Sub-Item 77Q1(g)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is adopted as of this
30th day of March, 2010 by and among (i) each of the Xxx Xxxxxx open-end
registered investment companies identified on Exhibit A hereto (each a "Target
Entity") separately on behalf of its respective series identified on Exhibit A
hereto (each a "Target Fund"); (ii) Xxx Xxxxxx Asset Management ("VKAM"); (iii)
each of the registrants in the AIM Family of Funds identified on Exhibit A
hereto (each an "Acquiring Entity"), separately on behalf of its respective
series identified on Exhibit A hereto (each an "Acquiring Fund"); and (iv)
Invesco Advisers, Inc ("IAI").
WHEREAS, Xxxxxx Xxxxxxx entered into a definitive agreement dated
October 19, 2009 (the "Transaction Agreement") to sell substantially all of its
retail asset management business operating under both the Xxxxxx Xxxxxxx and Xxx
Xxxxxx brands to Invesco, Ltd. ("Invesco") (referred to herein as the
"MS/Invesco Transaction");
WHEREAS, the parties hereto intend for each Acquiring Fund and its
corresponding Target Fund (as set forth in Exhibit A hereto) to enter into a
transaction pursuant to which: (i) the Acquiring Fund will acquire the assets
and assume the liabilities of the Target Fund in exchange for the corresponding
class or classes of shares (as applicable) of the Acquiring Fund identified on
Exhibit A of equal value to the net assets of the Target Fund being acquired,
and (ii) the Target Fund will distribute such shares of the Acquiring Fund to
shareholders of the corresponding class of the Target Fund, in connection with
the liquidation of the Target Fund, all upon the terms and conditions
hereinafter set forth in this Agreement (each such transaction, a
"Reorganization" and collectively, the "Reorganizations");
WHEREAS, each Target Entity and each Acquiring Entity is an open-end,
registered investment company of the management type; and
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation with respect to each Reorganization within the
meaning of Section 368(a)(1) of the United States Internal Revenue Code of 1986,
as amended ("Code").
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. DESCRIPTION OF THE REORGANIZATIONS
1.1. It is the intention of the parties hereto that each Reorganization
described herein shall be conducted separately of the other, and a party that is
not a party to a Reorganization shall incur no obligations, duties or
liabilities with respect to such Reorganization by reason of being a party to
this Agreement. If one Reorganization should fail to be consummated, such
failure shall not affect the other Reorganization in any way.
1.2. Provided that all conditions precedent to a Reorganization set forth
herein have been satisfied as of the Closing Date (as defined in Section 3.1),
and based on the representations
and warranties each party provides to the others, each Target Entity and its
corresponding Acquiring Entity agree to take the following steps with respect to
their Reorganization, the parties to which and classes of shares to be issued in
connection with which are set forth in Exhibit A:
(a) The Target Fund shall transfer all of its Assets, as defined and
set forth in Section 1.2(b), to the Acquiring Fund, and the Acquiring Fund
in exchange therefor shall assume the Liabilities, as defined and set forth
in Section 1.2(c), and deliver to the Target Fund the number of full and
fractional Acquiring Fund shares determined in the manner set forth in
Section 2. At least fifteen business days prior to the Valuation Date (as
defined in Section 2.1(a)), the Target Entity will provide the Acquiring
Entity with a schedule of the portfolio securities and other assets of each
Target Fund. At least ten business days prior to the Valuation Date, the
Acquiring Entity will advise the Target Entity of any investments of a
Target Fund shown on the Target Fund's schedule provided pursuant to the
preceding sentence that the Acquiring Fund would not be permitted to hold
(i) under its investment objective, principal investment strategies or
investment restrictions; (ii) under applicable law or regulation; or (iii)
because the transfer of such investments would result in material
operational or administrative difficulties to the Acquiring Entity in
connection with facilitating the orderly transition of the Target Fund's
Assets. Under such circumstances, to the extent practicable, the Target
Entity will, if requested by the Acquiring Entity and, to the extent
permissible and consistent with its own investment objectives and policies
and the fiduciary duties of the investment adviser responsible for the
portfolio management of the Target Fund, dispose of such investments prior
to the Valuation Date. In addition, if it is determined that the portfolios
of an Acquiring Fund and a Target Fund, when aggregated, would contain
investments exceeding certain percentage limitations to which an Acquiring
Fund is or will be subject with respect to such investments, the Target
Entity will, if requested by the Acquiring Entity and, to the extent
permissible and consistent with its own investment objectives and policies
and the fiduciary duties of the investment adviser responsible for the
portfolio management of the Target Fund, dispose of and/or reinvest a
sufficient amount of such investments as may be necessary to avoid
violating such limitations as of the Closing Time (as defined in Section
3.1). Notwithstanding the foregoing, nothing herein will require a Target
Fund to dispose of any portfolio securities or other assets, if, in the
reasonable judgment of the Target Entity's Board of Trustees or Target
Fund's investment adviser, such disposition would adversely affect the
tax-free nature of the Reorganization for federal income tax purposes or
would otherwise not be in the best interests of a Target Fund. In addition,
in order to facilitate the transfer of Assets at the Closing Time, the
investment adviser to an Acquiring Fund may request in writing that the
investment adviser to the Target Fund use its commercially reasonable best
efforts, subject to its fiduciary duty, to limit or cease portfolio trading
on behalf of a Target Fund for a period of up to three days prior to the
Valuation Day. The Target Entity agrees that it will accommodate such
requests to the extent such trading restrictions are consistent with the
investment objectives, policies and strategies of the Target Fund and
consistent with fulfilling the fiduciary obligations of the Target Fund's
investment adviser.
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(b) The assets of the Target Fund to be transferred to the Acquiring
Fund shall consist of all assets and property, including, without
limitation, all cash, securities, commodities and futures interests, claims
(whether absolute or contingent, known or unknown, accrued or unaccrued and
including, without limitation, any interest in pending or future legal
claims in connection with past or present portfolio holdings, whether in
the form of class action claims, opt-out or other direct litigation claims,
or regulator or government-established investor recovery fund claims, and
any and all resulting recoveries) and dividends or interest receivable that
are owned by the Target Fund and any deferred or prepaid expenses shown as
an asset on the books of the Target Fund on the Closing Date, except for
cash, bank deposits or cash equivalent securities in an amount necessary to
pay the estimated costs of extinguishing any Excluded Liabilities (as
defined in Section 1.2(c)) and cash in an amount necessary to pay any
distributions pursuant to Section 7.1(g) (collectively, "Assets").
(c) The Acquiring Fund shall assume all of the liabilities of the
Target Fund, whether accrued or contingent, known or unknown, existing at
the Closing Date (as defined in Section 3.1), except for the Target Fund's
Excluded Liabilities (as defined below), if any, pursuant to this Agreement
(collectively, with respect to each Target Fund separately, "Liabilities").
Each Target Fund will use its best efforts to discharge all known
Liabilities prior to or at the Valuation Date (as defined in Section
2.1(a)) to the extent possible and consistent with its own investment
objectives and policies and normal business operations. If prior to the
Closing Date the Acquiring Entity identifies a liability that the Acquiring
Entity and the Target Entity mutually agree should not be assumed by the
Acquiring Fund, such liability shall be excluded from the definition of
Liabilities hereunder and shall be listed on a Schedule of Excluded
Liabilities to be signed by the Acquiring Entity and the Target Entity at
Closing and attached to this Agreement as Schedule 1.2(c) (the "Excluded
Liabilities"). The Assets minus the Liabilities of a Target Fund shall be
referred to herein as the Target Fund's "Net Assets."
(d) As soon as is reasonably practicable after the Closing, the Target
Fund will distribute to its shareholders of record ("Target Fund
Shareholders") the shares of the Acquiring Fund of the corresponding class
received by the Target Fund pursuant to Section 1.2(a), as set forth in
Exhibit A, on a pro rata basis within that class, and will as promptly as
practicable completely liquidate and dissolve. Such distribution and
liquidation will be accomplished, with respect to each class of the Target
Fund's shares, by the transfer of the Acquiring Fund shares of the
corresponding class then credited to the account of the Target Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Target Fund Shareholders of the class.
The aggregate net asset value of the Acquiring Fund shares to be so
credited to the corresponding Target Fund Shareholders shall be equal to
the aggregate net asset value of the corresponding Target Fund's shares
owned by the Target Fund Shareholders on the Valuation Date. The Acquiring
Fund shall not issue certificates representing shares in connection with
such exchange.
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(e) Ownership of Acquiring Fund shares will be shown on its books, as
such are maintained by the Acquiring Fund's transfer agent.
2. VALUATION
2.1. With respect to each Reorganization:
(a) The value of the Target Fund's Assets shall be the value of such
Assets computed as of immediately after the close of regular trading on the
New York Stock Exchange ("NYSE"), which shall reflect the declaration of
any dividends, on the business day next preceding the Closing Date (the
"Valuation Date"), using the Target Fund's valuation procedures established
by the Target Entity's Board of Trustees, which shall be provided to the
Acquiring Fund prior to the Valuation Date.
(b) The net asset value per share of each class of the Acquiring Fund
shares issued in connection with the Reorganization shall be the net asset
value per share of each class computed on the Valuation Date, using the
Acquiring Fund's valuation procedures established by the Acquiring Entity's
Board of Trustees.
(c) The number of shares issued of each class of the Acquiring Fund
(including fractional shares, if any, rounded to the nearest thousandth) in
exchange for the Target Fund's Net Assets shall be determined by dividing
the value of the Net Assets of the Target Fund attributable to each class
of Target Fund shares by the net asset value per share of the corresponding
share class of the Acquiring Fund.
(d) It is understood and agreed that the net asset value of the Target
Funds shall be based on the amortized cost valuation procedures that have
been adopted by the Board of Trustees of the applicable Target Entity on
behalf of the Target Fund. If for any period from the date of this
Agreement up to and including the Valuation Date, the market value per
share of a Target Fund or an Acquiring Fund falls below $0.9985, such Fund
shall adhere to its amortized cost valuation procedures, including but not
limited to providing any required notices to the Fund's Board of Trustees
(a copy of which shall be simultaneously provided to the other Fund's Board
of Trustees and investment adviser). In addition, to the extent that on any
of the three business days prior to the Valuation Date or on the Valuation
Date, (i) a Target Fund's amortized cost per share net asset value (as
computed in accordance with the policies and procedures established by the
Target Entity) differs from the Acquiring Fund's amortized cost per share
net asset value (as computed in accordance with the policies and procedures
established by the Acquiring Entity) by more than $0.0010; (ii) a Target
Fund's market value per share net asset value (as computed in accordance
with the policies and procedures established by the Target Entity) differs
from the Acquiring Fund's market value per share net asset value (as
computed in accordance with the policies and procedures established by the
Acquiring Entity) by more than $0.0010; (iii) the market value per share of
a Target Fund (as computed in accordance with the policies and procedures
established by the Target Entity) or Acquiring Fund (as computed in
accordance with the policies and procedures established by the Acquiring
Entity) shall fall below $0.9985, or (iv) it is determined that
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the market value per share of the combined fund on a pro forma basis would
be $0.9985 or less (as computed in accordance with the policies and
procedures established by the Acquiring Entity), the parties shall consult
on the actions to be taken with respect to the Reorganization and either of
the Target Fund or the Acquiring Fund may postpone the Valuation Date and
Closing Date until such time that none of the conditions stated in
(i)--(iv) above exist or as the parties otherwise agree.
(e) All computations of value shall be made by the Target Fund's
designated recordkeeping agent using the valuation procedures described in
this Section 2 and shall be subject to review by the Acquiring Fund's
recordkeeping agent and, if requested by either the Target Entity or the
Acquiring Entity, by the independent registered public accountant of the
requesting party.
3. CLOSING AND CLOSING DATE
3.1. Each Reorganization shall close on June 1, 2010 or such other date as
the parties may agree with respect to any or all Reorganizations (the "Closing
Date"). All acts taking place at the closing of a Reorganization ("Closing")
shall be deemed to take place simultaneously as of immediately prior to the
opening of regular trading on the NYSE on the Closing Date of that
Reorganization unless otherwise agreed to by the parties (the "Closing Time").
The Closing of each Reorganization shall be held in person, by facsimile, email
or such other communication means as the parties may reasonably agree.
3.2. With respect to each Reorganization:
(a) The Target Fund's portfolio securities, investments, or other
assets that are represented by a certificate or other written instrument
shall be transferred and delivered by the Target Fund as of the Closing
Date to the custodian for the Acquiring Fund (the "Acquiring Fund's
Custodian") for the account of the Acquiring Fund duly endorsed in proper
form for transfer and in such condition as to constitute good delivery
thereof. The Target Fund shall direct the Target Custodian (the "Target
Custodian") to deliver to the Acquiring Fund's Custodian as of the Closing
Date by book entry, in accordance with the customary practices of the
Target Custodian and any securities depository (as defined in Rule 17f-4
under the Investment Company Act of 1940, as amended (the "1940 Act")) in
which the Assets are deposited, the Target Fund's portfolio securities and
instruments so held. The cash to be transferred by a Target Fund shall be
delivered to the Acquiring Fund's Custodian by wire transfer of federal
funds or other appropriate means on the Closing Date. If the Target Fund is
unable to make such delivery on the Closing Date in the manner contemplated
by this Section for the reason that any of such securities or other
investments purchased prior to the Closing Date have not yet been delivered
to the Target Fund or its broker, then the Acquiring Fund may, in its sole
discretion, waive the delivery requirements of this Section with respect to
said undelivered securities or other investments if the Target Fund has, by
or on the Closing Date, delivered to the Acquiring Fund or its Custodian
executed copies of an agreement of assignment and escrow and due bills
executed on behalf of said broker or brokers, together with such other
documents as
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may be required by the Acquiring Fund or its Custodian, such as brokers'
confirmation slips.
(b) The Target Entity shall direct the Target Custodian for each
Target Fund to deliver, at the Closing, a certificate of an authorized
officer stating that (i) except as permitted by Section 3.2(a), the Assets
have been delivered in proper form to the Acquiring Fund no later than the
Closing Time on the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets, including all applicable
Federal, state and foreign stock transfer stamps, if any, have been paid or
provision for payment has been made.
(c) At such time prior to the Closing Date as the parties mutually
agree, the Target Fund shall provide (i) instructions and related
information to the Acquiring Fund or its transfer agent with respect to the
Target Fund Shareholders, including names, addresses, dividend reinvestment
elections and tax withholding status of the Target Fund Shareholders as of
the date agreed upon (such information to be updated as of the Closing
Date, as necessary) and (ii) the information and documentation maintained
by the Target Fund or its agents relating to the identification and
verification of the Target Fund Shareholders under the USA PATRIOT ACT and
other applicable anti-money laundering laws, rules and regulations (the
"AML Documentation") and such other information as the Acquiring Fund may
reasonably request. The Acquiring Fund and its transfer agent shall have no
obligation to inquire as to the validity, propriety or correctness of any
such instruction, information or documentation, but shall, in each case,
assume that such instruction, information or documentation is valid,
proper, correct and complete.
(d) The Target Entity shall direct each applicable transfer agent for
a Target Fund (the "Target Transfer Agent") to deliver to the Acquiring
Fund at the Closing a certificate of an authorized officer stating that its
records, as provided to the Acquiring Entity, contain the names and
addresses of the Target Fund Shareholders and the number of outstanding
shares of each class owned by each such shareholder immediately prior to
the Closing. The Acquiring Fund shall issue and deliver to the Secretary of
the Target Fund a confirmation evidencing the Acquiring Fund shares to be
credited on the Closing Date, or provide other evidence satisfactory to the
Target Entity that such Acquiring Fund shares have been credited to the
Target Fund Shareholders' accounts on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale,
checks, assignments, certificates, if any, receipts or other documents as
such other party or its counsel may reasonably request.
(e) In the event that on the Valuation Date or the Closing Date (a)
the NYSE or another primary trading market for portfolio securities of the
Target Fund (each, an "Exchange") shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading
on such Exchange or elsewhere shall be disrupted so that, in the judgment
of the Board of Trustees of the Acquiring Entity or the Target Entity or
the authorized officers of either of such entities, accurate appraisal of
the value of the net assets of the Acquiring Fund or the Target Fund,
respectively, is impracticable, the
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Closing Date shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have been
restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. Each Target Entity, on behalf of itself or, where applicable a Target
Fund, represents and warrants to its corresponding Acquiring Entity and
Acquiring Fund as follows:
(a) The Target Fund is duly organized as a series of the Target
Entity, which is a statutory trust duly formed, validly existing, and in
good standing under the laws of the State of Delaware with power under the
Amended and Restated Agreement and Declaration of Trust or Second Amended
and Restated Agreement and Declaration of Trust and by-laws ("Governing
Documents"), to own all of its Assets, to carry on its business as it is
now being conducted and to enter into this Agreement and perform its
obligations hereunder;
(b) The Target Entity is a registered investment company classified as
a management company of the open-end type, and its registration with the
U.S. Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act, and the registration of the shares of the
Target Fund under the Securities Act of 1933, as amended ("1933 Act"), are
in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority, or the Financial Industry Regulatory Authority
("FINRA") is required for the consummation by the Target Fund and the
Target Entity of the transactions contemplated herein, except such as have
been obtained or will be obtained at or prior to the Closing Date under the
1933 Act, the Securities Exchange Act of 1934, as amended ("1934 Act"), the
1940 Act and state securities laws;
(d) The current prospectus and statement of additional information of
the Target Fund and each prospectus and statement of additional information
of the Target Fund used at all times between October 1, 2001 and the date
of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the Commission thereunder and
does not or did not at the time of its use include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) The Target Fund is in compliance in all material respects with the
applicable investment policies and restrictions set forth in the Target
Fund's prospectus and statement of additional information and the value of
the net assets of the Target Fund is determined using portfolio valuation
methods that comply in all material respects with the requirements of the
1940 Act and the rules and regulations of the Commission thereunder and the
pricing and valuation policies of the Target Fund and there have been no
material miscalculations of the net asset value of the Target Fund or the
net asset value
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per share of the Target Fund (or any class thereof) during the twelve-month
period preceding the date hereof which would have a material adverse effect
on such Target Fund or its properties or assets;
(f) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Acquiring Fund, the Target Fund will on the Closing Date
have good title to the Assets and full right, power, and authority to sell,
assign, transfer and deliver such Assets free of adverse claims, including
any liens or other encumbrances, and upon delivery and payment for such
Assets, the Acquiring Fund will acquire good title thereto, free of adverse
claims and subject to no restrictions on the full transfer thereof,
including, without limitation, such restrictions as might arise under the
1933 Act;
(g) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Acquiring Fund, the Target Fund is not engaged currently,
and the execution, delivery and performance of this Agreement will not
result, in (i) a material violation of the Target Entity's Governing
Documents or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Target Fund or the Target Entity is a party
or by which it is bound, or (ii) the acceleration of any obligation, or the
imposition of any lien, encumbrance, penalty or additional fee under any
agreement, indenture, instrument, contract, lease, judgment or decree to
which the Target Fund or Target Entity is a party or by which it is bound;
(h) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Acquiring Fund, all material contracts or other
commitments of the Target Fund (other than this Agreement and certain
investment contracts, including swap agreements, options, futures and
forward contracts) will terminate with respect to the Target Fund without
liability to the Target Fund or may otherwise be assigned to the Acquiring
Fund without the payment of any fee (penalty or otherwise) or acceleration
of any obligations of the Target Fund on or prior to the Closing Date;
(i) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Acquiring Fund, no litigation or administrative proceeding
or investigation of or before any court, tribunal, arbitrator, governmental
body or FINRA is presently pending or, to the Target Fund's knowledge,
threatened against the Target Fund that, if adversely determined, would
materially and adversely affect the Target Fund's financial condition or
the conduct of its business. The Target Fund and the Target Entity, without
any special investigation or inquiry, know of no facts that might form the
basis for the institution of such proceedings and neither the Target Entity
nor the Target Fund is a party to or subject to the provisions of any
order, decree or judgment of any court, governmental body or FINRA that
materially and adversely affects its business or its ability to consummate
the transactions herein contemplated;
(j) The financial statements of the Target Fund for the Target Fund's
most recently completed fiscal year have been audited by the independent
registered public accounting firm identified in the Target Fund's
prospectus or statement of additional
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information included in the Target Fund's registration statement on Form
N-1A (the "Prospectus" and "Statement of Additional Information"). Such
statements, as well as the unaudited, semi-annual financial statements for
the semi-annual period next succeeding the Target Fund's most recently
completed fiscal year, if any, were prepared in accordance with accounting
principles generally accepted in the United States of America ("GAAP")
consistently applied, and such statements (copies of which have been
furnished or made available to the Acquiring Fund) present fairly, in all
material respects, the financial condition of the Target Fund as of such
date in accordance with GAAP, and there are no known contingent liabilities
of the Target Fund required to be reflected on a balance sheet (including
the notes thereto) in accordance with GAAP as of such date not disclosed
therein;
(k) Since the last day of the Target Fund's most recently completed
fiscal year, there has not been any material adverse change in the Target
Fund's financial condition, assets, liabilities or business, other than
changes occurring in the ordinary course of business, except as otherwise
disclosed to and accepted by the Acquiring Fund in writing. For the
purposes of this subparagraph, a decline in net asset value due to declines
in market values of securities held by the Target Fund (except as provided
in Section 2.1(d)), the redemption of the Target Fund's shares by
shareholders of the Target Fund or the discharge of the Target Fund's
ordinary course liabilities shall not constitute a material adverse change;
(l) On the Closing Date, all material Returns (as defined below) of
the Target Fund required by law to have been filed by such date (including
any extensions) shall have been filed and are or will be true, correct and
complete in all material respects, and all Taxes (as defined below) shown
as due or claimed to be due by any government entity shall have been paid
or provision has been made for the payment thereof. To the Target Fund's
knowledge, no such Return is currently under audit by any Federal, state,
local or foreign Tax authority; no assessment has been asserted with
respect to such Returns; there are no levies, liens or other encumbrances
on the Target Fund or its assets resulting from the non-payment of any
Taxes; no waivers of the time to assess any such Taxes are outstanding nor
are any written requests for such waivers pending; and adequate provision
has been made in the Target Fund financial statements for all Taxes in
respect of all periods ended on or before the date of such financial
statements. As used in this Agreement, "Tax" or "Taxes" means (i) any tax,
governmental fee or other like assessment or charge of any kind whatsoever
(including, but not limited to, withholding on amounts paid to or by any
person), together with any interest, penalty, addition to tax or additional
amount imposed by any governmental authority (domestic or foreign)
responsible for the imposition of any such tax. "Return" means reports,
returns, information returns, elections, agreements, declarations, or other
documents of any nature or kind (including any attached schedules,
supplements and additional or supporting material) filed or required to be
filed with respect to Taxes, including any claim for refund, amended return
or declaration of estimated Taxes (and including any amendments with
respect thereto);
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(m) The Target Fund has elected to be a regulated investment company
under Subchapter M of the Code and is a fund that is treated as a separate
corporation under Section 851(g) of the Code. The Target Fund has qualified
for treatment as a regulated investment company for each taxable year since
inception that has ended prior to the Closing Date and will have satisfied
the requirements of Part I of Subchapter M of the Code to maintain such
qualification for the period beginning on the first day of its current
taxable year and ending on the Closing Date. In order to (i) ensure
continued qualification of the Target Fund for treatment as a "regulated
investment company" for tax purposes and (ii) eliminate any tax liability
of the Target Fund arising by reason of undistributed investment company
taxable income or net capital gain, the Target Fund, will declare on or
prior to the Valuation Date to the shareholders of Target Fund a dividend
or dividends that, together with all previous such dividends, shall have
the effect of distributing (A) all of Target Fund's investment company
taxable income (determined without regard to any deductions for dividends
paid) for the taxable year ended prior to the Closing Date and
substantially all of such investment company taxable income for the short
taxable year beginning on the first day of its current taxable year and
ending on the Closing Date and (B) all of Target Fund's net capital gain
recognized in its taxable year ended prior to the Closing Date and
substantially all of any such net capital gain recognized in such short
taxable year (in each case after reduction for any capital loss carryover);
(n) All issued and outstanding shares of the Target Fund are, and on
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Target Entity and, in every state where
offered or sold, such offers and sales have been in compliance in all
material respects with applicable registration and/or notice requirements
of the 1933 Act and state and District of Columbia securities laws. All of
the issued and outstanding shares of the Target Fund will, at the time of
Closing, be held by the persons and in the amounts set forth in the records
of the Target Transfer Agent, on behalf of the Target Fund. The Target Fund
does not have and will not have outstanding as of the Closing Date any
options, warrants or other rights to subscribe for or purchase any of the
shares of the Target Fund, nor is there outstanding any security
convertible into any of the Target Fund's shares, except for the automatic
conversion right of holders of Class B shares, as applicable, of the Target
Fund to convert to Class A shares in accordance with the terms set forth in
the Target Fund's Prospectus and Statement of Additional Information and
Governing Documents;
(o) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the Board of Trustees of the Target Entity,
on behalf of the Target Fund, and subject to the approval of the
shareholders of the Target Fund, and the due authorization, execution and
delivery of this Agreement by the other parties hereto, this Agreement will
constitute a valid and binding obligation of the Target Fund, enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
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(p) As of the date of this Agreement or within a certain time
thereafter as mutually agreed by the parties, the Target Fund has provided
the Acquiring Fund with all information relating to the Target Fund
reasonably necessary for the preparation of the N-14 Registration Statement
(as defined in Section 5.1(b) hereof), in compliance with the 1933 Act, the
1934 Act and the 1940 Act in connection with the meeting of shareholders of
the Target Fund to approve this Agreement and the transactions contemplated
hereby. As of the effective date of the N-14 Registration Statement, the
date of the meeting of shareholders of the Target Fund and the Closing
Date, such information provided by any Target Fund will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading; provided, however, that the representations and warranties in
this subparagraph shall not apply to statements in or omissions from the
N-14 Registration Statement made in reasonable reliance upon and in
conformity with information that was furnished by the Acquiring Fund for
use therein;
(q) The books and records of the Target Fund are true and correct in
all material respects and contain no material omissions with respect to the
information required to be maintained under laws, rules and regulations
applicable to the Target Fund;
(r) The Target Entity is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code; and
(s) The Target Fund has no unamortized or unpaid organizational fees
or expenses.
4.2. Each Acquiring Entity, on behalf of itself or, where applicable, an
Acquiring Fund, represents and warrants to its corresponding Target Entity and
Target Fund as follows:
(a) The Acquiring Fund is duly organized as a series of the Acquiring
Entity, which is a statutory trust duly formed, validly existing, and in
good standing under the laws of the State of Delaware, with power under its
Amended and Restated Agreement and Declaration of Trust, as amended (the
"Agreement and Declaration of Trust") and by-laws to own all of its
properties and assets and to carry on its business as it is now being
conducted, and to enter into this Agreement and perform its obligations
hereunder;
(b) The Acquiring Entity is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration
of the shares of the Acquiring Fund under the 1933 Act are in full force
and effect;
(c) No consent, approval, authorization, or order of any court,
governmental authority or FINRA is required for the consummation by the
Acquiring Fund and the Acquiring Entity of the transactions contemplated
herein, except such as have been or will be obtained at or prior to the
Closing Date under the 1933 Act, the 1934 Act, the 1940 Act and state
securities laws;
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(d) The current prospectus and statement of additional information of
the Acquiring Fund and each prospectus and statement of additional
information of the Acquiring Fund used at all times between October 1, 2001
and the date of this Agreement conforms or conformed at the time of its use
in all material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission thereunder and
does not or did not at the time of its use include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) The Acquiring Fund is in compliance in all material respects with
the applicable investment policies and restrictions set forth in the
Acquiring Fund's prospectus and statement of additional information and the
value of the net assets of the Acquiring Fund is determined using portfolio
valuation methods that comply in all material respects with the
requirements of the 1940 Act and the rules and regulations of the
Commission thereunder and the pricing and valuation procedures of the
Acquiring Fund and there have been no material miscalculations of the net
asset value of the Acquiring Fund or the net asset value per share of the
Acquiring Fund (or any class thereof) during the twelve month period
preceding the date hereof which would have a material adverse effect on
such Acquiring Fund or its properties or assets;
(f) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Target Fund, the Acquiring Fund is not engaged currently,
and the execution, delivery and performance of this Agreement will not
result, in (i) a material violation of the Acquiring Entity's Agreement and
Declaration of Trust or by-laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring Fund or the
Acquiring Entity is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any lien, encumbrance,
penalty, or additional fee under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquiring Fund or the
Acquiring Entity is a party or by which it is bound;
(g) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Target Fund, no litigation or administrative proceeding or
investigation of or before any court, tribunal, arbitrator, governmental
body or FINRA is presently pending or, to the Acquiring Fund's knowledge,
threatened against the Acquiring Fund that, if adversely determined, would
materially and adversely affect the Acquiring Fund's financial condition or
the conduct of its business. The Acquiring Fund and the Acquiring Entity,
without any special investigation or inquiry, know of no facts that might
form the basis for the institution of such proceedings and neither the
Acquiring Entity nor the Acquiring Fund is a party to or subject to the
provisions of any order, decree or judgment of any court, governmental body
or FINRA that materially and adversely affects its business or its ability
to consummate the transactions herein contemplated;
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(h) The financial statements of the Acquiring Fund for the Acquiring
Fund's most recently completed fiscal year have been audited by the
independent registered public accounting firm identified in the Acquiring
Fund's prospectus or statement of additional information included in the
Acquiring Fund's registration statement on Form N-1A. Such statements, as
well as the unaudited, semi-annual financial statements for the semi-annual
period next succeeding the Acquiring Fund's most recently completed fiscal
year, if any, were prepared in accordance with GAAP consistently applied,
and such statements (copies of which have been furnished or made available
to the Target Fund) present fairly, in all material respects, the financial
condition of the Acquiring Fund as of such date in accordance with GAAP,
and there are no known contingent liabilities of the Acquiring Fund
required to be reflected on a balance sheet (including the notes thereto)
in accordance with GAAP as of such date not disclosed therein;
(i) Since the last day of the Acquiring Fund's most recently completed
fiscal year, there has not been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, except as
otherwise disclosed to and accepted by the Target Fund in writing. For the
purposes of this subparagraph, a decline in net asset value due to declines
in market values of securities held by the Acquiring Fund (except as
provided in Section 2.1(d)), the redemption of the Acquiring Fund's shares
by shareholders of the Acquiring Fund or the discharge of the Acquiring
Fund's ordinary course liabilities shall not constitute a material adverse
change;
(j) On the Closing Date, all material Returns of the Acquiring Fund
required by law to have been filed by such date (including any extensions)
shall have been filed and are or will be true, correct and complete in all
material respects, and all Taxes shown as due or claimed to be due by any
government entity shall have been paid or provision has been made for the
payment thereof. To the Acquiring Fund's knowledge, no such Return is
currently under audit by any Federal, state, local or foreign Tax
authority; no assessment has been asserted with respect to such Returns;
there are no levies, liens or other encumbrances on the Acquiring Fund or
its assets resulting from the non-payment of any Taxes; no waivers of the
time to assess any such Taxes are outstanding nor are any written requests
for such waivers pending; and adequate provision has been made in the
Acquiring Fund financial statements for all Taxes in respect of all periods
ended on or before the date of such financial statements.
(k) The Acquiring Fund has elected to be a regulated investment
company under Subchapter M of the Code and is a fund that is treated as a
separate corporation under Section 851(g) of the Code. The Acquiring Fund
has qualified for treatment as a regulated investment company for each
taxable year since inception that has ended prior to the Closing Date and
will have satisfied the requirements of Part I of Subchapter M of the Code
to maintain such qualification for the period beginning on the first day of
its current taxable year and ending on the Closing Date. The Acquiring Fund
has no earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M of the Code did not apply to it.
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(l) All issued and outstanding Acquiring Fund shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Acquiring Entity and, in every state where
offered or sold, such offers and sales have been in compliance in all
material respects with applicable registration and/or notice requirements
of the 1933 Act and state and District of Columbia securities laws. The
Acquiring Fund does not have and will not have outstanding as of the
Closing Date any options, warrants or other rights to subscribe for or
purchase any Acquiring Fund shares (other than rights presented by this
contract), nor is there outstanding any security convertible into any
Acquiring Fund shares, except for the automatic conversion right of holders
of Class B5 shares of the Acquiring Fund to convert to Class A5 shares in
accordance with the terms set forth in the Acquiring Fund's prospectus and
statement of additional information and Agreement and Declaration of Trust;
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the trustees of the Acquiring Entity, on
behalf of the Acquiring Fund, and subject to the approval of the
shareholders of the Target Fund and the due authorization, execution and
delivery of this Agreement by the other parties hereto, this Agreement will
constitute a valid and binding obligation of the Acquiring Fund,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;
(n) The shares of the Acquiring Fund to be issued and delivered to the
Target Fund, for the account of the Target Fund Shareholders, pursuant to
the terms of this Agreement, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly
issued Acquiring Fund shares, and, upon receipt of the Target Fund's Assets
in accordance with the terms of this Agreement, will be fully paid and
non-assessable by the Acquiring Entity;
(o) The books and records of the Acquiring Fund are true and correct
in all material respects and contain no material omissions with respect to
information required to be maintained under laws, rules and regulations
applicable to the Acquiring Fund;
(p) The Acquiring Entity is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code;
(q) The Acquiring Fund has no unamortized or unpaid organizational
fees or expenses for which it does not expect to be reimbursed by Invesco
or its affiliates; and
(r) As of the effective date of the N-14 Registration Statement (as
defined in Section 5.1(b)), the date of the meeting of shareholders of the
Target Fund and the Closing Date, the information provided by any Acquiring
Fund for use in the N-14 Registration Statement will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements were made, not misleading;
provided, however, that the representations and warranties in this
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subparagraph shall not apply to statements in or omissions from the N-14
Registration Statement made in reasonable reliance upon and in conformity
with information that was furnished by the Target Fund for use therein.
5. COVENANTS OF THE ACQUIRING FUND AND THE TARGET FUND
5.1. With respect to each Reorganization:
(a) The Acquiring Fund and the Target Fund each: (i) will operate its
business in the ordinary course and substantially in accordance with past
practices between the date hereof and the Closing Date for the
Reorganization, it being understood that such ordinary course of business
may include the declaration and payment of customary dividends and
distributions, and any other distribution that may be advisable, and (ii)
shall use its reasonable best efforts to preserve intact its business
organization and material assets and maintain the rights, franchises and
business and customer relations necessary to conduct the business
operations of the Acquiring Fund or the Target Fund, as appropriate, in the
ordinary course in all material respects.
(b) The parties hereto shall cooperate in preparing, and the Acquiring
Entity shall file with the Commission, a registration statement on Form
N-14 under the 1933 Act which shall properly register the Acquiring Fund
shares to be issued in connection with the Reorganization and include a
proxy statement with respect to the votes of the shareholders of the Target
Fund to approve the Reorganization (the "N-14 Registration Statement").
(c) The Target Entity will call a meeting of the shareholders of the
Target Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated
herein. The Target Entity shall, through its board of trustees, if
considered by such trustees to be consistent with their fiduciary
obligations, recommend to the shareholders of the Target Fund approval of
this Agreement.
(d) The Target Fund covenants that the Acquiring Fund shares to be
issued pursuant to this Agreement are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms of
this Agreement.
(e) The Target Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the
beneficial ownership of the Target Fund's shares.
(f) The Target Entity will provide the Acquiring Fund with (1) a
statement of the respective tax basis and holding period of all investments
to be transferred by the Target Fund to the Acquiring Fund, (2) a copy
(which may be in electronic form) of the shareholder ledger accounts
including, without limitation, the name, address and taxpayer
identification number of each shareholder of record, the number of shares
of beneficial interest held by each shareholder, the dividend reinvestment
elections applicable to each
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shareholder, and the backup withholding and nonresident alien withholding
certifications, notices or records on file with the Target Fund with
respect to each shareholder, for all of the shareholders of record of the
Target Fund as of the close of business on the Valuation Date, who are to
become holders of the Acquiring Fund as a result of the transfer of Assets
(the "Target Fund Shareholder Documentation"), certified by its transfer
agent or its President or Vice-President to the best of their knowledge and
belief, (3) all FIN 48 work papers and supporting statements pertaining to
the Target Fund (the "FIN 48 Workpapers"), and (4) the tax books and
records of the Target Fund for purposes of preparing any returns required
by law to be filed for tax periods ending after the Closing Date. The
information to be provided under (1) of this sub-section shall be provided
as soon as reasonably practicable after the Closing but in any event not
later than twenty (20) business days after Closing and the information to
be provided under (2) through (4) of this sub-section shall be provided at
or prior to the Closing.
(g) Subject to the provisions of this Agreement, the Acquiring Fund
and the Target Fund will each take, or cause to be taken, all action, and
do or cause to be done all things, reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
(h) As soon as is reasonably practicable after the Closing, the Target
Fund will make one or more liquidating distributions to its shareholders
consisting of the applicable class of shares of the Acquiring Fund received
at the Closing, as set forth in Section 1.2(d) hereof.
(i) The Acquiring Fund and the Target Fund shall each use their
reasonable best efforts prior to Closing to fulfill or obtain the
fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement.
(j) The Target Fund shall, from time to time, as and when reasonably
requested by the Acquiring Fund, execute and deliver or cause to be
executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action, as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the Assets and otherwise to
carry out the intent and purpose of this Agreement.
(k) The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and
such of the state blue sky or securities laws as may be necessary in order
to continue its operations after the Closing Date.
(l) A statement of the earnings and profits (accumulated and current)
of the Target Fund for federal income tax purposes that will be carried
over to the Acquiring Fund as a result of Section 381 of the Code will be
provided to the Acquiring Fund prior to Closing if the Target Fund's most
recent fiscal year ended on or before December 31, 2009, otherwise within
ninety (90) days after the Closing Date.
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(m) It is the intention of the parties that each Reorganization will
qualify as a reorganization with the meaning of Section 368(a) of the Code.
None of the parties to this Agreement shall take any action or cause any
action to be taken (including, without limitation the filing of any tax
return) that is inconsistent with such treatment or results in the failure
of a Reorganization to qualify as a reorganization with the meaning of
Section 368(a) of the Code.
(n) Any reporting responsibility of the Target Fund, including, but
not limited to, the responsibility for filing regulatory reports, tax
returns relating to tax periods ending on or prior to the Closing Date
(whether due before or after the Closing Date), or other documents with the
Commission, any state securities commission, and any Federal, state or
local tax authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Target Fund.
(o) On or prior to the signing of this Agreement or within twenty (20)
business days thereafter, the Target Fund shall have delivered to the
Acquiring Fund copies of: (1) the federal, state and local income tax
returns filed by or on behalf of the Target Fund for the prior three (3)
taxable years; (2) any of the following that have been issued to or for the
benefit of or that otherwise affect the Target Fund and which have
continuing relevance: (a) rulings, determinations, holdings or opinions
issued by any federal, state, local or foreign tax authority and (b) legal
opinions; and (3) any organizational documents, including without
limitation, the declarations of trust and by-laws, together with the board
meeting minutes and consent of trustees and shareholders with respect to
any wholly-owned subsidiaries of the Target Fund.
(p) The contingent deferred sales charge ("CDSC") applicable to Class
B5 and Class C5 shares of the Acquiring Fund issued in connection with the
Reorganization will be calculated based on the CDSC schedule of Class B and
Class C shares, respectively, of the Target Fund and, for purposes of
calculating the CDSC, recipients of such Class B5 and Class C5 shares of
the Acquiring Fund shall be deemed to have acquired such shares on the
date(s) that the corresponding shares of the Target Fund were acquired by
the shareholder.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND
6.1. With respect to each Reorganization, the obligations of the Target
Entity, on behalf of the Target Fund, to consummate the transactions provided
for herein shall be subject, at the Target Fund's election, to the performance
by the Acquiring Fund of all of the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, the following
conditions:
(a) All representations and warranties of the Acquiring Fund and the
Acquiring Entity contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and as of the
Closing Date;
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(b) The Acquiring Entity shall have delivered to the Target Entity on
the Closing Date a certificate executed in its name by its President or
Vice President and Treasurer, in form and substance reasonably satisfactory
to the Target Entity and dated as of the Closing Date, to the effect that
the representations and warranties of or with respect to the Acquiring Fund
made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement;
(c) The Acquiring Entity and the Acquiring Fund shall have performed
all of the covenants and complied with all of the provisions required by
this Agreement to be performed or complied with by the Acquiring Entity and
the Acquiring Fund, on or before the Closing Date;
(d) The Target Fund and the Acquiring Fund shall have agreed on the
number of full and fractional shares of each class of the Acquiring Fund
set forth on Exhibit A hereto to be issued in connection with the
Reorganization after such number has been calculated in accordance with
Section 1.2 hereto;
(e) The Target Entity shall have received on the Closing Date the
opinion of Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP ("Xxxxxxxx Ronon"), counsel
to the Acquiring Entity (which may rely on certificates of officers or
trustees of the Acquiring Entity), dated as of the Closing Date, covering
the following points:
(i) The Acquiring Entity is a statutory trust duly formed,
validly existing and in good standing under the laws of the State of
Delaware and has the trust power to own all of the Acquiring Fund's
properties and assets and to conduct its business, including that of the
Acquiring Fund, as a registered investment company as described in its
organizational documents or in the most recently filed registration
statement of the Acquiring Fund;
(ii) The Acquiring Entity is a registered investment company
classified as a management company of the open-end type with respect to
each series of shares it offers, including the Acquiring Fund, under the
1940 Act, and its registration with the Commission as an investment company
under the 1940 Act is in full force and effect;
(iii) The Agreement has been duly authorized by the Acquiring
Entity on behalf of the Acquiring Fund and, assuming due authorization,
execution and delivery of the Agreement by the Target Entity, the Target
Fund and VKAM is a valid and binding obligation of the Acquiring Entity, on
behalf of the Acquiring Fund, enforceable against the Acquiring Entity in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent conveyance, reorganization, receivership, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a proceeding in
equity or at law) and to an implied covenant of good faith and fair
dealing;
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(iv) The Acquiring Fund shares to be issued to the Target Fund
Shareholders as provided by this Agreement are duly authorized, upon such
delivery will be validly issued and upon receipt of the Target Fund's
Assets will be fully paid and non-assessable by the Acquiring Entity and no
shareholder of an Acquiring Fund has any preemptive rights to subscription
or purchase in respect thereof; and
(v) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not, result in a
violation of the Acquiring Entity's Agreement and Declaration of Trust or
By-Laws or a breach or default under any agreement pertaining to the
Acquiring Fund identified as an exhibit in Part C of the registration
statement on Form N-1A last filed by Acquiring Entity or, to the knowledge
of such counsel, result in the acceleration of any obligation or the
imposition of any penalty under any such agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
7.1. With respect to each Reorganization, the obligations of the Acquiring
Entity, on behalf of the Acquiring Fund, to consummate the transactions provided
for herein shall be subject, at the Acquiring Fund's election, to the
performance by the Target Fund of all of the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
(a) All representations and warranties of the Target Entity and the
Target Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date,
with the same force and effect as if made on and as of the Closing Date;
(b) The Target Entity, on behalf of the Target Fund, shall have
delivered to the Acquiring Entity on the Closing Date (i) a statement of
the Target Fund's Assets, together with a list of portfolio securities of
the Target Fund as of the Closing Date, certified by the Treasurer of the
Target Entity, (ii) the Target Fund Shareholder Documentation, (iii) the
AML Documentation, and (iv) to the extent permitted by applicable law, all
information pertaining to, or necessary or useful in the calculation or
demonstration of, the investment performance of the Target Fund;
(c) The Target Entity shall have delivered to the Acquiring Entity on
the Closing Date a certificate executed in its name by its President or
Vice President and Treasurer, in form and substance reasonably satisfactory
to the Acquiring Entity and dated as of the Closing Date, to the effect
that the representations and warranties of or with respect to the Target
Fund made in this Agreement are true and correct at and as of the Closing
Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Entity shall
reasonably request;
(d) The Target Custodian and the Target Transfer Agent shall have
delivered the certificates contemplated by Sections 3.2(b) and 3.2(d) of
this Agreement,
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respectively, and the Target Transfer Agent or the Target Fund's President
or Vice President shall have delivered the certificate contemplated by
Section 5.1(f) of this Agreement, each duly executed by an authorized
officer of the Target Custodian, the Target Transfer Agent, the Target
Fund's President or the Target Fund's Vice President, as applicable;
(e) The Target Entity and the Target Fund shall have performed all of
the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Target Entity and the
Target Fund, on or before the Closing Date;
(f) The Target Fund and the Acquiring Fund shall have agreed on the
number of full and fractional shares of each class of the Acquiring Fund
set forth on Exhibit A hereto to be issued in connection with the
Reorganization after such number has been calculated in accordance with
Section 1.2 hereto;
(g) The Target Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders
(i) all of its investment company taxable income (determined without regard
to any deductions for dividends paid) and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to the
Closing Time on the Closing Date; and (ii) any undistributed investment
company taxable income and net realized capital gains from any period to
the extent not otherwise already distributed;
(h) The Acquiring Entity shall have received on the Closing Date the
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the Target
Entity (which may rely on certificates of officers or trustees of the
Target Entity), dated as of the Closing Date, covering the following
points:
(i) The Target Entity is a statutory trust duly formed, validly
existing and in good standing under the laws of the State of Delaware and
has the trust power to own all of Target Fund's properties and assets, and
to conduct its business, including that of the Target Fund, as a registered
investment company as described in its organizational documents or in the
most recently filed registration statement of the Target Fund;
(ii) The Target Entity is a registered investment company
classified as a management company of the open-end type with respect to
itself and, if applicable, each series of shares it offers, including the
Target Fund, under the 1940 Act, and its registration with the Commission
as an investment company under the 1940 Act is in full force and effect;
(iii) The Agreement has been duly authorized by the Target Entity
on behalf of the Target Fund and, assuming due authorization, execution and
delivery of the Agreement by the Acquiring Entity and the Acquiring Fund,
is a valid and binding obligation of the Target Entity, on behalf of the
Target Fund, enforceable against the
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Target Entity in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
receivership, moratorium and other similar laws relating to or affecting
creditors' rights generally general equity principles (whether considered
in a proceeding in equity or at law) and to an implied covenant of good
faith and fair dealing; and
(iv) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not, result in a
violation of, the Target Entity's Governing Documents or a breach or
default under any agreement pertaining to the Target Fund identified as an
exhibit in Part C of the registration statement on Form N-1A last filed by
Target Entity or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty under any
such agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
TARGET FUND
With respect to each Reorganization, if any of the conditions set forth
below have not been satisfied on or before the Closing Date with respect to the
Target Fund or the Acquiring Fund, the Acquiring Entity or Target Entity,
respectively, shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. The Agreement shall have been approved by the requisite vote of the
holders of the outstanding shares of the Target Fund in accordance with the
provisions of the Target Entity's Governing Documents, Delaware law, and the
1940 Act, and certified copies of the voting record from the proxy solicitor
evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the Target Fund nor the
Acquiring Fund may waive the conditions set forth in this Section 8.1;
8.2. The Agreement and transactions contemplated herein shall have been
approved by the Board of Trustees of the Target Entity and the Board of Trustees
of the Acquiring Entity and each party shall have delivered to the other party a
copy of the resolutions approving this Agreement and the transactions
contemplated in connection herewith adopted by such party's Board of Trustees,
certified by the secretary or equivalent officer. Notwithstanding anything
herein to the contrary, neither the Target Fund nor the Acquiring Fund may waive
the conditions set forth in this Section 8.2;
8.3. On the Closing Date, no action, suit or other proceeding shall be
pending or, to the Target Entity's or the Acquiring Entity's knowledge,
threatened before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement, the transactions contemplated herein or the MS/Invesco Transaction;
8.4. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or Target Fund to
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permit consummation, in all material respects, of the transactions contemplated
hereby shall have been obtained, except where failure to obtain any such
consent, order or permit would not involve a risk of a material adverse effect
on the assets or properties of the Acquiring Fund or the Target Fund, provided
that either party hereto may for itself waive any of such conditions;
8.5. The N-14 Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act;
8.6. The Target Entity and the Acquiring Entity shall have received on or
before the Closing Date an opinion of Xxxxxxxx Ronon in form and substance
reasonably acceptable to the Target Entity and the Acquiring Entity, as to the
matters set forth on Schedule 8.6. In rendering such opinion, Xxxxxxxx Ronon may
request and rely upon representations contained in certificates of officers of
the Target Entity, the Acquiring Entity and others, and the officers of the
Target Entity and the Acquiring Entity shall use their best efforts to make
available such truthful certificates; and
8.7. The MS/Invesco Transaction contemplated by the Transaction Agreement
shall have been consummated.
9. BROKERAGE FEES AND EXPENSES
9.1. The parties hereto represent and warrant to each other that there are
no brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
9.2. Xxxxxx Xxxxxxx and Invesco will bear or arrange for an entity under
common ownership of Xxxxxx Xxxxxxx or Invesco to bear the expenses relating to
the Reorganizations, allocated among Xxxxxx Xxxxxxx and Invesco as set forth in
the Transaction Agreement. The costs of the Reorganizations shall include, but
not be limited to, costs associated with obtaining any necessary order of
exemption from the 1940 Act, if any, organizing each Acquiring Fund,
preparation, printing and distribution of the N-14 Registration Statement for
each Reorganization (including the prospectus/proxy statement contained
therein), legal fees, accounting fees, and expenses of holding shareholders'
meetings.
10. COOPERATION AND EXCHANGE OF INFORMATION
10.1. With respect to each Reorganization, prior to the Closing and for a
reasonable time thereafter, the Target Entity and the corresponding Acquiring
Entity will provide each other and their respective representatives with such
cooperation, assistance and information as is reasonably necessary (i) for the
filing of any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to any proposed
adjustment, or (ii) for any financial accounting purpose. Each such party or
their respective agents will retain until the applicable period for assessment
under applicable law (giving effect to any and all extensions or waivers) has
expired all returns, schedules and work papers and all material records or other
documents relating to Tax matters and financial reporting of tax
-22-
positions of the Target Fund and the Acquiring Fund for its taxable period first
ending after the Closing of the applicable Reorganization and for all prior
taxable periods for which the statute of limitation had not run at the time of
the Closing, provided that a Target Entity shall not be required to maintain any
such documents that it has delivered to the Acquiring Fund.
11. INDEMNIFICATION
11.1. With respect to a Reorganization, the applicable Acquiring Entity,
out of the assets of the Acquiring Fund, and IAI agree to indemnify and hold
harmless the Target Entity and each of the Target Entity's officers and trustees
from and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which, jointly and severally, the Target
Entity or any of its trustees or officers may become subject, insofar as such
loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Acquiring Entity, on behalf of
the Acquiring Fund, of any of its representations, warranties, covenants or
agreements set forth in this Agreement. This indemnification obligation shall
survive the termination of this Agreement and the closing of the Reorganization.
11.2. With respect to a Reorganization, VKAM agrees to indemnify and hold
harmless the applicable Acquiring Entity and its officers and trustees to the
extent that a Target Fund being merged into such Acquiring Entity is currently
advised by VKAM from and against any and all losses, claims, damages,
liabilities or expenses (including, without limitation, the payment of
reasonable legal fees and reasonable costs of investigation) to which, jointly
and severally, the Acquiring Entity or any of its trustees or officers may
become subject, insofar as such loss, claim, damage, liability or expense (or
actions with respect thereto) arises out of or is based on any breach by the
Target Entity, on behalf of the Target Fund, of any of its representations,
warranties, covenants or agreements set forth in this Agreement. This
indemnification obligation shall survive the termination of this Agreement and
the closing of the Reorganization.
12. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES AND COVENANTS
12.1. Except as described in Section 9.2, each party agrees that no party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
12.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing shall survive the Closing.
13. TERMINATION
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned with respect to one or both Reorganizations by (i) mutual
agreement of the parties; or (ii) by either the Acquiring Entity or the Target
Entity if the Closing shall not have occurred on
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or before September 30, 2010, unless such date is extended by mutual agreement
of the Acquiring Entity and the Target Entity; or (iii) by any party if one or
more other parties shall have materially breached its obligations under this
Agreement or made a material misrepresentation herein or in connection herewith.
In the event of any such termination, this Agreement shall become void and there
shall be no liability hereunder on the part of any party or their respective
trustees or officers, except for (i) any such material breach or intentional
misrepresentation or (ii) the parties' respective obligations under Section 11,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
14. AMENDMENTS
This Agreement may be amended, modified or supplemented in a writing signed
by the parties hereto to be bound by such Amendment.
15. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, personal service or prepaid or certified mail addressed to:
For each Target Entity:
000 Xxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxx
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxxx Investment Management
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention Xxxxxxxx X. Xxxxx Yu
Fax: 000-000-0000
For Xxx Xxxxxx Asset Management:
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxx
Fax: 000-000-0000
With a copy to:
-00-
Xxxxxx Xxxxxxx Investment Management
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention Xxxxxxxx X. Xxxxx Yu
Fax: 000-000-0000
For each Acquiring Entity
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax: 000-000-0000
Attn: General Counsel
with a copy to:
X. Xxxxxxx Xxxxxxx
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
For Invesco Advisers, Inc.:
Two Peachtree Pointe
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, XX 00000
Fax: 000-000-0000
Attn: General Counsel
16. HEADINGS; GOVERNING LAW; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
16.1. The Article and Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16.2. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware and applicable Federal law, without regard to
its principles of conflicts of laws.
16.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or
-25-
obligations hereunder shall be made by any party without the written consent of
the other parties. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm or corporation, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
16.4. This agreement may be executed in any number of counterparts, each of
which shall be considered an original.
16.5. It is expressly agreed that the obligations of the parties hereunder
shall not be binding upon any of their respective trustees, shareholders,
nominees, officers, agents, or employees personally, but, except as provided in
Sections 9.2, 11.1 and 11.2 hereof, shall bind only the property of the
applicable Target Fund or the applicable Acquiring Fund as provided in the
Governing Documents of the applicable Target Entity or the Agreement and
Declaration of Trust of the applicable Acquiring Entity, respectively. The
execution and delivery by such officers shall not be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the property of such party.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be approved on behalf of the Acquiring Fund and Target Fund.
AIM INVESTMENT SECURITIES FUNDS, ON XXX XXXXXX MONEY MARKET FUND, ON BEHALF
BEHALF OF ITS SERIES IDENTIFIED ON OF ITS SERIES IDENTIFIED ON EXHIBIT
EXHIBIT A HERETO A HERETO
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx III
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxx III
Title: President Title: President and Principal Executive
Officer
AIM TAX EXEMPT FUNDS, ON BEHALF OF XXX XXXXXX TAX FREE MONEY FUND, ON
ITS SERIES IDENTIFIED ON EXHIBIT A BEHALF OF ITS SERIES IDENTIFIED ON
HERETO EXHIBIT A HERETO
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx III
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxx III
Title: President Title: President and Principal Executive
Officer
INVESCO ADVISERS, INC. XXX XXXXXX ASSET MANAGEMENT
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx III
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxx III
Title: Co-President Title: Managing Director and Chief
Administrative Officer
-27-
EXHIBIT A
CHART OF REORGANIZATIONS
ACQUIRING FUND (AND SHARE CLASSES) AND CORRESPONDING TARGET FUND (AND SHARE
ACQUIRING ENTITY CLASSES) AND TARGET ENTITY
-------------------------------------- --------------------------------------
AIM MONEY MARKET FUND, A SERIES OF AIM XXX XXXXXX MONEY MARKET FUND, A SERIES
INVESTMENT SECURITIES FUNDS OF XXX XXXXXX MONEY MARKET FUND
Class A5 Class A
Class B5 Class B
Class C5 Class C
AIM TAX EXEMPT CASH FUND, A SERIES OF XXX XXXXXX TAX FREE MONEY FUND, A
AIM TAX EXEMPT FUNDS SERIES OF XXX XXXXXX TAX FREE MONEY
FUND
Class A Shares
-28-
SCHEDULE 1.2(C)
EXCLUDED LIABILITIES
None
-29-
SCHEDULE 8.6
Tax Opinions
With respect to each Reorganization:
(i) The acquisition by the Acquiring Fund of substantially all of the
assets of the Target Fund, as provided for in the Agreement, in exchange for
Acquiring Fund shares and the assumption by the Acquiring Fund of all of the
liabilities of the Target Fund, followed by the distribution by the Target Fund
to its shareholders of the Acquiring Fund shares in complete liquidation of the
Target Fund, will qualify as a reorganization within the meaning of Section
368(a)(1) of the Code, and the Target Fund and the Acquiring Fund each will be a
"party to the reorganization" within the meaning of Section 368(b) of the Code.
(ii) No gain or loss will be recognized by the Target Fund upon the
transfer of substantially all of its assets to, and assumption of its
liabilities by, the Acquiring Fund in exchange solely for Acquiring Fund shares
pursuant to Section 361(a) and Section 357(a) of the Code.
(iii) No gain or loss will be recognized by the Acquiring Fund upon the
receipt by it of substantially all of the assets of the Target Fund solely in
exchange for the assumption of the liabilities of the Target Fund and issuance
of the Acquiring Fund shares pursuant to Section 1032(a) of the Code.
(iv) No gain or loss will be recognized by the Target Fund upon the
distribution of the Acquiring Fund shares by the Target Fund to its shareholders
in complete liquidation (in pursuance of the Agreement) pursuant to Section
361(c)(1) of the Code.
(v) The tax basis of the assets of the Target Fund received by the
Acquiring Fund will be the same as the tax basis of such assets in the hands of
the Target Fund immediately prior to the transfer pursuant to Section 362(b) of
the Code.
(vi) The holding periods of the assets of the Target Fund in the hands of
the Acquiring Fund will include the periods during which such assets were held
by the Target Fund pursuant to Section 1223(2) of the Code.
(vii) No gain or loss will be recognized by the shareholders of the Target
Fund upon the exchange of all of their Target Fund shares solely for the
Acquiring Fund shares pursuant to Section 354(a) of the Code.
(viii) The aggregate tax basis of the Acquiring Fund shares to be received
by each shareholder of the Target Fund will be the same as the aggregate tax
basis of Target Fund shares exchanged therefor pursuant to Section 358(a)(1) of
the Code.
(ix) The holding period of Acquiring Fund shares received by a shareholder
of the Target Fund will include the holding period of the Target Fund shares
exchanged therefor,
-30-
provided that the shareholder held Target Fund shares as a capital asset on the
date of the exchange pursuant to Section 1223(1) of the Code.
(x) The Acquiring Fund will succeed to and take into account, as of the
date of the transfer as defined in Section 1.381(b)-1(b) of the income tax
regulations issued by the United States Department of the Treasury (the
"Treasury Regulations"), the items of the Target Fund described in Section
381(c) of the Code, subject to the conditions and limitations specified in
Sections 381, 382, 383 and 384 of the Code, and the Treasury Regulations.
-31-
