon as administratively feasible.
FEDERAL ESTATE AND GIFT TAXES: Generally, there is no specific exclusion for
SIMPLE IRAs under the estate tax rules. Therefore, in the event of your death,
your SIMPLE IRA balance will be includible in your gross estate for federal
estate tax purposes. However, if your surviving spouse is the beneficiary of
your SIMPLE IRA, the amount in your SIMPLE IRA may qualify for the marital
deduction available under Section 2056 of the Internal Revenue Code. A transfer
of property for federal gift tax purposes does not include an amount which a
beneficiary receives from a SIMPLE IRA plan.
PENALTIES: If you are under age 59 1/2 and receive a premature distribution from
your SIMPLE IRA, an additional 10% (or 25% for certain SIMPLE IRA distributions)
income tax will apply on the taxable amount of the distribution. If you make an
excess deferral to your SIMPLE IRA and it is not corrected on a timely basis, an
excise tax of 6% is imposed on the excess amount. This tax will apply each year
to any part or all of the excess which remains in your account. If you are age
70 1/2 or over or if you should die, and the appropriate required minimum
distributions are not made from your SIMPLE IRA, an additional tax of 50% is
imposed upon the difference between what should have been distributed and what
was actually distributed.
For tax years ending before 1/1/97, you will be taxed an additional 15% on
any amount you receive and include in income during a calendar year from
qualified plans, TSAs and all IRAs which exceeds the greater of $150,000
(unindexed) or $112,500 (indexed for cost of living). Before you receive an
excess distribution, you should seek advice from your tax advisor with respect
to the application of these rules. For tax years 1997, 1998 and 1999, the 15%
excess distribution tax will not apply. In the event of your death, your estate
may be subject to a 15% tax on the "excess accumulation" in all of your
qualified plans, TSAs and IRAs. You should seek the advice of your own tax
advisor with respect to the application of this excess accumulation excise tax.
You must file IRS Form 5329 with the Internal Revenue Service for any year an
additional tax is due.
IRS APPROVAL AS TO FORM: This SIMPLE IRA Custodial Agreement has been approved
by the Internal Revenue Service as to form. This is not an endorsement of the
plan in operation or of the investments offered.
ADDITIONAL INFORMATION: You may obtain further information on IRAs and SIMPLE
IRAs from your District Office of the Internal Revenue Service. In particular
you may wish to obtain IRS Publication 590 (Individual Retirement Arrangements).
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<PAGE> 14
SIMPLE TRANSMITTAL FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYER INFORMATION (Please print or type.)
Name of Employer_____________________________________________________________
Address______________________________________________________________________
City_________________________________State_____________________Zip Code______
- --------------------------------------------------------------------------------
2. EMPLOYER'S AUTHORIZATION (Signature(s) of authorized employer representative)
We hereby authorize INVESCO Trust Company to invest contributions in
accordance with the instructions below.
_________________________________________________ Date _________ /___ /____
Month Day Year
<TABLE>
<CAPTION>
(1) (2) (3) (4)
NAME OF SOCIAL SECURITY SELECTED CONTRIBUTION PER FUND**
PARTICIPANT NUMBER AIM FUNDS* (MINIMUM $25 PER FUND)
Salary Employer Nonelective
Deferral Match 2% Contribution
<S> <C> <C> <C> <C> <C>
1 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
2 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
3 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
4 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
5 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
6 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
7 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
</TABLE>
* Indicate funds used by each participant. ** Indicate dollar($) amount
contributed per fund.
15
<PAGE> 15
<TABLE>
<CAPTION>
(1) (2) (3) (4)
NAME OF SOCIAL SECURITY SELECTED CONTRIBUTION PER FUND**
PARTICIPANT NUMBER AIM FUNDS* (MINIMUM $25 PER FUND)
Salary Employer Nonelective
Deferral Match 2% Contribution
<S> <C> <C> <C> <C> <C>
8 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
9 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
10 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
11 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
12 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
Total Employer Contributions $______________
Total Employee Salary
Deferred Contributions $______________
Total Employer and
Employee Contributions $______________
</TABLE>
If a contribution for a participant is to be invested in more than one fund, $25
or more must be invested in each fund selected. Attach form, check (payable to
INVESCO Trust Company) and SIMPLE applications and mail to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
------------------------------------------------------------------------
AIM FUND SERVICES, INC. AIM FUND SERVICES, INC.
ATTN: RETIREMENT PLANS ATTN: RETIREMENT PLANS
OPERATIONS OPERATIONS
P.O. BOX 4739 P.O. BOX 4739
HOUSTON, TEXAS 77210-4739 HOUSTON, TEXAS 77210-4739
* Indicate funds used by each participant. ** Indicate dollar($) amount
contributed per fund.
[AIM LOGO APPEARS HERE] A I M Distributors, Inc.
12/97
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[AIM LOGO APPEARS HERE]
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS (SIMPLE)
FORM 5304-SIMPLE (DECEMBER 1996)
(NOT SUBJECT TO THE DESIGNATED FINANCIAL INSTITUTION RULES)
Department of the Treasury
Internal Revenue Service
- --------------------------------------------------------------------------------
Name of Employer_____________________________________establishes the following
SIMPLE plan under section 408(p) of the Internal Revenue Code and pursuant to
the instructions contained in this form.
ARTICLE I - EMPLOYEE ELIGIBILITY REQUIREMENTS (Complete appropriate box(es) and
blanks--see instructions.)
1. GENERAL ELIGIBILITY REQUIREMENTS. The Employer agrees to permit salary
reduction contributions to be made in each calendar year to the SIMPLE IRA
established by each employee who meets the following requirements (select either
1a or 1b):
a / / FULL ELIGIBILITY. All employees are eligible.
b / / LIMITED ELIGIBILITY. Eligibility is limited to employees who are
described in both (i) and (ii) below:
(i) CURRENT COMPENSATION. Employees who are reasonably expected
to receive at least $____________ in compensation (not to exceed
$5,000) for the calendar year.
(ii) PRIOR COMPENSATION. Employees who have received at least
$_____________ in compensation (not to exceed $5,000) during any
___________ calendar year(s) (insert 0, 1, or 2) preceding the
calendar year.
2. EXCLUDABLE EMPLOYEES. (OPTIONAL)
/ / The Employer elects to exclude employees covered under a
collective bargaining agreement for which retirement benefits were the
subject of good faith bargaining.
ARTICLE II - SALARY REDUCTION AGREEMENTS (Complete the box and blank, if
appropriate--see instructions.)
1. SALARY REDUCTION ELECTION. An eligible employee may make a salary
reduction election to have his or her compensation for each pay period
reduced by a percentage. The total amount of the reduction in the
employee's compensation cannot exceed $6,000* for any calendar year.
2. TIMING OF SALARY REDUCTION ELECTIONS.
a. For a calendar year, an eligible employee may make or modify a
salary reduction election during the 60-day period immediately
preceding January 1 of that year. However, for the year in which the
employee becomes eligible to make salary reduction contributions, the
period during which the employee may make or modify the election is a
60-day period that includes either the date the employee becomes
eligible or the day before.
b. In addition to the election periods in 2a, eligible employees may
make salary reduction elections or modify prior elections
___________________. If the Employer chooses this option, insert a
period or periods (e.g., semiannually, quarterly, monthly or daily)
that will apply uniformly to all eligible employees.)
c. No salary reduction election may apply to compensation that an
employee received, or had a right to immediately receive, before
execution of the salary reduction election.
d. An employee may terminate a salary reduction election at any time
during the calendar year. / / If this box is checked, an employee who
terminates a salary reduction election not in accordance with 2b may
not resume salary reduction contributions during the calendar year.
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<PAGE> 17
ARTICLE III - CONTRIBUTIONS (Complete the blank, if appropriate-see
instructions.)
1. SALARY REDUCTION CONTRIBUTIONS. The amount by which the employee
agrees to reduce his or her compensation will be contributed by the
Employer to the employee's SIMPLE IRA.
2. OTHER CONTRIBUTIONS.
a. Matching Contributions
(i) For each calendar year, the Employer will contribute a
matching contribution to each eligible employee's SIMPLE IRA
equal to the employee's salary reduction contributions up to a
limit of 3% of the employee's compensation for the calendar year.
(ii) The Employer may reduce the 3% limit for the calendar year
in (i) only if:
(1) The limit is not reduced below 1%; (2) The limit is not
reduced for more than two calendar years during the
five-year period ending with the calendar year the reduction
is effective; and (3) Each employee is notified of the
reduced limit within a reasonable period of time before the
employees' 60-day election period for the calendar year
(described in Article II, item 2a).
b. Nonelective Contributions
(i) For any calendar year, instead of making matching
contributions, the Employer may make nonelective contributions
equal to 2% of compensation for the calendar year to the SIMPLE
IRA of each eligible employee who has at least $___________ (not
more than $5,000) in compensation for the calendar year. No more
than $160,000* in compensation can be taken into account in
determining the nonelective contribution for each eligible
employee.
(ii) For any calendar year, the Employer may make 2% nonelective
contributions instead of matching contributions only if:
(1) Each eligible employee is notified that a 2% nonelective
contribution will be made instead of a matching
contribution; and
(2) This notification is provided within a reasonable period
of time before the employees' 60-day election period for the
calendar year (described in Article II, item 2a).
3. TIME AND MANNER OF CONTRIBUTIONS.
a. The Employer will make the salary reduction contributions
(described in 1 above) for each eligible employee to the SIMPLE IRA
established at the financial institution selected by that employee no
later than 30 days after the end of the month in which the money is
withheld from the employee's pay. See instructions.
b. The Employer will make the matching or nonelective contributions
(described in 2a and 2b above) for each eligible employee to the
SIMPLE IRA established at the financial institution selected by that
employee no later than the due date for filing the Employer's tax
return, including extensions, for the taxable year that includes the
last day of the calendar year for which the contributions are made.
ARTICLE IV - OTHER REQUIREMENTS AND PROVISIONS
1. CONTRIBUTIONS IN GENERAL. The Employer will make no contributions to
the SIMPLE IRAs other than salary reduction contributions (described
in Article III, item 1) and matching or nonelective contributions
(described in Article III, items 2a and 2b).
2. VESTING REQUIREMENTS. All contributions made under this SIMPLE plan
are fully vested and nonforfeitable.
3. NO WITHDRAWAL RESTRICTIONS. The Employer may not require the employee
to retain any portion of the contributions in his or her SIMPLE IRA or
otherwise impose any withdrawal restrictions.
4. SELECTION OF IRA TRUSTEE. The Employer must permit each eligible
employee to select the financial institution that will serve as the
trustee, custodian, or issuer of the SIMPLE IRA to which the employer
will make all contributions on behalf of that employee.
5. AMENDMENTS TO THIS SIMPLE PLAN. This SIMPLE plan may not be amended
except to modify the entries inserted in the blanks or boxes provided
in Articles I, II, III, VI, and VII.
6. EFFECTS OF WITHDRAWALS AND ROLLOVERS.
a. An amount withdrawn from the SIMPLE IRA is generally includible in
gross income. However, a SIMPLE IRA balance may be rolled over or
transferred on a tax-free basis to another IRA designed solely to hold
funds under a SIMPLE plan. In addition, an individual may roll over or
transfer his or her SIMPLE IRA balance to any IRA on a tax-free basis
after a two-year period has expired since the individual first
participated in a SIMPLE plan. Any rollover or transfer must comply
with the requirements under section 408.
18
<PAGE> 18
b. If an individual withdraws an amount from a SIMPLE IRA during the
two-year period beginning when the individual first participated in a
SIMPLE plan and the amount is subject to the additional tax on early
distributions under section 72(t), this additional tax is increased
from 10% to 25%.
ARTICLE V - DEFINITIONS
1. COMPENSATION.
a. GENERAL DEFINITION OF COMPENSATION. Compensation means the sum of
the wages, tips, and other compensation from the Employer subject to
federal income tax withholding [as described in section 6051(a)(3)]
and the employee's salary reduction contributions made under this
plan, and, if applicable, elective deferrals under a section 401(k)
plan, a SARSEP, or a section 403(b) annuity contract and compensation
deferred under a section 457 plan required to be reported by the
Employer on Form W-2 [as described in section 6051(a)(8)].
b. COMPENSATION FOR SELF-EMPLOYED INDIVIDUALS. For self-employed
individuals, compensation means the net earnings from self-employment
determined under section 1402(a) prior to subtracting any
contributions made pursuant to this plan on behalf of the individual.
2. EMPLOYEE. Employee means a common-law employee of the Employer. The
term employee also includes a self-employed individual and a leased
employee described in section 414(n) but does not include a
nonresident alien who received no earned income from the Employer that
constitutes income from sources within the United States.
3. ELIGIBLE EMPLOYEE. An eligible employee means an employee who
satisfies the conditions in Article 1, item 1 and is not excluded
under Article 1, item 2.
4. SIMPLE IRA. A SIMPLE IRA is an individual retirement account described
in section 408(a), or an individual retirement annuity described in
section 408(b), to which the only contributions that can be made are
contributions under a SIMPLE plan and rollovers or transfers from
another SIMPLE IRA.
ARTICLE VI - PROCEDURES FOR WITHDRAWAL (The Employer will provide each employee
with the procedures for withdrawals of contributions received by the financial
institution selected by that employee, and that financial institution's name and
address (by attaching that information or inserting it in the space below)
unless: (1) that financial institution's procedures are unavailable, or (2) that
financial institution provides the procedures directly to the employee.
See Employee Notification section in the instructions.)
ARTICLE VII - EFFECTIVE DATE
This SIMPLE plan is effective __________________________. (See instructions.)
Name of Employer
-------------------------------------------------------------
By:
--------------------------------------------------------------------------
Signature Date
Address of Employer
-----------------------------------------------------------
Name and Title
---------------------------------------------------------------
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
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MODEL NOTIFICATION TO ELIGIBLE EMPLOYEES
I. OPPORTUNITY TO PARTICIPATE IN THE SIMPLE PLAN
You are eligible to make salary reduction contributions to
the_________________SIMPLE plan. This notice and the attached summary
description provide you with information that you should consider before
you decide whether to start, continue, or change your salary reduction
agreement.
II. EMPLOYER CONTRIBUTION ELECTION
For the ____________ calendar year, the Employer elects to contribute to
your SIMPLE IRA [employer must select either (1), (2), or (3)]:
/ / (1) A matching contribution equal to your salary reduction
contributions up to a limit of 3% of your compensation for the year;
/ / (2) A matching contribution equal to your salary reduction
contributions up to a limit of ___________% (employer must insert a
number from 1 to 3 and is subject to certain restrictions) of your
compensation for the year; or
/ / (3) A nonelective contribution equal to 2% of your compensation
for the year (limited to $160,000, adjusted periodically by the IRS)
if you are an employee who makes at least $____________ (Employer must
insert an amount that is $5,000 or less) in compensation for the year.
III. ADMINISTRATIVE PROCEDURES
If you decide to start or change your salary reduction agreement, you must
complete the salary reduction agreement and return it to
__________________________ (Employer should designate a place or
individual) by _________________(Employer should insert a date that is not
less than 60 days after notice is given).
IV. EMPLOYEE SELECTION OF FINANCIAL INSTITUTION
You must select the financial institution that will serve as the trustee,
custodian, or issuer of your SIMPLE IRA and notify your Employer of your
selection.
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PAPERWORK REDUCTION ACT NOTICE
You are not required to provide the information requested on a form that is
subject to the Paperwork Reduction Act unless the form displays a valid OMB
control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of
any Internal Revenue law. Generally, tax returns and return information are
confidential, as required by section 6103.
The time needed to complete this form will vary depending on individual
circumstances. The estimated average time is:
<TABLE>
<S> <C> <C>
Recordkeeping. . . . . . . . . . . . . . 3 hr., 38 min.
Learning about the law or the form . . . 2 hr., 26 min.
Preparing the form . . . . . . . . . . . 47 min.
</TABLE>
If you have comments concerning the accuracy of these time estimates or
suggestions for making this form simpler, we would be happy to hear from you.
You can write to the Tax Forms Committee, Western Area Distribution Center,
Rancho Cordova, CA 95743-0001. DO NOT send this form to this address. Instead,
keep it for your records.
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
NOTE: THE INSTRUCTIONS FOR THIS FORM ARE DESIGNED TO ASSIST IN THE ESTABLISHMENT
AND ADMINISTRATION OF THE SIMPLE PLAN; THEY ARE NOT INTENDED TO SUPERSEDE ANY
PROVISIONS IN THE SIMPLE PLAN.
PURPOSE OF FORM
Form 5304-SIMPLE is a model Savings Incentive Match Plan for Employees of Small
Employers (SIMPLE) plan document that an employer may use to establish a SIMPLE
plan described in section 408(p), under which each eligible employee is
permitted to select the financial institution for his or her SIMPLE IRA. It is
important that you keep this form for your records. DO NOT file this form with
the IRS. For more information, see Pub. 560, Retirement Plans for the Self-
Employed, and Pub. 590, Individual Retirement Arrangements (IRAs).
INSTRUCTIONS FOR THE EMPLOYER
WHICH EMPLOYERS MAY ESTABLISH AND MAINTAIN A SIMPLE PLAN?
You are eligible to establish and maintain a SIMPLE plan only if you meet both
of the following requirements:
1. Last calendar year, you had no more than 100 employees (including
self-employed individuals) who earned $5,000 or more in compensation from you
during the year. If you have a SIMPLE plan but later exceed this 100-employee
limit, you will be treated as meeting the limit for the two years following the
calendar year in which you last satisfied the limit. If the failure to continue
to satisfy the 100-employee limit is due to an acquisition or similar
transaction involving your business, special rules apply. Consult your tax
advisor to find out if you can still maintain the plan after the transaction.
2. You do not maintain during any part of the calendar year another
qualified plan with respect to which contributions are made, or benefits are
accrued, for service in the calendar year. For this purpose, a qualified plan
[defined in section 219(g)(5)] includes a qualified pension plan, a
profit-sharing plan, a stock bonus plan, a qualified annuity plan, a
tax-sheltered annuity plan, and a simplified employee pension (SEP) plan.
Certain related employers (trades or businesses under common control) must
be treated as a single employer for purposes of the SIMPLE requirements. These
are: (1) a controlled group of corporations under section 414(b); (2) a
partnership or sole proprietorship under common control under section 414(c); or
(3) an affiliated service group under section 414(m). In addition, if you have
leased employees required to be treated as your own employees under the rules of
section 414(n), then you must count all such leased employees for the
requirements listed above.
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WHAT IS A SIMPLE PLAN?
A SIMPLE plan is a written arrangement that provides you and your employees with
a simplified way to make contributions to provide retirement income for your
employees. Under a SIMPLE plan, employees may choose whether to make salary
reduction contributions to the SIMPLE plan rather than receiving these amounts
as part of their regular compensation. In addition, you will contribute matching
or nonelective contributions on behalf of eligible employees (see Employee
Eligibility Requirements below and Contributions on page 23). All contributions
under this plan will be deposited into a SIMPLE individual retirement account or
annuity established for each eligible employee with the financial institution
selected by each eligible employee (SIMPLE IRA).
The information provided below is intended to help you understand and
administer the rules of your SIMPLE plan.
WHEN TO USE FORM 5304-SIMPLE
A SIMPLE plan may be established by using this Model Form or any other document
that satisfies the statutory requirements. Thus, you are not required to use
Form 5304-SIMPLE to establish and maintain a SIMPLE plan. Further, do not use
Form 5304-SIMPLE if:
1. You want to require that all SIMPLE plan contributions initially go to a
financial institution designated by you (i.e., you do not want to permit each of
your eligible employees to choose a financial institution that will initially
receive contributions). However, Form 5305-SIMPLE, Savings Incentive Match Plan
for Employees of Small Employers (SIMPLE) (for Use With a Designated Financial
Institution), may be used in such a case;
2. You want employees who are nonresident aliens receiving no earned income
from you that constitutes income from sources within the United States to be
eligible under this plan; or
3. You want to establish a SIMPLE 401(k) plan.
COMPLETING FORM 5304-SIMPLE
Pages 1 and 2 of Form 5304-SIMPLE contain the operative provisions of your
SIMPLE plan. This SIMPLE plan is considered adopted when you have completed all
appropriate boxes and blanks and it has been executed by you.
The SIMPLE plan is a legal document with important tax consequences for you
and your employees. You may want to consult with your attorney or tax advisor
before adopting this plan.
EMPLOYEE ELIGIBILITY REQUIREMENTS (ARTICLE I)
Each year for which this SIMPLE plan is effective, you must permit salary
reduction contributions to be made by all of your employees who are reasonably
expected to receive at least $5,000 in compensation from you during the year,
and who received at least $5,000 in compensation from you in any two preceding
years. However, you can expand the group of employees who are eligible to
participate in the SIMPLE plan by completing the options provided in Article I,
items 1a and 1b. To choose full eligibility, check the box in Article I, item
1a. Alternatively, to choose limited eligibility, check the box in Article I,
item 1b, and then insert $5,000 or a lower compensation amount (including zero)
and two or a lower number of years of service in the blanks in (i) and (ii) of
Article I, item 1b.
In addition, you can exclude from participation those employees covered
under a collective bargaining agreement for which retirement benefits were the
subject of good faith bargaining. You may do this by checking the box in Article
I, item 2.
SALARY REDUCTION AGREEMENTS (ARTICLE II)
As indicated in Article II, item 1, a salary reduction agreement permits an
eligible employee to make a salary reduction election to have his or her
compensation for each pay period reduced by a percentage (expressed as a
percentage or dollar amount). The total amount of the reduction in the
employee's compensation cannot exceed $6,000* for any calendar year.
TIMING OF SALARY REDUCTION ELECTIONS
For a calendar year, an eligible employee may make or modify a salary reduction
election during the 60-day period immediately preceding January 1 of that year.
However, for the year in which the employee becomes eligible to make salary
reduction contributions, the period during which the employee may make or modify
the election is a 60-day period that includes either the date the employee
becomes eligible or the day before.
* This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
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<PAGE> 22
You can extend the 60-day election periods to provide additional
opportunities for eligible employees to make or modify salary reduction
elections using the blank in Article II, item 2b. For example, you can provide
that eligible employees may make new salary reduction elections or modify prior
elections for any calendar quarter during the 30 days before that quarter.
You may use (but are not required to) the Model Salary Reduction Agreement
to enable eligible employees to make or modify salary reduction elections.
Employees must be permitted to terminate their salary reduction elections
at any time. They may resume salary reduction contributions if permitted under
Article II, item 2b. However, by checking the box in Article II, item 2d, you
may prohibit an employee who terminates a salary reduction election outside the
normal election cycle from resuming salary reduction contributions during the
remainder of the calendar year.
CONTRIBUTIONS (ARTICLE III)
Only contributions described below may be made to this SIMPLE plan. No
additional contributions may be made.
SALARY REDUCTION CONTRIBUTIONS
As indicated in Article III, item 1, salary reduction contributions consist of
the amount by which the employee agrees to reduce his or her compensation. You
must contribute the salary reduction contributions to the financial institution
selected by each eligible employee.
OTHER CONTRIBUTIONS
MATCHING CONTRIBUTIONS.
In general, you must contribute a matching contribution to each eligible
employee's SIMPLE IRA equal to the employee's salary reduction contributions.
This matching contribution cannot exceed 3% of the employee's compensation. See
Definition of Compensation, below.
You may reduce this 3% limit to a lower percentage, but not lower than 1%.
You cannot lower the 3% limit for more than two calendar years out of the
five-year period ending with the calendar year the reduction is effective. NOTE:
If any year in the five-year period described above is a year before you first
established any SIMPLE plan, you will be treated as making a 3% matching
contribution for that year for purposes of determining when you may reduce the
employer matching contribution.
In order to elect this option, you must notify the employees of the reduced
limit within a reasonable period of time before the applicable 60-day election
periods for the year. See Timing of Salary Reduction Elections above.
NONELECTIVE CONTRIBUTIONS.
Instead of making a matching contribution, you may, for any year, make a
nonelective contribution equal to 2% of compensation for each eligible employee
who has at least $5,000 in compensation for the year. Nonelective contributions
may not be based on more than $160,000* of compensation.
In order to elect to make nonelective contributions, you must notify
employees within a reasonable period of time before the applicable 60-day
election periods for such year. See Timing of Salary Reduction Elections above.
NOTE: Insert $5,000 in Article III, item 2b(i) to impose the $5,000 compensation
requirement. You may expand the group of employees who are eligible for
nonelective contributions by inserting a compensation amount lower than $5,000.
EFFECTIVE DATE (ARTICLE VII)
Insert in Article VII, the date you want the provisions of the SIMPLE plan to
become effective. You must insert January 1 of the applicable year unless this
is the first year for which you are adopting any SIMPLE plan. If this is the
first year for which you are adopting a SIMPLE plan, you may insert any date
between January 1 and October 1, inclusive of the applicable year. Do not insert
any date before January 1, 1997.
OTHER IMPORTANT INFORMATION ABOUT YOUR SIMPLE PLAN
TIMING OF SALARY REDUCTION CONTRIBUTIONS
Under the Internal Revenue Code, for all SIMPLE plans, the employer must make
the salary reduction contributions to the financial institution selected by each
eligible employee for his or her SIMPLE IRA no later than the 30th day of the
month following the month in which the
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
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<PAGE> 23
amounts would otherwise have been payable to the employee in cash. The
Department of Labor has indicated that most SIMPLE plans are also subject to
Title I of the Employee Retirement Income Security Act of 1974 (ERISA). The
Department of Labor has informed the IRS that, as a matter of enforcement
policy, for these plans, salary reduction contributions must be made to each
participant's SIMPLE IRA as of the earliest date on which those contributions
can reasonably be segregated from the employer's general assets, but in no event
later than the 30-day deadline described above.
DEFINITION OF COMPENSATION
"Compensation" means the amount described in section 6051(a)(3) [wages, tips,
and other compensation from the employer subject to federal income tax
withholding under section 3401(a)]. Usually, this is the amount shown in box 1
of Form W-2, Wage and Tax Statement. For further information, see Pub. 15
(Circular E), Employer's Tax Guide. Compensation also includes the salary
reduction contributions made under this plan, and, if applicable, compensation
deferred under a section 457 plan. In determining an employee's compensation for
prior years, the employee's elective deferrals under a section 401(k) plan, a
SARSEP, or a section 403(b) annuity contract are also included in the employee's
compensation.
For self-employed individuals, compensation means the net earnings from
self-employment determined under section 1402(a) prior to subtracting any
contributions made pursuant to this SIMPLE plan on behalf of the individual.
EMPLOYEE NOTIFICATION
You must notify each eligible employee prior to the employee's 60-day election
period described above that he or she can make or change salary reduction
elections and select the financial institution that will serve as the trustee,
custodian, or issuer of the employee's SIMPLE IRA. In this notification, you
must indicate whether you will provide:
1. A matching contribution equal to your employees' salary reduction
contributions up to a limit of 3% of their compensation;
2. A matching contribution equal to your employees' salary reduction
contributions subject to a percentage limit that is between 1 and 3% of their
compensation; or
3. A nonelective contribution equal to 2% of your employees' compensation.
You can use the Model Notification to Eligible Employees on page 20 to
satisfy these employee notification requirements for this SIMPLE plan. A Summary
Description must also be provided to eligible employees at this time. This
summary description requirement may be satisfied by providing a completed copy
of pages 1 and 2 of Form 5304-SIMPLE (including the information described in
Article VI - Procedures for Withdrawal).
If you fail to provide the employee notification (including the summary
description) described above, you will be liable for a penalty of $50 per day
until the notification is provided. If you can show that the failure was due to
reasonable cause, the penalty will not be imposed.
If the summary description information with respect to the financial
institution (i.e., the name and address of the financial institution and its
withdrawal procedures) is not available at the time the employee must be given
the summary description, you must provide the summary description without this
information. In such a case, you will have reasonable cause for not including
this information with respect to the financial institution in the summary
description, but only if you see to it that this information is provided to the
employee as soon as administratively feasible once the financial institution has
been selected.
REPORTING REQUIREMENTS
You are not required to file any annual information returns for your SIMPLE
plan, such as Forms 5500, 5500-C/R or 5500-EZ. However, you must report to the
IRS which eligible employees are active participants in the SIMPLE plan and the
amount of your employees' salary reduction contributions to the SIMPLE plan on
Form W-2. These contributions are subject to social security, medicare, railroad
retirement and federal unemployment tax.
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<PAGE> 24
DEDUCTING CONTRIBUTIONS
Contributions to this SIMPLE plan are deductible in your tax year containing the
end of the calendar year for which the contributions are made.
Contributions will be treated as made for a particular tax year if they are
made for that year and are made by the due date (including extensions) of your
income tax return for that year.
SUMMARY DESCRIPTION
Each year the SIMPLE plan is in effect, the financial institution for the SIMPLE
IRA of each eligible employee must provide the employer the information
described in section 408(I)(2)(B). This requirement may be satisfied by
providing the employer a current copy of Form 5304-SIMPLE (including
instructions) together with the financial institution's procedures for
withdrawals from SIMPLE IRAs established at that financial institution,
including financial institution's name and address. The summary description must
be received by the employer in sufficient time to comply with the Employee
Notification requirements above.
There is a penalty of $50 per day imposed on the financial institution for
each failure by the financial institution to provide the summary description
described above. However, if the failure was due to reasonable cause, the
penalty will not be imposed.
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[AIM LOGO APPEARS HERE]
SUMMARY DESCRIPTION FOR NONDESIGNATED FINANCIAL INSTITUTION
Employer must complete the following:
ELIGIBILITY REQUIREMENTS
All Employees of the Employer shall be eligible to participate under the Plan
except:
a. Employees included in a unit of employees covered under a collective
bargaining agreement described in Section 2.02(a) of the Plan.
b. Nonresident alien employees who did not receive U.S. source income
described in Section 2.02(b) of the Plan.
c. Employees who are not reasonably expected to earn $_____________(not to
exceed $5,000) during the Plan Year for which the contribution is being
made.
d. There are no eligibility requirements. All Employees are eligible to
participate upon the later of the plan's effective date or the employee's
date of hire.
Each Eligible Employee will be eligible to become a Participant after having
worked for the Employer during any prior years (not to exceed 2) and received at
least $____________ in compensation (not to exceed $5,000), during each of such
prior years.
WRITTEN ALLOCATION FORMULA
The Employer has agreed to provide contributions for the _______________ Plan
Year as follows (complete only one choice):
a. Matching Contribution
The amount of the Participant's Elective Deferral not in excess of 3% of
such Participant's Compensation (not to exceed $6,000).
b. Matching Contribution
The amount of the Participant's Elective Deferral not in excess of _______%
(not less than 1% nor more than 3%) of each Participant's Compensation (not
to exceed $6,000).
c. Nonelective Employer Contribution 2% of each Participant's Compensation.
The Employer has designated _________________________________________________
(insert Name & Title) to provide additional information to participants about
the Employer's SIMPLE Plan.
- --------------------------------------------------------------------------------
GENERAL DISCLOSURE INFORMATION
The following information explains what a Savings Incentive Match Plan for
Employees ("SIMPLE") is, how contributions are made and how to treat these
contributions for tax purposes. For more specific information, refer to the
employer's SIMPLE Retirement Plan document itself. For a calendar year, you may
make or modify a salary reduction election during the 60-day period immediately
preceding January 1 of that year. However, for the year in which you first
become eligible to make salary reduction contributions, the period during which
you may make or modify the election is a 60-day period that includes either the
date you become eligible or the day before. If indicated in your Employer's
SIMPLE plan, you may have additional opportunities during a calendar year to
make or modify your salary reduction election.
I. SIMPLE RETIREMENT PLAN AND SIMPLE IRA DEFINED
A SIMPLE Retirement Plan is a retirement income arrangement established by your
Employer. Under this SIMPLE Plan, you may choose to defer compensation to your
own Individual Retirement Account or Annuity ("IRA"). You may base these
"elective deferrals" on a salary reduction basis that, at your election, may be
contributed to an IRA or received in cash. This type of plan is available only
to an employer with 100 or fewer employees who earned at least $5,000 during the
prior calendar year. A SIMPLE IRA is a separate IRA plan that you establish with
an eligible financial institution for the purpose of receiving contributions
under this SIMPLE Retirement Plan. Your Employer must provide you with a copy of
the SIMPLE agreement containing eligibility requirements and a description of
the basis upon which contributions may be made. All amounts contributed to your
IRA belong to you, even after you quit working for your Employer.
II. ELECTIVE DEFERRALS - NOT REQUIRED
You are not required to make elective deferrals under this SIMPLE Retirement
Plan. However, if the Employer is matching your elective deferrals, no Employer
contribution will be made on your behalf unless you elect to defer under the
plan.
III. ELECTIVE DEFERRALS - ANNUAL LIMITATION
The maximum amount that you may defer under this SIMPLE Plan for any calendar
year is limited to the lesser of the percentage of your compensation that you
select or $6,000, subject to cost-of-living increases. If you work for other
employers (unrelated to this Employer) who also maintain a salary deferral plan,
there is an overall limit on the maximum amount that you may defer in each
calendar year to all elective SEPs, cash or deferred arrangements under section
401(k) of the Code, other SIMPLE plans and 403(b) plans regardless of how many
employers you may have worked for during the year. This limitation is referred
to as the section 402(g) limit. The section 402(g) limit on elective deferrals
is currently $9,500 and is indexed according to the cost of living.
IV. ELECTIVE DEFERRALS - TAX TREATMENT
The amount that you may elect to contribute to your SIMPLE IRA is excludible
from gross income, subject to the limitations discussed above, and is not
includible as taxable wages on Form W-2. However, these amounts are subject to
FICA taxes.
V. ELECTIVE DEFERRALS - EXCESS AMOUNTS CONTRIBUTED
When "excess elective deferrals" (i.e., amounts in excess of the $6,000 SIMPLE
elective deferral limit or the section 402(g) limit) are made, you are
responsible for calculating whether you have exceeded these limits in the
calendar year. For 1997, the section 402(g) limit for contributions made to all
elective deferral plans is $9,500. Excess elective deferrals are calculated on
the basis of the calendar year.
VI. EXCESS ELECTIVE DEFERRALS - HOW TO AVOID ADVERSE TAX CONSEQUENCES
Excess elective deferrals are includible in your gross income in the calendar
year of deferral. Income on the excess elective deferrals is includible in your
income in the year of withdrawal from the IRA. You should withdraw excess
elective deferrals and any allocable income, from your SIMPLE IRA by April 15
following the year to which the deferrals relate. These amounts may not be
transferred or rolled over tax-free to another SIMPLE IRA. If you fail to
withdraw excess elective deferrals, and any allocable income, by the following
April 15th, the excess elective deferrals will be subject to the IRA
contribution limitations of sections 219 and 408 of the Code and thus may be
considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals is includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate.
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<PAGE> 27
Income withdrawn from the IRA after that date may be subject to a 10% tax (or
25% if withdrawn within the first two years of participation) on early
distributions.
VII. INCOME ALLOCABLE TO EXCESS AMOUNTS
The rules for determining and allocating income attributable to excess elective
deferrals and other excess SIMPLE contributions are the same as those governing
regular IRA excess contributions. The trustee or custodian of your SIMPLE IRA
will inform you of the income allocable to such excess amounts.
VIII. AVAILABILITY OF REGULAR IRA CONTRIBUTION DEDUCTION
In addition to any SIMPLE contribution, you may contribute to a separate IRA the
lesser of $2,000 or 100% of compensation to an IRA as a regular IRA
contribution. However, the amount that you may deduct is subject to various
limitations since you will be considered an "active participant" in an
employer-sponsored plan. See Pub. 590, "Individual Retirement Arrangement," for
more specific information.
IX. SIMPLE IRA AMOUNTS - ROLLOVER OR TRANSFER TO ANOTHER IRA
You may not roll over or transfer from your SIMPLE IRA any SIMPLE contributions
(or income on these contributions) made during the plan year to another IRA
(other than a SIMPLE IRA) until the two years following the date you first
participated in the SIMPLE plan. Also, any distribution made before this time
will be includible in your gross income and may also be subject to a 25% percent
additional income tax for early withdrawal. You may, however, remove excess
elective deferrals and income allocable to such excess amounts from your SIMPLE
IRA before this time, but you may not roll over or transfer these amounts to
another IRA.
After the two-year restriction no longer applies, you may withdraw, or
receive, funds from your SIMPLE IRA, and no more than 60 days later, place such
funds in another IRA or SIMPLE IRA. This is called a "rollover" and may not be
done without penalty more frequently than at one-year intervals. However, there
are no restrictions on the number of times that you may make "transfers" if you
arrange to have such funds transferred between the trustees so that you never
have possession of the funds. You may not, however, roll over or transfer excess
elective deferrals, and income allocable to such excess amounts from your SIMPLE
IRA to another IRA. These excess amounts may be reduced only by a distribution
to you.
X. FILING REQUIREMENTS
You do not need to file any additional forms with the IRS because of your
participation in your employer's SIMPLE Plan.
XI. EMPLOYER TO PROVIDE INFORMATION
Your employer must provide you with a copy of the executed SIMPLE agreement, a
Summary Description, the form you should use to elect to defer amounts to your
SIMPLE IRA, and a statement for each taxable year showing any contribution to
your SIMPLE IRA.
XII. FINANCIAL INSTITUTION WHERE IRA IS ESTABLISHED TO PROVIDE
INFORMATION
The financial institution must provide you with a disclosure statement that
contains information described in section 1.408-6 of the regulations. The
Disclosure Statement that is a part of this Custodian's SIMPLE IRA account
documentation must be read in conjunction with this Summary Description for
Nondesignated Financial Institutions. The Disclosure Statement contains
important information about the SIMPLE plan rules and the contents of such
Disclosure Statement are incorporated herein by reference.
See Publication 590, "Individual Retirement Arrangements," which is available at
most IRS offices, for a more complete explanation of the disclosure
requirements. In addition to the disclosure statement, the financial institution
is required to provide you with a financial statement each year. It may be
necessary to retain and refer to statements for more than one year in order to
evaluate the investment performance of your IRA and in order that you will know
how to report IRA distributions for tax purposes.
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SIMPLE IRA DISCLOSURE STATEMENT [AIM LOGO APPEARS HERE]
RIGHT TO REVOKE YOUR SIMPLE IRA ACCOUNT: You may revoke your SIMPLE IRA within
seven days after you sign the SIMPLE IRA Plan Application by hand delivering or
mailing a written notice to the name and address indicated on the SIMPLE IRA
Plan Application. If you revoke your account by mailing a written notice, such
notice must be postmarked by the seventh day after you sign the Plan
Application. If you revoke your SIMPLE IRA within the seven-day period you will
receive a refund of the entire amount of your contributions to the SIMPLE IRA
without any adjustment for earnings or any administrative expenses. If you
exercise this revocation, we are still required to report certain information to
the IRS.
GENERAL REQUIREMENTS OF A SIMPLE IRA:
1. All SIMPLE contributions must be made in cash, unless you are making a
rollover contribution or transfer, and the Custodian accepts such noncash
assets.
2. The only types of contributions permitted to be made to this SIMPLE IRA are
salary reduction contributions and employer contributions under the
employer's SIMPLE Retirement Plan.
3. The custodian of your SIMPLE IRA must be a bank, savings and loan
association, credit union or person who is approved to act in such a
capacity by the Secretary of the Treasury.
4. No portion of your SIMPLE IRA funds may be invested in life insurance
contracts.
5. Your interest in your SIMPLE IRA must be fully vested and is nonforfeitable
at all times.
6. The assets in your SIMPLE IRA may not be commingled with other property
except in a common trust fund or common investment fund.
7. You may not invest the assets of your SIMPLE IRA in collectibles (as
described in Section 408(m) of the Internal Revenue Code.) A collectible is
defined as any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage, or any other tangible personal property specified by the
IRS. However, if the Custodian permits, specially minted U.S. Gold and
Silver bullion coins and certain state-issued coins are permissible SIMPLE
IRA investments.
8. Your interest in your SIMPLE IRA must begin to be distributed to you by the
April 1st following the calendar year you attain the age of 70-1/2. The
methods of distribution, election deadlines and other limitations are
described in detail below.
9. For purposes of the SIMPLE IRA Plan rules, in the case of an individual who
is not a self-employed individual, compensation means the amount described
in section 6051(a)(3) which includes wages, tips and other compensation from
the employer subject to income tax withholding under section 3401(a), and
amounts described in section 6051(a)(8), including elective contributions
made under a SIMPLE plan, and compensation deferred under a section 457
plan. In the case of a self-employed individual, compensation means net
earnings from self-employment determined under section 1402(a), prior to
subtracting any contributions made under the SIMPLE plan on behalf of the
individual.
10. Contributions to a SIMPLE IRA are excludible from federal income tax and not
subject to federal income tax withholding when made to the SIMPLE IRA.
Salary reduction contributions are subject to FICA, FUTA or RRTA tax when
made and must be reported on the employee's Form W-2 wage statement.
Matching and nonelective employer contributions made to a SIMPLE IRA are not
subject to FICA, FUTA or RRTA and are not required to be reported on Form
W-2.
11. A SIMPLE IRA must be established by or on behalf of an employee prior to the
first date by which a contribution is required to be deposited into the
SIMPLE IRA.
ELIGIBLE EMPLOYEES: Under a SIMPLE Retirement Plan established by an Eligible
Employer, all employees of the employer who received at least $5,000 in
compensation from the employer during any two preceding calendar years, whether
or not consecutive, and who are reasonably expected to receive at least $5,000
in compensation during the calendar year, must be eligible to participate in
the SIMPLE Plan for the calendar year. An employer may impose less restrictive
eligibility requirements, such as eliminating or reducing the prior year
compensation requirements, the current year compensation requirement, or both,
under its SIMPLE Plan.
An employer, at its option, may exclude from eligibility employees who are
included in a unit of employees covered by an agreement that the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representatives and such employer or employers; in the case of a trust
established or maintained pursuant to an agreement that the Secretary of Labor
finds to be a collective bargaining agreement between air pilots represented in
accordance with Title II of the Railway Labor Act and one or more employees, all
employees not covered by that agreement; and employees who are nonresident
aliens and who received no earned income from the employer that constitutes
income from sources within the United States.
PARTICIPATION IN ANOTHER PLAN: An eligible employee may participate in an
employer's SIMPLE Plan, even if he or she also participates in a plan of a
different employer for the same year. However, the employee's salary reduction
contributions are subject to the limitation of section 402(g), which provides an
aggregate limit on the exclusion for elective deferrals for any individual.
Also, an eligible employee who participates in an employer's SIMPLE plan and an
eligible deferred compensation plan described in section 457(b) is subject to
the limitation described in section 457(c). The employee is responsible for
monitoring compliance with these limitations.
ELIGIBLE EMPLOYERS: SIMPLE plans may be established by employers (including
tax-exempt employers and governmental entities) that had no more than 100
employees who earned $5,000 or more in compensation during the preceding
calendar year. For purposes of the 100-employee limitation, all employees
employed at any time during the calendar year are taken into account,
regardless of whether they are eligible to participate in the SIMPLE plan. This
means that otherwise excludible employees (i.e., certain union employees,
nonresident aliens with no U.S.-source income, and those employees who have not
met the plan's minimum eligibility requirements) must be taken into account.
SIMPLE PLAN CONTRIBUTIONS:
ELECTIVE DEFERRALS (SALARY REDUCTION CONTRIBUTIONS) -- A salary reduction
contribution is a contribution made pursuant to an employee's election to have
an amount contributed to his or her SIMPLE IRA, rather than have the amount
paid directly to the employee in cash. An eligible employee must be permitted
to elect to have salary reduction contributions made at the level specified by
the employee, expressed as a percentage of compensation for the year or as a
specific dollar amount. The maximum salary reduction contribution per calendar
year may not exceed $6,000, subject to cost of living adjustments. Salary
reduction contributions may not begin until the eligible employee completes a
form provided by the employer designed to permit the employee to elect the
salary reduction percentage or specific dollar amount. An employer may not
place any restrictions on the amount of an employee's salary reduction
contributions (e.g., by limiting the contribution percentage), except to the
extent needed to comply with the annual limit.
EMPLOYER CONTRIBUTIONS -- TWO OPTIONS
1. MATCHING CONTRIBUTIONS: Under a SIMPLE plan, an employer is generally
required to make a contribution on behalf of each eligible employee in an
amount equal to the employee's salary reduction contributions, up to a limit of
3% of the employee's compensation for the entire calendar year.
The 3% limit on matching contributions is permitted to be reduced for a
calendar year at the election of the employer, but only if: the limit is not
reduced below 1%; the limit is not reduced for more than two years out of the
five-year period that ends with and includes the year for which the election is
effective; and employees are notified of the reduced limit within a reasonable
period of time before the 60-day election period during which employees can
enter into salary reduction agreements as described below.
In determining whether the limit was reduced below 3% for a year, any year
before the first year in which an employer (or a predecessor employer)
maintains a SIMPLE plan will be treated as a year for which the limit was 3%.
If an employer chooses to make nonelective contributions for a year in lieu of
matching contributions, that year also will be treated as a year for which the
limit was 3%.
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2. NONELECTIVE CONTRIBUTIONS: Under a SIMPLE plan, an employer may make
nonelective contributions in lieu of matching contributions. These nonelective
contributions must be equal to 2% of each eligible employee's compensation for
the entire calendar year, regardless of whether the employee elects to make
salary reduction contributions for the calendar year. The employer may, but is
not required to, limit nonelective contributions to eligible employees who have
at least $5,000 (or some lower amount selected by the employer) of compensation
for the year. For purposes of this 2% nonelective contribution only, the
compensation taken into account must be limited to the amount of compensation
under section 401(a)(17) for the year. For 1997, this limit is $160,000 and will
be adjusted in accordance with the cost of living.
An employer may substitute the 2% nonelective contribution for the matching
contribution for a year only if eligible employees are notified within a
reasonable period of time before the 60-day election period during which
employees can enter into salary reduction agreements that a 2% nonelective
contribution will be made instead of a matching contribution.
EMPLOYEE ELECTIONS: During the 60-day period immediately preceding
January 1st of a calendar year (i.e., November 2 to December 31 of the preceding
calendar year), an eligible employee must be given the right to enter into a
salary reduction agreement for the calendar year, or to modify a prior agreement
(including reducing the amount subject to this agreement to $0). However, for
the year in which the employee becomes eligible to make salary reduction
contributions, the period during which the employee may enter into a salary
reduction agreement or modify a prior agreement is a 60-day period that includes
either the date the employee becomes eligible or the day before that date. For
example, if an employer establishes a SIMPLE plan effective as of July 1, 1997,
each eligible employee becomes eligible to make salary reduction contributions
on that date and the 60-day period must begin no later than July 1 and cannot
end before June 30, 1997.
During these 60-day periods, employees have the right to modify their
salary reduction agreements without restrictions. In addition, for the year in
which an employee becomes eligible to make salary reduction contributions, the
employee must be able to commence these contributions as soon as the employee
becomes eligible, regardless of whether the 60-day period has ended. An employer
may, but is not required to, provide additional opportunities or longer periods
for permitting eligible employees to enter into salary reduction agreements or
to modify prior agreements.
An employee must be given the right to terminate a salary reduction
agreement for a calendar year at any time during the year even if this is
outside a SIMPLE plan's normal election period. The employer's SIMPLE plan may,
however, provide that an employee who terminates a salary reduction agreement
at any time other than the normal election period is not eligible to resume
participation until the beginning of the next calendar year.
EMPLOYER ADMINISTRATIVE AND NOTIFICATION REQUIREMENTS: An employer must notify
each employee, immediately before the employee's 60-day election period, of the
employee's opportunity to enter into a salary reduction agreement or to modify
a prior agreement. If applicable, this notification must disclose an employee's
ability to select the financial institution that will serve as the trustee or
custodian of the employee's SIMPLE IRA. Such notification must also include the
Summary Description required under section 408(1)(2)(B). Such notification must
also include whether the employer will be making either matching contributions
(including the employer's election to reduce the matching contribution below
3%) or nonelective contributions as previously described.
If an eligible employee who is entitled to a contribution under the
employer's SIMPLE plan is unwilling or unable to establish a SIMPLE IRA with
any financial institution prior to the date on which the contribution is
required to be made to the SIMPLE IRA of the employee, the employer may execute
the necessary SIMPLE IRA documents on the employee's behalf with a financial
institution selected by the employer.
The employer must deliver the salary reduction contributions to the
financial institution maintaining the SIMPLE IRA as of the earliest date on
which the contributions can reasonably be segregated from the employer's
general assets, but no later than the close of the 30-day period following the
last day of the month in which amounts would otherwise have been payable to
the employee in cash.
Matching and nonelective employer contributions must be made to the
financial institution maintaining the SIMPLE IRA no later than the due date for
filing the employer's income tax return, including extensions, for the taxable
year that includes the last day of the calendar year for which the
contributions are made.
ROLLOVERS:
ROLLOVER CONTRIBUTIONS FROM ANOTHER SIMPLE IRA - A rollover contribution to
this SIMPLE IRA is only permitted from another SIMPLE IRA. A rollover
contribution from another SIMPLE IRA is any amount the participant receives
from one SIMPLE IRA and redeposits some or all of it into this SIMPLE IRA. The
participant is not required to roll over the entire amount received from the
first SIMPLE IRA. However, any amount you do not roll over will be taxed at
ordinary income tax rates for federal income tax purposes and may also be
subject to an additional tax if the distribution is a premature distribution
described below.
ROLLOVER DISTRIBUTIONS FROM A SIMPLE IRA - A distribution from any SIMPLE
IRA may be rolled over only to another SIMPLE IRA during the two-year period
the participant first participated in the employer's SIMPLE plan. Thus, a
distribution from a SIMPLE IRA during that two-year period qualifies as a
rollover contribution (and is not includible in gross income of the
participant) only if the distribution is paid into another SIMPLE IRA and
satisfies the other requirements that apply to all IRA rollovers under section
408(d)(3). SIMPLE IRAs may never be rolled into an employer's plan, such as a
qualified plan or section 403(b) plan. After this two-year period, a
distribution from a SIMPLE IRA may be rolled over to any IRA maintained by the
individual. This two-year period begins on the first day on which contributions
made by the individual's employer are deposited in the individual's SIMPLE IRA.
SPECIAL RULES THAT APPLY TO ROLLOVERS -
o The rollover must be completed no later than the 60th day after the day the
distribution was received by you.
o You may have only one IRA-to-IRA rollover during a 12-consecutive-month
period measured from the date you received a distribution of an IRA which
was rolled over to another IRA. (See IRS Publication 590 for more
information).
o The same property you receive in a distribution must be the same property
you roll over into the second IRA. For example, if you receive a
distribution from an IRA of property, such as stocks, that same stock must
be rolled over into the second IRA.
o You are required to make an irrevocable election indicating that this
transaction will be treated as a rollover contribution.
o You are not required to receive a complete distribution from your IRA in
order to make a rollover contribution into another IRA, nor are you
required to roll over the entire amount you received from the first IRA.
o If you inherit an IRA due to the death of the participant, you may not roll
this IRA into your own IRA unless you are the spouse of the decedent.
o If you are age 70 1/2 or older and wish to roll over to another IRA, you
must first satisfy the minimum distribution requirement for that year and
then the rollover of the remaining amount may be made.
o Rollover contributions to a SIMPLE IRA may not be made from a qualified
plan, 403(b) plan, or any other IRA that is not a SIMPLE IRA.
EXCESS DEFERRALS: Excess elective deferrals (amounts in excess of the $6,000
SIMPLE elective deferral limit) are includible in your gross income in the
calendar year of deferral. Income on the excess elective deferrals is
includible in your income in the year of withdrawal from the SIMPLE IRA. You
should withdraw excess elective deferrals and any allocable income, from your
SIMPLE IRA by April 15 following the year to which the deferrals relate. These
amounts may not be transferred or rolled over tax-free to another SIMPLE IRA.
If you fail to withdraw excess elective deferrals, and any allocable income, by
the following April 15th, the excess elective deferrals will be subject to the
IRA contribution limitations of sections 219 and 408 of the Code and thus may
be considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals in includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate. Income withdrawn from the IRA
after that date may be subject to a 10% tax (or 25% if withdrawn within the
first two years of participation) on early distributions. The rules for
determining and allocating income attributable to excess elective deferrals and
other excess SIMPLE contributions are the same as those governing regular IRA
excess contributions. The trustee or custodian of your SIMPLE IRA will inform
you of the income allocable to such excess amounts.
DISTRIBUTIONS: In general, all distributions from a SIMPLE IRA are subject to
federal income tax by the payee or distributee, whichever the case may be. When
you start withdrawing from your SIMPLE IRA, you may take the distributions in
regular payments, random withdrawals or in a single-sum payment. Generally, all
amounts distributed to you from your SIMPLE IRA are included in your gross
income in the taxable year in which they are received. However, if you have
made nondeductible contributions to any regular IRA as permitted under section
408(o) of the Code, the nontaxable portion of the distribution, if any, will be
a percentage based upon the ratio of your unrecovered nondeductible
contributions to the aggregate of all IRA balances, including SEP, SIMPLE and
rollover contributions, as of the end of the year in which you take the
distribution, plus distributions from the account during the year. All taxable
distributions from your SIMPLE IRA are taxed at ordinary income tax rates for
federal income tax purposes and
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are not eligible for either capital gains treatment or 5/10 year averaging. An
employer may not require an employee to retain any portion of the contribution
in the SIMPLE IRA or otherwise impose any withdrawal restrictions.
PREMATURE DISTRIBUTIONS -- In general, if you are under age 59 1/2 and
receive a distribution from your SIMPLE IRA account, a 10% additional income tax
will apply to the taxable portion of the distribution, unless the distribution
is received due to death; disability; a series of substantially equal periodic
payments at least annually over your life expectancy or the joint life
expectancy of you and your designated beneficiary; medical expenses that exceed
7.5% of your adjusted gross income; health insurance premiums paid by certain
unemployed individuals; a qualifying rollover distribution; or the timely
withdrawal of an excess deferral plus income attributable. If you request a
distribution in the form of a series of substantially equal payments, and you
modify the payments before five years have elapsed and before attaining age
59 1/2, the 10% additional income tax will apply retroactively to the year
payments began through the year of such modification. In addition, if you
request a distribution from your SIMPLE IRA within your first two years of
participation in the SIMPLE plan and none of the exceptions listed above applies
to the distribution, the normal 10% additional income tax referred to earlier is
increased to 25%.
AGE 70 1/2 REQUIRED MINIMUM DISTRIBUTIONS -- You are required to begin
receiving minimum distributions from your SIMPLE IRA by your required
beginning date (the April 1 of the year following the year you attain age
70 1/2). The year you attain age 70 1/2 is referred to as your "first
distribution calendar year." Your minimum distribution is based upon the value
of your account at the end of the prior year (less any required distributions
you received between January 1 and April 1 of the year following your first
distribution calendar year) by the joint life expectancy of you and your
designated beneficiary. If you do not have a designated beneficiary then the
minimum distribution will be based upon your single life expectancy.
As you can see, who you designate as beneficiary under your SIMPLE IRA
will affect the period over which distributions may be made. If you have more
than one primary beneficiary, generally the beneficiary with the shortest life
expectancy will be the measuring life expectancy used for determining the
period over which distributions will be made. If no beneficiary is named or
you name a beneficiary which is not an individual (i.e., your estate),
distributions will be based upon your single life expectancy.
By the April 1 following your first distribution calendar year, you must
make certain elections on a form provided by the Custodian. If no election is
made, you will be deemed to have elected to take your distributions over a
period not to exceed your single life expectancy. The required distributions
for the second distribution calendar year and for each subsequent distribution
calendar year must be made by December 31 of such year.
Unless otherwise elected by the Custodian (or by you, if the Custodian
permits) in determining the amount to be distributed for the second
distribution calendar year and subsequent distribution calendar years, your
life expectancy (and your designated beneficiary's life expectancy) shall not
be recalculated. If the Custodian elects (or you elect, if the Custodian
permits) to recalculate your life expectancy or your spouse's life expectancy,
you will generally have a longer period of time over which payments will be
made and therefore the minimum distribution will be less.
CAUTION: If you or your spouse should die, the decedent's life expectancy
that is being recalculated is reduced to zero which will reduce the period of
distribution to the survivor's single life expectancy. If recalculation is not
elected, the death of either person will not have an effect on the payment
period.
In any distribution calendar year you may take more than the required
minimum. However, if you take less than the required minimum with respect to
any distribution calendar year, you are subject to a federal excise tax penalty
of 50% of the difference between the amount required to be distributed and the
amount actually distributed.
MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE -- Basically, this
rule specifies that benefits provided under a retirement plan must be for the
primary benefit of a participant rather than for his/her beneficiaries. If your
spouse is your sole beneficiary, these special MDIB rules do not apply. The
amount required to be distributed under the MDIB rule may in some cases be more
than the amount required under the normal age 70 1/2 required minimum
distribution rules. If someone other than or in addition to your spouse is a
named primary beneficiary, the minimum distribution required is the greater of
the amount determined under the regular 70 1/2 rules and the amount determined
under the MDIB rules. The minimum amount to be distributed under the MDIB rules
is the amount determined by taking the balance in your SIMPLE IRA account and
dividing it by a factor taken from an IRS table specified in IRS regulations.
The table provides life expectancies for you and a beneficiary who is assumed
to be 10 years younger.
DEATH DISTRIBUTIONS -- If you die after your required beginning date, the
balance in your SIMPLE IRA will be distributed in a manner which is at least as
rapid as the method of distribution being used on the date of your death. If
you die before your required beginning date, the balance in your SIMPLE IRA
must generally be distributed within five years from the date of your death.
However your beneficiary(ies) may elect to receive the balance in your account
over the single life expectancy of your designated beneficiary if distributions
begin no later than the end of the year containing the one year anniversary of
your death. In addition, if your only beneficiary is your surviving spouse,
distributions need not commence until December 31st of the year you would have
attained age 70 1/2.
PROHIBITED TRANSACTIONS -- If you or your beneficiary engage in a
prohibited transaction (as defined under Section 4975 of the Internal Revenue
Code) with your SIMPLE IRA, it will lose its tax exemption and you must include
the value of your account in your gross income for that taxable year. If you
pledge any portion of your SIMPLE IRA as collateral for a loan, the amount so
pledged will be treated as a distribution and will be included in your gross
income for that year.
INCOME TAX WITHHOLDING -- All withdrawals from your SIMPLE IRA (except a
direct transfer) are subject to federal income tax withholding. You may,
however, elect not to have withholding apply to your SIMPLE IRA distribution in
most cases. If withholding does apply to your distribution, it is at the rate
of 10% of the amount of the distribution.
DESIGNATED FINANCIAL INSTITUTION "DFI":
In general, under section 408(p), an employer must permit an employee to select
the financial institution for the SIMPLE IRA to which the employer will make
all contributions on behalf of the employee. In this case, the financial
institution is referred to as a "Non-DFI." Alternatively, under section
408(p)(7), an employer may require that all SIMPLE contributions initially be
made to a single designated financial institution selected by the employee. In
this case, the financial institution is referred to as a "DFI." Refer to your
employer's SIMPLE Retirement Plan document to determine if the financial
institution is a DFI or a Non-DFI.
USE OF A DESIGNATED FINANCIAL INSTITUTION "DFI" -- If an employer
requires that all SIMPLE contributions initially be made to a DFI, the
following requirements must be met:
1. The employer and the financial institution must agree that the
financial institution will be a DFI for the employer's SIMPLE plan;
2. The DFI must agree that, if a participant elects before the
expiration of the employee's 60-day election period, the
participant's balance will be transferred without cost or penalty to
another SIMPLE IRA (or after the two-year period no longer applies,
to any IRA) to a financial institution selected by the participant;
and
3. Each participant is given written notification describing the
procedures under which, if a participant so elects, the participant's
balance will be transferred without cost or penalty to another SIMPLE
IRA (or after the two-year period no longer applies, to any IRA) to a
financial institution selected by the participant.
If the participant elects before the expiration of the 60-day election
period to have the balance transferred without cost or penalty as described
above, such election is valid only with respect to the balance attributable to
SIMPLE contributions for the calendar year following that 60-day election
period (or, for the year in which an employee becomes eligible to make salary
reduction contributions for the remainder of that year) and subsequent calendar
years if such election so provides.
If the participant timely elects the transfer of the balance without cost
or penalty as described above, the participant's balance must be transferred on
a reasonably frequent basis, such as on a monthly basis. If a participant
timely elects this transfer without cost or penalty, the Custodian reserves the
right to restrict the investment to a specified investment option until
transferred, even though a variety of investment options are available with
respect to contributions that the participant has not elected to transfer.
A transfer is deemed to be made without cost or penalty if no liquidation,
transaction, redemption or termination fee, or any commission, load (whether
front-end or back-end) or surrender charge or similar fee or charge is imposed
with respect to the balance being transferred that the participant has filed a
timely election with the DFI. However, the DFI can charge a reasonable annual
administrative fee to a SIMPLE IRA from which balances must be transferred in
accordance with the participant's timely transfer election.
In order to timely elect a transfer without cost or penalty, the
participant must indicate such election on the SIMPLE IRA Plan Application
attached hereto and must be received by the DFI no later than the expiration of
the 60-day election period applicable to the employee. If the participant fails
to timely elect such transfers without cost or penalty, the DFI reserves the
right to charge any or all fees and expenses described in Section 8.05 of this
SIMPLE IRA plan agreement.
USE OF A NONDESIGNATED FINANCIAL INSTITUTION "NON-DFI" -- If the
employer's SIMPLE plan permits the participants to select their own financial
institution to serve as trustee or custodian of the SIMPLE IRA, the rules
explained above do not apply and the Custodian may charge any and all fees
described in Section 8.05 of the SIMPLE IRA plan agreement.
TRANSFERS DEFINED -- A direct transfer is a payment from this SIMPLE IRA
directly to another trustee or custodian of a SIMPLE IRA (or, after the
two-year period no longer applies, to the trustee or custodian of any IRA).
Transfers do not constitute a distribution since you are never in receipt of
the funds. The monies
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are transferred directly to the new trustee or custodian. If you should transfer
all or a portion of your SIMPLE IRA to your former spouse's IRA under a divorce
decree (or under a written instrument incident to divorce) or separation
instrument, you will not be deemed to have made a taxable distribution, but
merely a transfer. The portion so transferred will be treated at the time of the
transfer as the IRA of your spouse or former spouse. If your spouse is the
beneficiary of your SIMPLE IRA, in the event of your death, your spouse may
"assume" your SIMPLE IRA. The assumed IRA is then treated as your surviving
spouse's IRA.
SUMMARY DESCRIPTION REQUIREMENTS: In general, the Custodian of any
SIMPLE IRA must annually provide to the employer maintaining the SIMPLE plan a
Summary Description early enough to allow the employer to meet its notification
obligations. If the Custodian of this SIMPLE IRA is a DFI, the Summary
Description will be provided directly to the employer by the Custodian in the
underlying SIMPLE plan agreement. If the Custodian of this SIMPLE IRA is a
Non-DFI, the Summary Description will be provided directly to the employee by
the Custodian. The employee agrees to have the employer complete certain
information contained on the Summary Description with respect to the employer's
SIMPLE plan provisions. A sample Summary Description for a Non-DFI is located on
the following page. The Custodian of a "transfer SIMPLE IRA" is not required to
provide this Summary Description. A SIMPLE IRA is a "transfer SIMPLE IRA" if it
is not a SIMPLE IRA to which the employer has made contributions under the
SIMPLE plan.
PROCEDURES FOR WITHDRAWALS: All distributions from this SIMPLE IRA
must be requested in writing on a form provided to the participant by the
Custodian. After the withdrawal form has been completed and executed by the
recipient, the form must be either hand delivered to the Custodian during normal
business hours or mailed to the Custodian by first class mail, certified or
registered mail prepaid through the U.S. Postal Service, or through any means of
an expedited delivery service. After receipt of a properly executed withdrawal
form, the Custodian will process the distribution as soon as administratively
feasible.
FEDERAL ESTATE AND GIFT TAXES: Generally, there is no specific exclusion for
SIMPLE IRAs under the estate tax rules. Therefore, in the event of your death,
your SIMPLE IRA balance will be includible in your gross estate for federal
estate tax purposes. However, if your surviving spouse is the beneficiary of
your SIMPLE IRA, the amount in your SIMPLE IRA may qualify for the marital
deduction available under Section 2056 of the Internal Revenue Code. A transfer
of property for federal gift tax purposes does not include an amount which a
beneficiary receives from a SIMPLE IRA plan.
PENALTIES: If you are under age 59 1/2 and receive a premature distribution from
your SIMPLE IRA, an additional 10% (or 25% for certain SIMPLE IRA distributions)
income tax will apply on the taxable amount of the distribution. If you make an
excess deferral to your SIMPLE IRA and it is not corrected on a timely basis, an
excise tax of 6% is imposed on the excess amount. This tax will apply each year
to any part or all of the excess which remains in your account. If you are age
70 1/2 or over or if you should die, and the appropriate required minimum
distributions are not made from your SIMPLE IRA, an additional tax of 50% is
imposed upon the difference between what should have been distributed and what
was actually distributed.
For tax years ending before 1/1/97, you will be taxed an additional 15% on
any amount you receive and include in income during a calendar year from
qualified plans, TSAs and all IRAs which exceeds the greater of $150,000
(unindexed) or $112,500 (indexed for cost of living). Before you receive an
excess distribution, you should seek advice from your tax advisor with respect
to the application of these rules. For tax years 1997, 1998 and 1999, the 15%
excess distribution tax will not apply. In the event of your death, your estate
may be subject to a 15% tax on the "excess accumulation" in all of your
qualified plans, TSAs and IRAs. You should seek the advice of your own tax
advisor with respect to the application of this excess accumulation excise tax.
You must file IRS Form 5329 with the Internal Revenue Service for any year an
additional tax is due.
IRS APPROVAL AS TO FORM: This SIMPLE IRA Custodial Agreement has been approved
by the Internal Revenue Service as to form. This is not an endorsement of the
plan in operation or of the investments offered.
ADDITIONAL INFORMATION: You may obtain further information on IRAs and SIMPLE
IRAs from your District Office of the Internal Revenue Service. In particular
you may wish to obtain IRS Publication 590 (Individual Retirement Arrangements).
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EXHIBIT 14(f)
[AIM LOGO APPEARS HERE]
ROTH IRA APPLICATION
TO OPEN YOUR AIM ROTH IRA ACCOUNT.
Complete Sections 1-9.
Return completed application and check to: A I M Fund Services, Inc., P.O. Box
4739, Houston, TX 77210-4739. Phone: 800-959-4246.
Minors cannot open an AIM Roth IRA account.
- --------------------------------------------------------------------------------
1 INVESTOR INFORMATION (Please print or type.)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street City State ZIP Code
Social Security Number Birth Date / /
-------------------------- ---- ---- ----
(Required to Open Account) Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 DEALER INFORMATION (To be completed by registered securities dealer)
Name of Broker/Dealer Firm
------------------------------------------------
Home Office Address
-------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
------------------------------------------------------------
Branch Phone Number ( )
--------- ------------------------
/ / Authorized for NAV purchase (If authorized for NAV purchase, other
than the Broker, please attach NAV Certification Form)
- --------------------------------------------------------------------------------
3 CONTRIBUTION TYPE
/ / REGULAR - Contribution for tax year 19 _____ .
/ / CONVERSION - Represents a conversion from a Traditional IRA account.
/ / TRANSFER - Transfer from another Roth IRA account. Please complete
Roth IRA Asset-Transfer Form.
4 FUND INVESTMENT
Indicate Fund(s) and contribution amount(s).
MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open a
Roth IRA is $250.
<TABLE>
<CAPTION>
Fund Amount of Investment Class of Shares (check one)
<S> <C> <C> <C> <C>
/ / AIM Advisor Flex Fund $_________________ / / Class A / / Class C
/ / AIM Advisor International Value Fund $________________ / / Class A / / Class C
/ / AIM Advisor Large Cap Value Fund $________________ / / Class A / / Class C
/ / AIM Advisor MultiFlex Fund $________________ / / Class A / / Class C
/ / AIM Advisor Real Estate Fund $________________ / / Class A / / Class C
/ / AIM Aggressive Growth Fund $________________ Fund currently closed to new investors
/ / AIM Balanced Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Blue Chip Fund $________________ / / Class A / / Class B / / Class C
</TABLE>
9
<PAGE> 2
<TABLE>
<S> <C> <C> <C> <C>
/ / AIM Capital Development Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Charter Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Constellation Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Aggressive Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Income Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Utilities Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM High Yield Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Income Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Intermediate Government Fund $________________ / / Class A / / Class B / / Class C
/ / AIM International Equity Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Limited Maturity Treasury Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Money Market Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Cash Reserve Shares
/ / AIM Value Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Weingarten Fund $________________ / / Class A / / Class B / / Class C
Total $________________
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where AIM Cash Reserve Shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in
Section 3 of the Asset-Transfer Form.
- --------------------------------------------------------------------------------
5 TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize A I M Fund Services, Inc., to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
/ / I DO NOT want the Telephone Exchange Privilege.
6 DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class
of shares with the exception of AIM Cash Reserve Shares of the AIM Money
Market Fund, which may only be exchanged for Class A shares of another AIM
fund.)
I have at least $5,000 in shares in my __________________________ Fund, for
which no certificates have been issued, and I would like to exchange:
<TABLE>
<S> <C> <C>
$ _________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
$__________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
$__________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
</TABLE>
on a / / monthly / / quarterly basis starting in the month of ______
on or near the / / 10th or / / 25th of the month.
- --------------------------------------------------------------------------------
7 REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION (This option is for Class A shares only.)
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds-Registered Trademark-:
<TABLE>
<S> <C>
Fund(s)/ Account No.(s) _______________________ Social Security No.(s)_________________________________
_______________________ _________________________________
_______________________ _________________________________
</TABLE>
LETTER OF INTENT
I agree to the Letter of Intent provisions in the Prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000
/ / $500,000 / / $1,000,000
10
<PAGE> 3
8 BENEFICIARY INFORMATION
I hereby designate the following beneficiary(ies) to receive the balance in
my Roth IRA custodial account upon my death. To be effective, the
designation of beneficiary and any subsequent change in designation of
beneficiary must be filed with the Custodian prior to my death. The balance
of my account shall be distributed in equal amounts to the beneficiary(ies)
who survives me. If no beneficiary is designated or no designated
beneficiary or contingent beneficiary survives me, the balance in my Roth
IRA will be distributed to the legal representatives of my estate. This
designation revokes any prior designations. I retain the right to revoke
this designation at any time.
I hereby certify that there is no legal impediment to the designation of
this beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
CONTINGENT BENEFICIARY
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my SIMPLE IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts. If more than on, please
attach a list.
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
9 SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist
you between 7:30 a.m. and 5:30 p.m. Central time at 800-959-4246.
11
<PAGE> 4
10 AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. Roth Individual Retirement
Account (IRA) appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the Roth IRA
custodial agreement and disclosure statement and consent to the custodial
account fees as specified. I understand that a $10 annual Maintenance Fee
will be deducted early in each December from my AIM Roth IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund
is required to have the following certification: Under the penalties
of perjury I certify by signing this Application as provided below
that:
1. The number shown in Section 1 of this Application is my correct
Social Security (or Tax Identification) Number, and
2. I am not subject to backup withholding either because (a) I have
not been notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to report
all interest or dividends or (b) the IRS has notified me that I am no
longer subject to backup withholding. (This paragraph (2) does not
apply to real estate transactions, mortgage interest paid, the
acquisition or abandonment of secured property, contributions to an
individual retirement arrangement and payments other than interest and
dividends.)
YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY
THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE
OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
In addition, the Fund hereby incorporates by reference into this
section of the Application either the IRS instructions for Form W-9 or
the substance of those instructions--whichever is incorporated in the
Prospectus.
SIGNATURE PROVISIONS
I, the undersigned Depositor, have read and understand the foregoing
Application and the attached material included herein by reference. In
addition, I certify that the information which I have provided and the
information which is included within the Application and the attached
material included herein by reference is accurate including but not limited
to the representations contained in the Witholding Information section of
this Application above. (The Internal Revenue Service does not require your
consent to any provision of this document other than the certifications to
avoid backup withholding.)
Dated ___ /___ /___
Signature of Roth IRA Shareholder
---------------------------------------
11 MAILING INSTRUCTIONS
Make check payable to INVESCO Trust Company.
Return Application to:
<TABLE>
<CAPTION>
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
<S> <C>
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
</TABLE>
12
<PAGE> 5
[AIM LOGO APPEARS HERE]
ROTH IRA ASSET-TRANSFER FORM
USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING ROTH IRA TO AN AIM
ROTH IRA.
THIS FORM IS NOT TO BE USED FOR CONVERSIONS.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian.
Complete Sections 1-5.
If you do not already have an AIM Roth IRA, you must also submit an AIM Roth IRA
Application. AIM will arrange the transfer for you.
1 INVESTOR INFORMATION (Please print or type.)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street City State ZIP Code
Social Security Number Birth Date / /
-------------------------- ---- ---- ----
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
2 CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee/Custodian
---------------------------------------
Account Number of Resigning Trustee/Custodian
-----------------------------
Address of Resigning Trustee/Custodian
------------------------------------
Street
---------------------------------------------------------------------------
City State ZIP Code
Attention Telephone
---------------------------------- ------------------
3 ROTH IRA ACCOUNT INFORMATION
<TABLE>
<S> <C> <C>
Please deposit proceeds in my / / New AIM Roth IRA* / / Existing AIM Roth IRA Account Number __________________
</TABLE>
INVESTMENT ALLOCATION:
<TABLE>
<S> <C> <C>
Fund Name ______________________________ Class _________________ % _______________
Fund Name ______________________________ Class _________________ % _______________
Fund Name ______________________________ Class _________________ % _______________
</TABLE>
*If this is a new AIM Roth IRA account, you must attach a completed AIM
Roth IRA Application. If no class of shares is selected, Class A shares
will be purchased with the exception of the AIM Money Market Fund, where
AIM Cash Reserve Shares will be purchased.
4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from my Roth IRA account listed in Section 2 and
transfer the amount indicated below to my Roth IRA with INVESCO Trust
Company.
Amount to liquidate: / / All / / Partial amount of $_______________
When to liquidate: / / Immediately / / At maturity _____ /_____ /_____
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE TRANSFERRED IN KIND. TO
TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind" immediately: / / All / / Partial amount of
shares____________
13
<PAGE> 6
5 AUTHORIZATION AND SIGNATURE
I have established a Roth Individual Retirement Account with the AIM Funds
and have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- --- --- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
--------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
REMAINDER OF FORM TO BE COMPLETED BY AIM
6 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
------------------------------- -----------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature /s/ Illegible Mailing Date / /
----------------------- --- -- ---
(INVESCO Trust Company)
7 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check. Return this completed form
and completed Roth IRA application to: INVESCO Trust Company, c/o A I M
Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the Social Security number of the Roth
IRA holder on all documents.
[AIM LOGO APPEARS HERE]
14
<PAGE> 7
<TABLE>
<CAPTION>
Form 5305-RA ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT Do not file
(January 1998) (Under Section 408A of the Internal Revenue Code) with the Internal
Revenue Service
<S> <C> <C>
Department of the Treasury
Internal Revenue Services
- ---------------------------------------------------------------------------------------------------------------------------
Name of depositor Date of birth of depositor Social security number
- ---------------------------------------------------------------------------------------------------------------------------
Address of depositor Check if Roth Conversion IRA / /
Check if Amendment / /
- ---------------------------------------------------------------------------------------------------------------------------
Name of Custodian Address or principal place of business or custodian
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The depositor whose name appears above is establishing a Roth individual
retirement account (Roth IRA) under section 408A to provide for his or her
retirement and for the support of his or her beneficiaries after death.
The custodian named above has given the depositor the disclosure statement
required under Regulations section 1.408-6.
The depositor assigned the custodial account $
----------------------
The depositor and the custodian make the following agreement:
- --------------------------------------------------------------------------------
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married depositor who files separately, between $0 and $10,000. In the
case of a conversion, the custodian will not accept IRA Conversion Contributions
in a tax year if the depositor's AGI for that tax year exceeds $100,000 or if
the depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
ARTICLE III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE IV
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
ARTICLE V
1. If the depositor dies before his or her entire interest is distributed
to him or her and the grantor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the depositor or, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the following the year of the depositor's
death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the grantor's entire interest in the trust
as of the close of business on December 31 of the preceding year by the life
expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the depositor's spouse is the sole beneficiary on the depositor's
date of death, such spouse will then be treated as the depositor.
ARTICLE VI
1. The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under sections 408(I) and
408A(d)(3)(E). Regulations sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or Incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VIII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
- --------------------------------------------------------------------------------
17 Cat No. 25094Y Form 5305-RA (1-98)
<PAGE> 8
ARTICLE IX
The following information is applicable to Roth IRAs, not Traditional IRAs.
The rules regarding Roth IRAs are new. Congress and the Internal Revenue Service
are refining the rules, so the following rules and/or their interpretation are
subject to change.
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related Roth IRA Application
(referred to herein as the "Roth IRA Adoption Agreement"), the Depositor directs
the Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the Roth IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds-Registered
Trademark-," which are managed or advised by subsidiaries of A I M Management
Group Inc. and any such investment company will hereafter be referred to as
"Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(c), 403(a)(4),
403(b)(8), 408(d)(3) or 408A(e) of the Code. The Depositor shall be responsible
for determining whether a rollover to a Roth IRA is permissible under the
Internal Revenues Code, and the timeliness of any rollover. The Custodian will
accept for the account all rollover contributions which consist of cash, and it
may, but shall be under no obligation to, accept any other rollover
contribution. In the case of rollover contributions composed of assets other
than cash, the prospective Depositor shall provide the Custodian with a
description of such assets and such other information as the Custodian may
reasonably require. The Custodian may accept all or any part of such a rollover
contribution if it determines that the assets of which such contribution
consists are either in a medium proper for investment hereunder or that the
assets can be promptly liquidated for cash. The Custodian may reject any
rollover contribution.
The Depositor warrants that any rollover contribution to the account
consists of cash, the same property received in the distribution or, in the case
of amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution.
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
or impermissible deposit, and interest, if any, earned thereon. Any
contributions made by or on behalf of the Depositor in respect of a taxable year
of the Depositor shall be made by or on behalf of the Depositor to the Custodian
for deposit in the custodial account within the time period for claiming any
income tax deduction for such taxable year. It shall be the sole responsibility
of the Depositor to determine the amount of the contributions made hereunder.
The Depositor shall execute such forms as the Custodian may require in
connection with any contribution hereunder.
ARTICLE X
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE XI
A Depositor shall have the right to designate a beneficiary or
beneficiaries to receive any amounts remaining in his account in the event of
his death. Any prior beneficiary designation may be changed or revoked at any
time by a Depositor by written designation signed by the Depositor on a form
acceptable to, and filed with, the Custodian; provided, however, that such
designation, or change or revocation of a prior designation shall not become
effective until it has been received by the Custodian, nor shall it be effective
unless received by the Custodian no later than thirty days before the death of
the Depositor, and provided further that the last such designation of
beneficiary or change or revocation of beneficiary executed by the Depositor, if
received by the Custodian within the time specified, shall control. Unless
otherwise provided in the beneficiary designation, amounts payable by reason of
the Depositor's death will be paid in equal shares only to the primary
beneficiary or beneficiaries who survive the Depositor, or, if no primary
beneficiary survives the Depositor, to the contingent beneficiary or
beneficiaries who survive the Depositor. If the Depositor had not, by the date
of his death, properly designated a beneficiary in accordance with the preceding
sentences, or if no designated beneficiary survives the Depositor, then the
Depositor's beneficiary shall be the Depositor's estate.
ARTICLE XII
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON 30 DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new
fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
ARTICLE XIII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the Roth IRA Adoption Agreement is
checked for spousal accounts, separate custodial accounts will be opened and
maintained in each spouse's name. The amounts specified in the Roth IRA Adoption
Agreement shall be credited to each spouse's separate custodial account except
that no more than $2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall
be registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIV
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below, the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the
18
<PAGE> 9
collection of contributions, the deductibility or propriety of any contribution
under this Agreement, or the purposes or propriety of any distribution from the
account, which matters are the responsibility of the Depositor or the
Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or proceeding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in
acting upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XV
1. THE CUSTODIAN MAY resign at any time upon 30 days' notice in writing to
the Depositor, and may be removed by the Depositor at any time upon thirty days'
notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under
this Agreement, must be a bank (as defined in Section 408(n) of the Code) or
such other person who qualifies with the Internal Revenue Service to serve in
the manner prescribed by Code section 408(a)(2) and satisfies the Custodian,
upon request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XVI
1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds
of the account to the depositor if within 30 days after the resignation or
removal of the Custodian pursuant to Article XV above, the Depositor has not
appointed a successor custodian which has accepted such appointment unless
within that time the Distributor appoints such successor and gives written
notice thereof to the Depositor and the Custodian. The Distributor shall have
the right, but not the duty, to appoint such a successor. Termination of the
custodial account shall be effected by distributing all of the assets therein in
cash or in kind to the Depositor in a lump sum, subject to the Custodian's right
to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVII
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and
administered in accordance with the laws of the State of Colorado. The Custodian
and the Depositor hereby waive and agree to waive right to trial by jury in an
action or proceeding instituted in respect to this custodial account. The
Depositor further agrees that the venue of any litigation between him and the
Custodian with respect to the custodial account shall be in the State of
Colorado.
3. THIS AGREEMENT IS intended to qualify under section 408A of the Code as
a Roth IRA and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one construction,
such ambiguity shall be resolved in favor of that interpretation or construction
which is consistent with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account
or any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt a Roth IRA under section 408A. When fully executed by the
Depositor and the Custodian not later than the time prescribed by law for filing
the Federal income tax return for the Depositor's tax year (not including any
extensions thereof), a Depositor will have a Roth IRA custodial account which
meets the requirements of section 408A. This account must be created in the
United States for the exclusive benefit of the Depositor or his/her
beneficiaries.
DEFINITIONS
CUSTODIAN. The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or other person who has the approval of the Internal
Revenue Service to act as custodian.
DEPOSITOR. The Depositor is the person who establishes the custodial
account.
ROTH IRA FOR NONWORKING SPOUSES
Contributions to a Roth IRA custodial account for a non-working spouse must
be made to a separate Roth IRA custodial account established by the nonworking
spouse.
This form may be used to establish the Roth IRA custodial account for the
nonworking spouse.
An individual's social security number will serve as the identification
number of his or her individual retirement account.
For more information, obtain a copy of the required disclosure statement
from your custodian or get Publication 590, Individual Retirement Arrangements
(IRAs).
SPECIFIC INSTRUCTIONS
ARTICLE IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both.
ARTICLE IX -- This article and any that follow it may incorporate
additional provisions that are agreed upon by the Depositor and the Custodian to
complete the agreement. These may include, for example: definitions, investment
powers, voting rights, exculpatory provisions, amendment and termination,
removal of Custodian, Custodian's fees, state law requirements, beginning date
of distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS-Registered Trademark-
ROTH IRA CUSTODIAL ACCOUNT DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of a Roth IRA account is
required to furnish each depositor who has established or is establishing a Roth
IRA account with a statement which discloses certain information regarding the
account. INVESCO Trust Company (hereinafter referred to as the "Custodian") is
providing this Disclosure Statement to you in accordance with that requirement,
and this Disclosure Statement contains general information about the The AIM
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<PAGE> 10
Family of Funds-Registered Trademark- Roth IRA Custodial Account (hereinafter
referred to as "Roth IRA"). This Disclosure Statement should be reviewed in
conjunction with both the Roth Individual Retirement Custodial Account agreement
(Form 5305 and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your Roth IRA. You should
review this Disclosure Statement and the Roth IRA documents with your attorney
or tax advisor. The Custodian cannot give tax advice or determine whether or not
the Roth IRA is appropriate for you.
The following information is applicable to Roth IRAs, not Traditional IRAs. The
rules regarding Roth IRAs are new. Congress and the Internal Revenue Service are
refining the rules, so the following rules and/or their interpretation are
subject to change.
A. SEVEN DAY RIGHT TO REVOKE YOUR ROTH IRA.
You may revoke your Roth IRA at any time within 7 business days after the
date the Roth IRA is established, by giving proper notice. For purposes of
revocation, it will be assumed that you received the Disclosure Statement no
later than the date of your check with which you opened your Roth IRA. Written
notice must be hand delivered or sent by first class mail, in which case, the
revocation will be effective as of the date the notice is postmarked (or if sent
by certified or registered mail, the date of certification or registration).
Notice of revocation should be made to: A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention:
Shareholder Services Department, area code (800) 959-4246. If you revoke your
Roth IRA, you are entitled to a refund of your entire contribution to the Roth
IRA, without adjustment for such items as sales commissions, administrative
expenses or fluctuation in market value. If you do not revoke within 7 business
days after the establishment of the Roth IRA, you will be deemed to have
accepted the terms and conditions of the Roth IRA and cannot later revoke the
Roth IRA without certain potential penalties.
B. STATUTORY REQUIREMENTS.
A Roth IRA is a trust or custodial account created or organized in the
United States for your exclusive benefit or that of your beneficiaries. It must
be created by a written governing instrument that meets the following
requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit
union, savings and loan association or another person eligible to act as trustee
or custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS contributions of more than $2,000 for any tax year
may not be made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your Roth IRA may not be invested in "collectibles," such as art works,
antiques, metals, gems, stamps, coins (with an exception for certain U.S.-minted
gold and silver coins and certain bullion), and certain other types of tangible
personal property. An investment in a collectible would be treated as a
distribution from your Roth IRA which would be includible in your gross income,
and, if you had not attained the age of 59 1/2, the distribution would also be
subject to the premature distribution penalty as discussed in Part E(5) below;
(6) UNLIKE A TRADITIONAL IRA, YOUR INTEREST IN YOUR ROTH IRA IS NOT
REQUIRED TO BE DISTRIBUTED WHEN YOU REACH AGE 70 1/2.
C. INVESTMENT OF YOUR ROTH IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your Roth IRA Funds in shares of investment companies which
are part of "The AIM Family of Funds-Registered Trademark-," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your Roth
IRA Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your Roth IRA, you
should provide the Custodian with specific instructions, detailing your
investment decision so that the Custodian can effectuate such investments as
provided in your Roth IRA Custodial Agreement. If you fail to direct the
Custodian as to the Investment of all or any portion of your Roth IRA account,
the Custodian shall hold such uninvested amount in your account and shall incur
no liability for interest or earnings thereon. All dividends and capital gain
distributions received on shares of an investment company held in your Roth IRA
will be reinvested in shares of that investment company, if available, which
shall be credited to the Custodian account. Detailed information about the
shares of the AIM fund(s) you select must be furnished to you in the form of
prospectuses governed by rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON ROTH IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your Roth IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate Roth IRA.
Contributions to a Roth IRA are nondeductible, but earnings on a Roth IRA
generally are not subject to federal income tax. The $2,000 individual Roth IRA
limit is reduced by any deductible or nondeductible contributions you make to a
Traditional IRA. You should consult your tax advisor to determine the specific
application of such rules to your Roth IRA contributions for any particular
taxable year.
Contributions to a Roth IRA are not deductible, but earnings on a Roth IRA
generally are not subject to federal income tax if they are distributed after
the account has been in existence for five years and the distribution is made on
account of death, disability, after age 59 1/2, or for certain qualifying
events. The $2,000 maximum contribution to a Roth IRA is reduced for taxpayers
whose income exceeds $95,000 (single filer) or $150,000 (joint filers) and is
phased-out entirely for taxpayers whose income exceeds $110,000 (single) or
$160,000 (joint).
E. FEDERAL INCOME TAX STATUS OF THE ROTH IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your Roth IRA and earnings
thereon are exempt from federal income tax at least until distributions are made
from the Roth IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS FROM A ROTH IRA. Contributions to a Roth
IRA are not tax-deductible, but distributions may be received tax-free under
certain circumstances. After a Roth IRA account has been maintained for at least
five years (whether or not contributions were made for all years), investment
earnings may be withdrawn without being subject to federal income tax if the
distribution is made after age 59 1/2, in the case of death or disability, or
for a first home purchase. A withdrawal for a first home purchase is limited to
$10,000 and is available to a person who has not had an ownership interest in a
principal residence during the two years ending on the date of purchase. The
dollar amount of contributions (but not earnings) to a Roth IRA may be withdrawn
without penalty at any time.
(3) EXCESS CONTRIBUTIONS. If contributions to your Roth IRA are in excess
of the limits stated in Part D above, you will be assessed a 6% nondeductible
excise tax on such excess amounts. This tax is payable for each year the excess
is permitted to remain in your Roth IRA. However, if the excess contribution and
all earnings thereon are returned before the due date for filing your income tax
return for the year in which the excess contribution was made, the 6% excise tax
will not be assessed. The earnings on such excess contributions that are
returned to you will be taxable as ordinary income and will be deemed to have
been earned and taxable in the tax year during which the excess contribution was
made. In addition, if you are not disabled or have not reached age 59 1/2, the
earnings will be subject to the 10% premature withdrawal penalty discussed
below. The 6% excess contribution tax may be eliminated for future tax years by
withdrawing the excess contribution from your Roth IRA before the due date for
filing your tax return for that year or by under-contributing for a subsequent
year by an amount equal to the excess contribution. If the total contributions
for the year to your Roth IRA are $2,000 or less, you may withdraw any excess
contributions after the due date for filing your tax return, including
extensions, and not include the amount withdrawn in your gross income. It is not
necessary to withdraw the interest or other income earned on the excess. You
will have to pay the 6% tax on the excess amount for each year the excess
contribution was in the Roth IRA.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your Roth IRA that occur before you reach age 59
1/2 (except in the event of disability, death, rollover, or as a qualifying
distribution), will be assessed a 10% additional income tax on the amount
distributed which is includible in your gross income. However, the additional
10% income tax will not be imposed if the distribution is one of a scheduled
series of level payments to be made over your life or life expectancy or over
the joint lives or joint life expectancies of you and your beneficiary. Amounts
treated as distributions from the Roth IRA because of pledging the Roth IRA as
described below, or prohibited transactions as described below, will also be
considered premature distributions if they occur before you reach age 59 1/2
(assuming you are not disabled).
(5) PLEDGING THE ROTH IRA. If you pledge your Roth IRA as security for a
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<PAGE> 11
loan, the portion so pledged is treated as being distributed to you in that
year. In addition to any regular income tax that may be payable on the
distribution, the premature distribution penalty as discussed above may also be
applicable.
(6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your Roth IRA, your Roth IRA will lose its exemption from tax and you must
include the fair market value of your Roth IRA in your gross income for the year
during which the prohibited transaction occurred. In addition to any regular
income tax that may be payable, the premature distribution penalty as discussed
above may also be applicable.
(7) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. You should consult your
tax advisor with respect to the application of community property laws on estate
and gift tax issues relating to your Roth IRA.
(8) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of distributions
from your Roth IRA, if any, is subject to federal income tax withholding unless
you elect not to have withholding applied. If you elect not to have withholding
applied to taxable distributions from your IRA, or if insufficient federal
income tax is withheld from any distribution, you may be responsible for payment
of estimated taxes, as well as for penalties under the estimated tax rules, if
withholding and estimated tax payments were not sufficient. Additional
information regarding withholding and the necessary election forms will be
provided no later than at the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a contribution of cash or other assets from one retirement
program to another. There are two kinds of rollover contributions to an IRA. In
one, you contribute amounts distributed to you from one IRA to another IRA. With
the other type, you contribute amounts distributed to you from your employer's
qualified plan or 403(b) plan to an IRA. A rollover is an allowable IRA
contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. Your employer or former employer will give you the opportunity to roll over
the distribution directly from the plan to the IRA. If you elect, instead, to
receive the distribution, you must deposit it into the IRA within 60 days after
you receive it.
An "eligible rollover distribution" is any distribution from a qualified
plan that would be taxable other than (1) a distribution that is one of a series
of periodic payments for an employee's life or over a period of 10 years or
more, (2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
The proceeds of a Roth IRA may be rolled over only to another Roth IRA. A
Roth IRA may accept the proceeds of a tax-qualified plan or a traditional IRA,
but any taxable portion of such a rollover shall be subject to federal income
tax. Similarly, a Traditional IRA may be redesignated as a Roth IRA, with the
taxable portion of the converted IRA being subject to federal income tax at the
time of conversion. In the case of such a rollover or conversion during 1998,
the amount required to be included in income shall be spread ratably over four
years.
G. AMENDMENTS.
The Custodian of your Roth IRA may amend the agreements establishing your
Roth IRA at any time. The Custodian will comply with the amendment procedures
set forth in your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your Roth IRA is subject to market
fluctuation, the value of your Roth IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your Roth IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your Roth IRA, including current market values of investments.
Certain fees will be charged by the Custodian in connection with your Roth
IRA. Such fees are disclosed on the Custodian's fee schedule, a copy of which
has been provided to you. Upon thirty days' prior written notice, the Custodian
may substitute a new fee schedule. Any fees or other expenses incurred in
connection with your Roth IRA will be deducted from your Roth IRA (with
liquidation of Fund Shares, if necessary), or at the Custodian's option, such
fees or expenses may be billed to you directly.
For its services to the various funds, in The AIM Family of
Funds-Registered Trademark-, INVESCO Trust Company receives a custodian fee.
This fee is in addition to fees it receives for acting as Custodian under the
Roth IRA. INVESCO Trust Company and A I M Distributors, Inc., also will receive
additional fees for performing specific services with respect to the various
funds in the AIM Family of Funds. Any such fees will be fully disclosed to you.
Potential investors should obtain a copy of the current Prospectus relating to
the fund(s) selected for investment prior to making an investment. Also, copies
of the Statement of Additional Information relating to such fund(s) will be
provided upon your request to A I M Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give
the amount of contributions to the Roth IRA, the year to which each contribution
relates, and the total value of the Roth IRA as of the end of the year.
Information relating to contributions and distributions must be reported
annually to the Internal Revenue Service and to you. You must also file Form
5329 (Return for Individual Retirement Savings Arrangement) with the Internal
Revenue Service for each taxable year during which you are assessed any penalty
or tax as discussed in Part E above.
Further information about Roth IRAs can be obtained from any district
office of the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your Roth IRA. This is not a legal document. Your legal rights and
obligations are governed by the federal tax laws and regulations and your
Custodial Agreement and Adoption Agreement with the Custodian.
The Depositor has assigned the Roth IRA custodial account
______ dollars ($______) in cash.
The Depositor has assigned the Roth IRA custodial account
______ dollars ($______) in cash.
- --------------------------------------------------------------------------------
Depositor's signature Date
- --------------------------------------------------------------------------------
Custodian's signature Date
- --------------------------------------------------------------------------------
Witness
(Use only if signature of the Depositor or the Custodian is required to be
witnessed.)
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EXHIBIT 15(d)
EXHIBIT A
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A which may be amended from time to time by A I M Distributors, Inc.
("Distributors")to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between
Distributors, solely as agent for the Funds, and the undersigned authorized
dealer, defines the services to be provided by the authorized dealer for which
it is to receive payments pursuant to the Plan adopted by each of the Funds.
The Plan and the Agreement have been approved by a majority of the directors of
each of the Funds, including a majority of the directors who are not interested
persons of such Funds, and who have no direct or indirect financial interest in
the operation of the Plan or related agreements (the "Dis-interested
Directors"), by votes cast in person at a meeting called for the purpose of
voting on the Plan. Such approval included a determination that in the exercise
of their reasonable business judgement and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit such Fund and its
shareholders.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
Fund's shares, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares and providing such other services as the Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
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<PAGE> 2
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written notice. It will
be terminated by any act which terminates either the Selected Dealer
Agreement between your firm and us or the Fund's Distribution Plan, and in
any event, it shall terminate automatically in the event of its assignment
as that term is defined in the 1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so long
as you provide such services.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
11/97
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund B Shares 0.25 March 3, 1998
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor Multiflex Fund B Shares 0.25 March 3, 1998
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund B Shares 0.25 March 3, 1998
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 July 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
2/98
<PAGE> 4
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
2/98
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
is paid as an asset-based sales charge, as those terms are defined under
the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
2/98
<PAGE> 1
EXHIBIT 15(e)
EXHIBIT B
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
11/97
<PAGE> 2
7 In consideration of the services and facilities described herein, we
shall receive from the Company on behalf of the AIM Funds an annual service
fee, payable at such intervals as may be set forth in Schedule A hereto, of
a percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto, which may be amended from time to time by the Company.
We understand that this Agreement and the payment of such service fees has
been authorized and approved by the Boards of Directors/Trustees of the AIM
Funds, and is subject to limitations imposed by the National Association of
Securities Dealers, Inc. In cases where the Company has advanced payments
to us of the first year's fee for shares sold with a contingent deferred
sales charge, no payments will be made to us during the first year the
subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assignment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 100, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
11/97
<PAGE> 3
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund B Shares 0.25 March 3, 1998
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund B Shares 0.25 March 3, 1998
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund B Shares 0.25 March 3, 1998
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
2/98
<PAGE> 4
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ----------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
2/98
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
is paid as an asset-based sales charge, as those terms are defined under
the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
2/98
<PAGE> 1
EXHIBIT 15(f)
EXHIBIT C
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
This Variable Group Annuity Conractholder Service Agreement (the
"Agreement") has been adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") under a Distribution Plan adopted pursuant
to said Rule. This Agreement, being made between A I M Distributors, Inc.
("Distributors") and the authorized insurance company, sets forth the terms for
the provision of specialized services to holders of Group Annuity Contracts
(the "Contracts") issued by insurance company separate accounts to employers
for their pension, stock bonus or profit-sharing plans qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Plans"), where
amounts contributed under such plans are invested pursuant to the Contracts in
shares of one or more of the series portfolios of the AIM - managed mutual
funds (or designated classes of such funds) (the "Fund(s)") listed in Appendix
A, attached hereto, which may be amended from time to time by Distributors.
Distributors' role in these arrangements will be solely as agent for the Funds.
1. To the extent you provide specialized services to holders of
Contracts who have selected the Fund(s) for purposes of their Group Annuity
Contracts ("Contractholders") you will receive payment pursuant to the
distribution plan adopted by each of the Funds. Such services to Group
Contractholders may include, without limitation, some or all of the
following: answering inquiries regarding the Fund(s); performing
sub-accounting for Contractholders; establishing and maintaining
Contractholder accounts and records; processing and bunching purchase and
redemption transactions; providing periodic statements of Contract account
balances; forwarding such reports and notices to Contractholders relative
to the Fund(s) as we deem necessary; generally, facilitating communications
with Contractholders concerning investments in the Fund(s) on behalf of
Plan participants; and performing such other administrative services as we
deem to be necessary or desirable, to the extent permitted by applicable
statute, rule or regulation. You represent that you will accept a fee
hereunder only so long as you continue to provide personal services to
Contractholders.
2. Shares of the Fund(s) purchased by you will be registered in your
name and you may exercise all applicable rights of a holder of such Shares.
You agree to transmit to the Funds, in a timely manner, all purchase orders
and redemption requests and to forward to each of your Contractholders as
you deem necessary, periodic shareholder reports and other communications
received from the Funds.
3. You agree to wire to the Fund(s)' custodian bank, within three (3)
business days of the placing of a purchase order, federal funds in an
amount equal to the amount of all purchase orders placed by you on behalf
of your Contractholders and accepted by the Funds (net of any redemption
orders placed by you on behalf of your Contractholders).
C-1
<PAGE> 2
4. You shall provide such facilities and personnel (which may be all
or any part of the facilities currently used in your business, or all or
any personnel employed by you) as may be necessary or beneficial in
carrying out the purposes of this Agreement.
5. Except as may be provided in a separate written agreement between
Distributors and you, neither you nor any of your employees or agents are
authorized to assist in the distribution of any shares of the Fund(s) to
the public or to make any representations to Contractholders concerning the
Fund(s) except those contained in the then current prospectus applicable to
the Fund(s). Neither the Funds, A I M Advisors, Inc. ("Advisors"),
Distributors nor any of their affiliates will be a party, nor will they be
represented as a party, to any Group Annuity Contract agreement between you
and the Contractholders nor shall the Funds, Advisors, Distributors or any
of their affiliates participate, directly or indirectly, in any
compensation that you may receive from Contractholders and their Plans'
participants.
6. In consideration of the services and facilities described herein,
you shall receive an annual fee, payable quarterly, as set forth in
Appendix A, of the aggregate average net asset value of shares of the
Fund(s) owned by you during each quarterly period for the benefit of
Contractholders' Plans' participants. You understand that this Agreement
and the payment of such distribution fees have been authorized and approved
by the Boards of Directors/Trustees of the Fund(s). You further understand
that this Agreement and the fees payable hereunder are subject to
limitations imposed by applicable rules of the National Association of
Securities Dealers, Inc.
7. The Funds reserve the right, at their discretion and without
notice, to suspend the sale of their shares or to withdraw the sale of
their shares.
8. This Agreement may be amended at any time without your consent by
mailing a copy of an amendment to you at the address set forth below. Such
amendment shall become effective on the date set forth in such amendment
unless you terminate this Agreement as set forth below within thirty (30)
days of your receipt of such amendment.
9. This Agreement may be terminated at any time by us on not less than
60 days' written notice to you at your principal place of business. You
may terminate this Agreement on 60 days' written notice addressed to us at
our principal place of business. We may also terminate this Agreement for
cause on violation by you of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to you of
such termination. Our failure to terminate for any cause shall not
constitute a waiver of our right to terminate at a later date for any such
cause.
This Agreement may be terminated with respect to any Fund at any
time without payment of any penalty by the vote of a majority of the
directors/trustees of such Fund who are Dis-interested Directors/Trustees,
as defined in the 1940 Act, or by a vote of a majority of the Fund's
outstanding shares, on sixty (60) days' written notice. It will be
terminated by any act which terminates either the Fund's Distribution
Agreement with us, the Selected Dealer Agreement between your firm and us
or the Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment as that term is defined in the
1940 Act.
C-2
<PAGE> 3
10. All communications to us shall be sent to 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Any notice to you shall be duly given if
mailed, telegraphed or sent by facsimile to you at the address shown on
this Agreement.
11. This Agreement shall become effective as of the date when it is
executed and dated below by us. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date: By:
------------------- ----------------------------
Signature
----------------------------
Print Name
The undersigned agrees to abide by the foregoing terms and conditions.
Date:
------------------- ----------------------------
(Firm Name)
----------------------------
(Address)
----------------------------
(City) / (State) / (County)
By:
-------------------------
Name:
-----------------------
Title:
-----------------------
C-3
<PAGE> 4
APPENDIX A
TO
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
Fund Fee Rate*
- ---- ---------
<S> <C>
AIM Advisor Funds, Inc. (Class A Shares Only)
- ---------------------------------------------
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A Shares Only)
- --------------------------------------------
AIM Aggressive Growth Fund** .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A Shares Only)
- -------------------------------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Growth Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc. (Class A Shares Only)
- ---------------------------------------------------
AIM Asian Growth Fund .25%
AIM European Development Fund .25%
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds (Class A Shares)
- ------------------------------------------------
AIM Limited Maturity Treasury Fund .15%
</TABLE>
*Frequency of Payments: Quarterly
**AIM Aggressive Growth Fund is currently closed to new investors.
C-4
<PAGE> 1
EXHIBIT 15(g)
EXHIBIT E
A I M DISTRIBUTORS, INC.
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
(BROKERS FOR BANK TRUST DEPARTMENTS)
_____________, 19___
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we shall
accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic
<PAGE> 2
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
shareholder reports and other communications received from AIM
Distributors by us relating to shares of the Funds owned by our clients.
AIM Distributors, on behalf of the Funds, agrees to pay all out-of-pocket
expenses actually incurred by us in connection with the transfer by us of
such proxy statements and reports to our clients as required under
applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
<PAGE> 3
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause shall
not constitute a waiver of AIM Distributors's right to terminate at a
later date for any such cause. This Agreement may be terminated with
respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates the Selected
Dealer Agreement between us and AIM Distributors or a Fund's
Distribution Plan, and in any event, shall terminate automatically in
the event of its assignment by us, the term "assignment" for this
purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors from
any obligations either may have under any other agreements between us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------
(Firm Name)
-----------------------------------
(Address)
-----------------------------------
City/State/Zip/County
By:
----------------------------
Name:
------------------------------
Title:
----------------------------
Dated:
-----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Dated:
----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
*AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
- ---------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE]
A I M Distributors, Inc. (BANK TRUST DEPARTMENTS)
_________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 7
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on
behalf of the Funds, agrees to pay all out-of- pocket expenses actually
incurred by us in connection with the transfer by us of such proxy
statements and reports to our clients as required under applicable laws
or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for
<PAGE> 8
Shareholder Service Agreement Page 3
(Bank Trust Departments)
any such cause. This Agreement may be terminated with respect to any
Fund at any time by the vote of a majority of the directors or trustees
of such Fund who are disinterested directors or by a vote of a majority
of the Fund's outstanding shares, on not less than 60 days' written
notice to us at our principal place of business. This Agreement will be
terminated by any act which terminates the Agreement for Purchase of
Shares of The AIM Family of Funds--Registered Trademark-- between us and
AIM Distributors or a Fund's Distribution Plan, and in any event, it
shall terminate automatically in the event of its assignment by us, the
term "assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM Family
of Funds--Registered Trademark-- through Bank Trust Departments
constitute the entire agreement between us and AIM Distributors and
supersede all prior oral or written agreements between the parties
hereto. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute the same
instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
----------------------------------
(Firm Name)
----------------------------------
(Address)
----------------------------------
City/State/Zip/County
By:
---------------------------
Name:
-----------------------------
Title:
---------------------------
Dated:
----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Dated:
---------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund*
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
- ----------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 1
EXHIBIT 16
AIM ADVISOR FLEX FUND
AIM ADVISOR INTERNATIONAL VALUE FUND
AIM ADVISOR LARGE CAP FUND
AIM ADVISOR MULTIFLEX FUND
AIM ADVISOR REAL ESTATE FUND
SCHEDULE OF PERFORMANCE QUOTATIONS
Average Annual Total Return (Pursuant to SEC Standardized Formula)
n
SEC Formula: P(1 + T) = ERV
Where P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
1, 5, or 10 year periods at the end of the 1,
5, or 10 year periods (or fractional portion
thereof)
Cumulative Total Return (Pursuant to Non-Standardized Formula)
n
P(1 + V) = ERV
Where P = a hypothetical initial payment of $1,000
V = cumulative total return assuming payment of
all of, a stated portion of, or none of,
the applicable maximum sales load at the
beginning of the stated period
n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment at the end of the stated
period
30-Day Yield Quotation (Pursuant to SEC Standardized Formula)
6
YIELD = 2[(a-b + 1) -1]
---
cd
Where a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements or waivers)
c = average daily number of shares outstanding
during period that were entitled to receive
dividends
d = maximum offering price per share on the last
day of the period
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR FLEX
FUND CLASS A SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUNDS, INC.
<SERIES>
<NUMBER>1
<NAME> AIM ADVISOR FLEX FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 432,776,171
<INVESTMENTS-AT-VALUE> 626,725,425
<RECEIVABLES> 4,553,638
<ASSETS-OTHER> 17,279
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 631,296,342
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,965,825
<TOTAL-LIABILITIES> 2,965,825
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 426,093,882
<SHARES-COMMON-STOCK> 31,826,871
<SHARES-COMMON-PRIOR> 29,462,972
<ACCUMULATED-NII-CURRENT> 197,107
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,090,275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 193,949,253
<NET-ASSETS> 628,330,517
<DIVIDEND-INCOME> 9,478,210
<INTEREST-INCOME> 11,975,969
<OTHER-INCOME> 0
<EXPENSES-NET> (12,405,228)
<NET-INVESTMENT-INCOME> 9,048,951
<REALIZED-GAINS-CURRENT> 23,883,293
<APPREC-INCREASE-CURRENT> 86,058,520
<NET-CHANGE-FROM-OPS> 118,990,764
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,921,653)
<DISTRIBUTIONS-OF-GAINS> (15,609,922)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,963,066
<NUMBER-OF-SHARES-REDEEMED> (4,761,432)
<SHARES-REINVESTED> 1,162,265
<NET-CHANGE-IN-ASSETS> 138,412,579
<ACCUMULATED-NII-PRIOR> 69,809
<ACCUMULATED-GAINS-PRIOR> (183,096)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,244,780
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,415,238
<AVERAGE-NET-ASSETS> 10,010,061
<PER-SHARE-NAV-BEGIN> 16.63
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 3.63
<PER-SHARE-DIVIDEND> (0.43)
<PER-SHARE-DISTRIBUTIONS> (0.50)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.74
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR FLEX
FUND CLASS C SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUNDS, INC.
<SERIES>
<NUMBER>2
<NAME> AIM ADVISOR FLEX FUND CLASS C SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 432,776,171
<INVESTMENTS-AT-VALUE> 626,725,425
<RECEIVABLES> 4,553,638
<ASSETS-OTHER> 17,279
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 631,296,342
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,965,825
<TOTAL-LIABILITIES> 2,965,825
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 426,093,882
<SHARES-COMMON-STOCK> 31,826,871
<SHARES-COMMON-PRIOR> 29,462,972
<ACCUMULATED-NII-CURRENT> 197,107
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,090,275
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 193,949,253
<NET-ASSETS> 628,330,517
<DIVIDEND-INCOME> 9,478,210
<INTEREST-INCOME> 11,975,969
<OTHER-INCOME> 0
<EXPENSES-NET> (12,405,228)
<NET-INVESTMENT-INCOME> 9,048,951
<REALIZED-GAINS-CURRENT> 23,883,293
<APPREC-INCREASE-CURRENT> 86,058,520
<NET-CHANGE-FROM-OPS> 118,990,764
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,921,653)
<DISTRIBUTIONS-OF-GAINS> (15,609,922)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,963,066
<NUMBER-OF-SHARES-REDEEMED> (4,761,432)
<SHARES-REINVESTED> 1,162,265
<NET-CHANGE-IN-ASSETS> 138,412,579
<ACCUMULATED-NII-PRIOR> 69,809
<ACCUMULATED-GAINS-PRIOR> (183,096)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,244,780
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,415,238
<AVERAGE-NET-ASSETS> 558,338,988
<PER-SHARE-NAV-BEGIN> 16.63
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 3.60
<PER-SHARE-DIVIDEND> (0.29)
<PER-SHARE-DISTRIBUTIONS> (0.50)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.74
<EXPENSE-RATIO> 2.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR
INTERNATIONAL VALUE FUND CLASS A SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUND, INC.
<SERIES>
<NUMBER>3
<NAME> AIM ADVISOR INTERNATIONAL VALUE FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 86,614,500
<INVESTMENTS-AT-VALUE> 101,673,192
<RECEIVABLES> 514,410
<ASSETS-OTHER> 2,009
<OTHER-ITEMS-ASSETS> 5,146
<TOTAL-ASSETS> 102,194,757
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 588,628
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<NUMBER-OF-SHARES-REDEEMED> (887,775)
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<NET-CHANGE-IN-ASSETS> 49,690,153
<ACCUMULATED-NII-PRIOR> (48,513)
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR
INTERNATIONAL VALUE FUND CLASS C SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
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<SERIES>
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<NAME> AIM ADVISOR INTERNATIONAL VALUE FUND CLASS C SHARES
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<PERIOD-TYPE> YEAR
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<PERIOD-END> DEC-31-1997
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<NUMBER-OF-SHARES-SOLD> 3,757,368
<NUMBER-OF-SHARES-REDEEMED> (887,775)
<SHARES-REINVESTED> 65,146
<NET-CHANGE-IN-ASSETS> 49,690,153
<ACCUMULATED-NII-PRIOR> (48,513)
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR LARGE
CAP VALUE FUND CLASS A SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUND, INC.
<SERIES>
<NUMBER>5
<NAME> AIM ADVISOR LARGE CAP VALUE FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> YEAR
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<REALIZED-GAINS-CURRENT> 17,674,268
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<NET-CHANGE-FROM-OPS> 41,744,193
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<NUMBER-OF-SHARES-SOLD> 943,886
<NUMBER-OF-SHARES-REDEEMED> (962,273)
<SHARES-REINVESTED> 699,257
<NET-CHANGE-IN-ASSETS> 39,812,081
<ACCUMULATED-NII-PRIOR> (22,215)
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR LARGE
CAP VALUE FUND CLASS C SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUND, INC.
<SERIES>
<NUMBER>6
<NAME> AIM ADVISOR LARGE CAP FUND CLASS C SHARES
<S> <C>
<PERIOD-TYPE> YEAR
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<NUMBER-OF-SHARES-REDEEMED> (962,273)
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<NET-CHANGE-IN-ASSETS> 39,812,081
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR
MULTIFLEX FUND CLASS A SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUND, INC.
<SERIES>
<NUMBER>7
<NAME> AIM ADVISOR MULTIFLEX FUND CLASS A SHARES
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<ACCUM-APPREC-OR-DEPREC> 70,444,804
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<DIVIDEND-INCOME> 6,793,380
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<NUMBER-OF-SHARES-SOLD> 7,370,837
<NUMBER-OF-SHARES-REDEEMED> (2,781,887)
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<NET-CHANGE-IN-ASSETS> 119,026,802
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<GROSS-ADVISORY-FEES> 3,280,042
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR
MULTIFLEX FUND CLASS C SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUND, INC.
<SERIES>
<NUMBER>8
<NAME> AIM ADVISOR MULTIFLEX FUND CLASS C SHARES
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<PERIOD-TYPE> YEAR
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR REAL
ESTATE FUND CLASS A SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUND, INC.
<SERIES>
<NUMBER>9
<NAME> AIM ADVISOR REAL ESTATE FUND CLASS A SHARES
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<PERIOD-TYPE> YEAR
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM ADVISOR REAL
ESTATE FUND CLASS C SHARES DECEMBER 31, 1997 ANNUAL REPORT.
</LEGEND>
<CIK> 0000731273
<NAME> AIM ADVISOR FUND, INC.
<SERIES>
<NUMBER>10
<NAME> AIM ADVISOR REAL ESTATE FUND CLASS C SHARES
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