AGREEMENT
AND
PLAN OF REORGANIZATION
FOR
AIM SMALL COMPANY GROWTH FUND,
A SEPARATE PORTFOLIO OF
AIM STOCK FUNDS
NOVEMBER 14, 2005
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS ................................................... 1
SECTION 1.1. Definitions ............................................. 1
ARTICLE 2 TRANSFER OF ASSETS ............................................ 5
SECTION 2.1. Reorganization of Selling Fund .......................... 5
SECTION 2.2. Computation of Net Asset Value .......................... 5
SECTION 2.3. Valuation Date .......................................... 6
SECTION 2.4. Delivery ................................................ 6
SECTION 2.5. Termination of Series and Redemption of Selling Fund
Shares .................................................. 6
SECTION 2.6. Issuance of Buying Fund Shares .......................... 6
SECTION 2.7. Investment Securities ................................... 7
SECTION 2.8. Liabilities ............................................. 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER ...................... 7
SECTION 3.1. Organization; Authority ................................. 7
SECTION 3.2. Registration and Regulation of Seller ................... 7
SECTION 3.3. Financial Statements .................................... 8
SECTION 3.4. No Material Adverse Changes; Contingent Liabilities ..... 8
SECTION 3.5. Selling Fund Shares; Business Operations ................ 8
SECTION 3.6. Accountants ............................................. 9
SECTION 3.7. Binding Obligation ...................................... 9
SECTION 3.8. No Breaches or Defaults ................................. 9
SECTION 3.9. Authorizations or Consents .............................. 9
SECTION 3.10. Permits ................................................ 10
SECTION 3.11. No Actions, Suits or Proceedings ....................... 10
SECTION 3.12. Contracts .............................................. 10
SECTION 3.13. Properties and Assets .................................. 10
SECTION 3.14. Taxes .................................................. 10
SECTION 3.15. Benefit and Employment Obligations ..................... 11
SECTION 3.16. Brokers ................................................ 11
SECTION 3.17. Voting Requirements .................................... 11
SECTION 3.18. State Takeover Statutes ................................ 12
SECTION 3.19. Books and Records ...................................... 12
SECTION 3.20. Prospectus and Statement of Additional Information ..... 12
SECTION 3.21. No Distribution ........................................ 12
SECTION 3.22. Liabilities of Selling Fund ............................ 12
SECTION 3.23. Value of Shares ........................................ 12
SECTION 3.24. Shareholder Expenses ................................... 12
SECTION 3.25. Intercompany Indebtedness; Consideration ............... 12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER ....................... 13
SECTION 4.1. Organization; Authority ................................. 13
SECTION 4.2. Registration and Regulation of Buyer .................... 13
SECTION 4.3. Financial Statements .................................... 13
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SECTION 4.4. No Material Adverse Changes; Contingent Liabilities ..... 13
SECTION 4.5. Registration of Buying Fund Shares ...................... 13
SECTION 4.6. Accountants ............................................. 14
SECTION 4.7. Binding Obligation ...................................... 14
SECTION 4.8. No Breaches or Defaults ................................. 15
SECTION 4.9. Authorizations or Consents .............................. 15
SECTION 4.10. Permits ................................................ 15
SECTION 4.11. No Actions, Suits or Proceedings ....................... 15
SECTION 4.12. Taxes .................................................. 16
SECTION 4.13. Brokers ................................................ 16
SECTION 4.14. Representations Concerning the Reorganization .......... 16
SECTION 4.15. Prospectus and Statement of Additional Information ..... 17
SECTION 4.16. Value of Shares ........................................ 17
SECTION 4.17. Intercompany Indebtedness; Consideration ............... 17
ARTICLE 5 COVENANTS ..................................................... 18
SECTION 5.1. Conduct of Business ..................................... 18
SECTION 5.2. Expenses ................................................ 18
SECTION 5.3. Further Assurances ...................................... 18
SECTION 5.4. Notice of Events ........................................ 18
SECTION 5.5. Consents, Approvals and Filings ......................... 19
SECTION 5.6. Submission of Agreement to Shareholders ................. 19
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION .................... 19
SECTION 6.1. Conditions Precedent of Buyer ........................... 19
SECTION 6.2. Mutual Conditions ....................................... 20
SECTION 6.3. Conditions Precedent of Seller .......................... 21
ARTICLE 7 TERMINATION OF AGREEMENT ...................................... 21
SECTION 7.1. Termination ............................................. 21
SECTION 7.2. Survival After Termination .............................. 22
ARTICLE 8 MISCELLANEOUS ................................................. 22
SECTION 8.1. Survival of Representations, Warranties and Covenants ... 22
SECTION 8.2. Governing Law ........................................... 22
SECTION 8.3. Binding Effect, Persons Benefiting, No Assignment ....... 22
SECTION 8.4. Obligations of Buyer and Seller ......................... 23
SECTION 8.5. Amendments .............................................. 23
SECTION 8.6. Enforcement ............................................. 23
SECTION 8.7. Interpretation .......................................... 23
SECTION 8.8. Counterparts ............................................ 24
SECTION 8.9. Entire Agreement; Exhibits and Schedules ................ 24
SECTION 8.10. Notices ................................................ 24
SECTION 8.11. Representations by Investment Adviser .................. 24
SECTION 8.12. Successors and Assigns; Assignment ..................... 25
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EXHIBIT A Excluded Liabilities of Selling Fund
SCHEDULE 2.1 Classes of Shares of Selling Fund and Corresponding
Classes of Shares of Buying Fund
SCHEDULE 3.4 Certain Contingent Liabilities of Selling Fund
SCHEDULE 4.4 Certain Contingent Liabilities of Buying Fund
SCHEDULE 4.5(a) Classes of Shares of Buying Fund
SCHEDULE 4.14(b) Permitted Reorganizations of Funds
SCHEDULE 6.2(f) Tax Opinions
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of November 14, 2005 (this
"Agreement"), by and among AIM Stock Funds, a Delaware statutory trust
("Seller"), acting on behalf of AIM Small Company Growth Fund ("Selling Fund"),
a separate series of Seller, AIM Growth Series, a Delaware statutory trust
("Buyer"), acting on behalf of AIM Small Cap Growth Fund ("Buying Fund"), a
separate series of Buyer, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH
WHEREAS, Seller is a management investment company registered with the SEC
(as defined below) under the Investment Company Act (as defined below) that
offers separate series of its shares representing interests in its investment
portfolios, including Selling Fund, for sale to the public; and
WHEREAS, Buyer is a management investment company registered with the SEC
under the Investment Company Act that offers separate series of its shares
representing interests in investment portfolios, including Buying Fund, for sale
to the public; and
WHEREAS, Seller desires to provide for the reorganization of Selling Fund
through the transfer of all of its assets to Buying Fund in exchange for the
assumption by Buying Fund of all of the Liabilities (as defined below) of
Selling Fund and the issuance by Buyer of shares of Buying Fund in the manner
set forth in this Agreement; and
WHEREAS, the Investment Adviser (as defined below) serves as the investment
advisor to both Buying Fund and Selling Fund and is making certain
representations, warranties and agreements set forth in this Agreement;
WHEREAS, this Agreement is intended to be and is adopted by the parties
hereto as a Plan of Reorganization within the meaning of the regulations under
Section 368(a) of the Code (as defined below).
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, Seller and Buyer agree
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. For all purposes in this Agreement, the following
terms shall have the respective meanings set forth in this Section 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined):
"Advisers Act" means the Investment Advisers Act of 1940, as amended, and
all rules and regulations of the SEC adopted pursuant thereto.
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"Affiliated Person" means an affiliated person as defined in Section
2(a)(3) of the Investment Company Act.
"Agreement" means this Agreement and Plan of Reorganization, together with
all exhibits and schedules attached hereto and all amendments hereto and
thereof.
"Applicable Law" means the applicable laws of the state of Delaware and
shall include the Delaware Statutory Trust Act.
"Benefit Plan" means any material "employee benefit plan" (as defined in
Section 3(3) of ERISA) and any material bonus, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
vacation, retirement, profit sharing, welfare plans or other plan, arrangement
or understanding maintained or contributed to by Seller on behalf of Selling
Fund, or otherwise providing benefits to any current or former employee, officer
or director/trustee of Seller.
"Buyer" means AIM Growth Series, a Delaware statutory trust.
"Buyer Counsel" means Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP.
"Buyer Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of Buying Fund.
"Buyer Registration Statement" means the registration statement on Form
N-1A of Buyer, as amended, 1940 Act Registration No. 811-2699.
"Buying Fund" means AIM Small Cap Growth Fund, a separate series of Buyer.
"Buying Fund Auditors" means PricewaterhouseCoopers LLP.
"Buying Fund Financial Statements" means the audited financial statements
of Buying Fund for the fiscal year ended December 31, 2004, and the Buying Fund
Semiannual Report to Shareholders dated June 30, 2005.
"Buying Fund Shares" means shares of each class of Buying Fund issued
pursuant to Section 2.6 of this Agreement.
"Closing" means the transfer of the assets of Selling Fund to Buying Fund,
the assumption of all of Selling Fund's Liabilities by Buying Fund and the
issuance of Buying Fund Shares directly to Selling Fund Shareholders as
described in Section 2.1 of this Agreement.
"Closing Date" means March 27, 2006, or such other date as the parties may
mutually agree upon.
"Code" means the Internal Revenue Code of 1986, as amended, and all rules
and regulations adopted pursuant thereto.
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"Corresponding" means, when used with respect to a class of shares of
Selling Fund or Buying Fund, the classes of their shares set forth opposite each
other on Schedule 2.1.
"Effective Time" means 8:00 a.m. Eastern Time on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations adopted pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
all rules and regulations adopted pursuant thereto.
"Governing Documents" means the organic documents which govern the business
and operations of each of Buyer and Seller and shall include, as applicable,
Amended and Restated Agreement and Declaration of Trust, Amended and Restated
Bylaws and Bylaws.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including the SEC)
or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the NASD Regulation, Inc., the
Commodity Futures Trading Commission, the National Futures Association, the
Investment Management Regulatory Organization Limited and the Office of Fair
Trading).
"Investment Adviser" means A I M Advisors, Inc.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted pursuant thereto.
"Liabilities" means all of the liabilities of any kind of Selling Fund,
including without limitation all liabilities included in the calculation of the
net asset value per share of each class of Selling Fund Shares on the Closing
Date, but not including the excluded liabilities set forth on Exhibit A.
"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a change in the
condition (financial or otherwise), properties, assets or prospects of an entity
having an adverse monetary effect in an amount equal to or greater than $50,000.
"NYSE" means the New York Stock Exchange.
"Permits" shall have the meaning set forth in Section 3.10 of this
Agreement.
"Person" means an individual or a corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"Reorganization" means the acquisition of the assets of Selling Fund by
Buying Fund in consideration of the assumption by Buying Fund of all of the
Liabilities of Selling Fund and the
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issuance by Buyer of Buying Fund Shares directly to Selling Fund Shareholders as
described in this Agreement, and the termination of Selling Fund's status as a
designated series of shares of Seller.
"Required Shareholder Vote" means, if a quorum is present, a 1940 Act
Majority, which is the lesser of (a) the affirmative vote of 67% or more of the
voting securities of Selling Fund present or represented by proxy at the Special
Meeting, if the holders of more than 50% of the outstanding voting securities of
such Selling Fund are present or represented by proxy, or (b) the affirmative
vote of more than 50% of the outstanding voting securities of such Selling Fund.
"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted pursuant thereto.
"Seller" means AIM Stock Funds, a Delaware statutory trust.
"Seller Custodian" means State Street Bank and Trust acting in its capacity
as custodian for the assets of Selling Fund.
"Seller Registration Statement" means the registration statement on Form
N-1A of Seller, as amended, 1940 Act Registration No. 811-1474.
"Selling Fund" means AIM Small Company Growth Fund, a separate series of
Seller.
"Selling Fund Auditors" means PricewaterhouseCoopers LLP.
"Selling Fund Financial Statements" means the audited financial statements
of Selling Fund for the fiscal year ended July 31, 2005.
"Selling Fund Shareholders" means the holders of record of the outstanding
shares of each class of Selling Fund as of the close of regular trading on the
NYSE on the Valuation Date.
"Selling Fund Shares" means the outstanding shares of each class of Selling
Fund.
"Shareholders Meeting" means a meeting of the shareholders of Selling Fund
convened in accordance with Applicable Law and the Governing Documents of Seller
to consider and vote upon the approval of this Agreement.
"Tax" means any tax or similar governmental charge, impost or levy
(including income taxes (including alternative minimum tax and estimated tax),
franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross receipts
taxes, value added taxes, employment taxes, excise taxes, ad valorem taxes,
property taxes, withholding taxes, payroll taxes, minimum taxes, or windfall
profit taxes), together with any related penalties, fines, additions to tax or
interest,
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imposed by the United States or any state, county, local or foreign government
or subdivision or agency thereof.
"Termination Date" means September 30, 2006, or such later date as the
parties may mutually agree upon.
"Treasury Regulations" means the Federal income tax regulations adopted
pursuant to the Code.
"Trustee Benefit Plans" means the Deferred Compensation Agreement for the
Directors/Trustees of the AIM Funds, the AIM Funds Retirement Plan for Eligible
Directors/Trustees, the Deferred Fee Agreement, the INVESCO Funds Retirement
Plan for Independent Directors and the Deferred Retirement Plan Account
Agreement.
"Valuation Date" shall have the meaning set forth in Section 2.2 of this
Agreement.
ARTICLE 2
TRANSFER OF ASSETS
SECTION 2.1. Reorganization of Selling Fund. At the Effective Time, all of
the assets of Selling Fund shall be delivered to Buyer Custodian for the account
of Buying Fund in exchange for the assumption by Buying Fund of all of the
Liabilities of Selling Fund and delivery by Buyer directly to the holders of
record as of the Effective Time of the issued and outstanding shares of each
class of Selling Fund of a number of shares of each corresponding class of
Buying Fund, as set forth on Schedule 2.1 (including, if applicable, fractional
shares rounded to the nearest thousandth), having an aggregate net asset value
equal to the value of the net assets of Selling Fund so transferred, assigned
and delivered, all determined and adjusted as provided in Section 2.2 below.
Upon delivery of such assets, Buying Fund will receive good and marketable title
to such assets free and clear of all Liens.
SECTION 2.2. Computation of Net Asset Value.
(a) The net asset value per share of each class of Buying Fund Shares,
and the value of the assets and the amount of the Liabilities of Selling Fund,
shall, in each case, be determined as of the close of regular trading on the
NYSE on the business day next preceding the Closing Date (the "Valuation Date").
(b) The net asset value per share of each class of Buying Fund Shares
shall be computed in accordance with the policies and procedures of Buying Fund
as described in the Buyer Registration Statement.
(c) The value of the assets and the amount of the Liabilities of
Selling Fund to be transferred to Buying Fund pursuant to this Agreement shall
be computed in accordance with the policies and procedures of Selling Fund as
described in the Seller Registration Statement.
(d) Subject to Sections 2.2(b) and (c) above, all computations of
value regarding the assets and Liabilities of Selling Fund and the net asset
value per share of each class
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of Buying Fund Shares to be issued pursuant to this Agreement shall be made by
agreement of Seller and Buyer. The parties agree to use commercially reasonable
efforts to resolve any material pricing differences between the prices of
portfolio securities determined in accordance with their respective pricing
policies and procedures.
SECTION 2.3. Valuation Date. The share transfer books of Selling Fund will
be permanently closed as of the close of business on the Valuation Date and only
requests for the redemption of shares of Selling Fund received in proper form
prior to the close of regular trading on the NYSE on the Valuation Date shall be
accepted by Selling Fund. Redemption requests thereafter received by Selling
Fund shall be deemed to be redemption requests for Buying Fund Shares of the
corresponding class (assuming that the transactions contemplated by this
Agreement have been consummated), to be distributed to Selling Fund Shareholders
under this Agreement.
SECTION 2.4. Delivery.
(a) No later than three (3) business days preceding the Closing Date,
Seller shall instruct Seller Custodian to transfer all assets held by Selling
Fund to the account of Buying Fund maintained at Buyer Custodian. Such assets
shall be delivered by Seller to Buyer Custodian on the Closing Date. The assets
so delivered shall be duly endorsed in proper form for transfer in such
condition as to constitute a good delivery thereof, in accordance with the
custom of brokers, and shall be accompanied by all necessary state stock
transfer stamps, if any, or a check for the appropriate purchase price thereof.
Cash held by Selling Fund shall be delivered on the Closing Date and shall be in
the form of currency or wire transfer in Federal funds, payable to the order of
the account of Buying Fund at Buyer Custodian.
(b) If, on the Closing Date, Selling Fund is unable to make delivery
in the manner contemplated by Section 2.4(a) of securities held by Selling Fund
for the reason that any of such securities purchased prior to the Closing Date
have not yet been delivered to Selling Fund or its broker, then Buyer shall
waive the delivery requirements of Section 2.4(a) with respect to said
undelivered securities if Selling Fund has delivered to Buyer Custodian by or on
the Closing Date, and with respect to said undelivered securities, 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 may be required
by Buyer or Buyer Custodian, including brokers' confirmation slips.
SECTION 2.5. Termination of Series and Redemption of Selling Fund Shares.
Following receipt of the Required Shareholder Vote and as soon as reasonably
practicable after the Closing, the status of Selling Fund as a designated series
of Seller shall be terminated and Seller shall redeem the outstanding shares of
Selling Fund from Selling Fund Shareholders in accordance with its Governing
Documents and all issued and outstanding shares of Selling Fund shall thereupon
be canceled on the books of Seller.
SECTION 2.6. Issuance of Buying Fund Shares. At the Effective Time, Selling
Fund Shareholders holding shares of a class of Selling Fund shall be issued that
number of full and fractional shares of the corresponding class of Buying Fund
having a net asset value equal to the net asset value of such shares of such
class of Selling Fund held by Selling Fund Shareholders on
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the Valuation Date in accordance with Sections 2.1 and 2.2. Seller shall provide
instructions to the transfer agent of Buyer with respect to the shares of each
class of Buying Fund to be issued to Selling Fund Shareholders. Buyer shall have
no obligation to inquire as to the validity, propriety or correctness of any
such instruction, but shall, in each case, assume that such instruction is
valid, proper and correct. Buyer shall record on its books the ownership of the
shares of each class of Buying Fund by Selling Fund Shareholders and shall
forward a confirmation of such ownership to Selling Fund Shareholders. No
redemption or repurchase of such shares credited to former Selling Fund
Shareholders in respect of Selling Fund Shares represented by unsurrendered
share certificates shall be permitted until such certificates have been
surrendered to Buyer for cancellation, or if such certificates are lost or
misplaced, until lost certificate affidavits have been executed and delivered to
Buyer.
SECTION 2.7. Investment Securities. On or prior to the Valuation Date,
Seller shall deliver a list setting forth the securities Selling Fund then owned
together with the respective Federal income tax bases thereof and holding
periods therefor. Seller shall provide to Buyer on or before the Valuation Date
detailed tax basis accounting records for each security to be transferred to it
pursuant to this Agreement. Such records shall be prepared in accordance with
the requirements for specific identification tax lot accounting and clearly
reflect the bases used for determination of gain and loss realized on the sale
of any security transferred to Buying Fund hereunder. Such records shall be made
available by Seller prior to the Valuation Date for inspection by the Treasurer
(or his or her designee) or Buying Fund Auditors upon reasonable request.
SECTION 2.8. Liabilities. Selling Fund shall use reasonable best efforts to
discharge all of its known liabilities, so far as may be possible, prior to the
Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller, on behalf of Selling Fund, represents and warrants to Buyer as
follows:
SECTION 3.1. Organization; Authority. Seller is duly organized, validly
existing and in good standing under Applicable Law, with all requisite trust
power and authority to enter into this Agreement and perform its obligations
hereunder.
SECTION 3.2. Registration and Regulation of Seller. Seller is duly
registered with the SEC as an investment company under the Investment Company
Act and all Selling Fund Shares which have been or are being offered for sale
have been duly registered under the Securities Act and have been duly
registered, qualified or are exempt from registration or qualification under the
securities laws of each state or other jurisdiction in which such shares have
been or are being offered for sale, and no action has been taken by Seller to
revoke or rescind any such registration or qualification. Selling Fund is in
compliance in all material respects with all applicable laws, rules and
regulations, including, without limitation, the Investment Company Act, the
Securities Act, the Exchange Act and all applicable state securities laws.
Selling Fund is in compliance in all material respects with the investment
policies and restrictions applicable to it set forth in the Seller Registration
Statement. The value of the net assets of Selling Fund is determined using
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portfolio valuation methods that comply in all material respects with the
requirements of the Investment Company Act and the policies of Selling Fund and
all purchases and redemptions of Selling Fund Shares have been effected at the
net asset value per share calculated in such manner.
SECTION 3.3. Financial Statements. The books of account and related records
of Selling Fund fairly reflect in reasonable detail its assets, liabilities and
transactions in accordance with generally accepted accounting principles applied
on a consistent basis. The Selling Fund Financial Statements previously
delivered to Buyer present fairly in all material respects the financial
position of Selling Fund as of the dates indicated and the results of operations
and changes in net assets for the periods then ended in accordance with
generally accepted accounting principles applied on a consistent basis for the
periods then ended.
SECTION 3.4. No Material Adverse Changes; Contingent Liabilities. Since the
date of the Selling Fund Financial Statements, no material adverse change has
occurred in the financial condition, results of operations, business, assets or
liabilities of Selling Fund or the status of Selling Fund as a regulated
investment company under the Code, other than changes resulting from any change
in general conditions in the financial or securities markets or the performance
of any investments made by Selling Fund or occurring in the ordinary course of
business of Selling Fund or Seller. Except as set forth on Schedule 3.4, there
are no contingent liabilities of Selling Fund not disclosed in the Selling Fund
Financial Statements and no contingent liabilities of Selling Fund have arisen
since the date of the most recent financial statements included in the Selling
Fund Financial Statements.
SECTION 3.5. Selling Fund Shares; Business Operations.
(a) Selling Fund Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(b) During the five-year period ending on the date of the
Reorganization, neither Selling Fund nor any person related to Selling Fund (as
defined in Section 1.368-1(e)(3) of the Treasury Regulations without regard to
Section 1.368-1(e)(3)(i)(A)) will have directly or through any transaction,
agreement, or arrangement with any other person, (i) acquired shares of Selling
Fund for consideration other than shares of Selling Fund, except for shares
redeemed in the ordinary course of Selling Fund's business as an open-end
investment company as required by the Investment Company Act, or (ii) made
distributions with respect to Selling Fund's shares, except for (a)
distributions necessary to satisfy the requirements of Sections 852 and 4982 of
the Code for qualification as a regulated investment company and avoidance of
excise tax liability and (b) additional distributions, to the extent such
additional distributions do not exceed 50 percent of the value (without giving
effect to such distributions) of the proprietary interest in Selling Fund on the
Effective Date.
(c) At the time of its Reorganization, Selling Fund shall not have
outstanding any warrants, options, convertible securities or any other type of
right pursuant to which any Person could acquire Selling Fund Shares, except for
the right of investors to acquire Selling Fund Shares at net asset value in the
normal course of its business as a series of an open-end management investment
company operating under the Investment Company Act.
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(d) Except for the Senior Officer Seller is required to employ
pursuant to the Assurance of Discontinuance entered into by the Investment
Adviser with the Attorney General of the State of New York on or about October
7, 2004, Seller does not have, and has not had during the six (6) months prior
to the date of this Agreement, any employees, and shall not hire any employees
from and after the date of this Agreement through the Closing Date.
SECTION 3.6. Accountants. Selling Fund Auditors, which have reported upon
the Selling Fund Financial Statements for the fiscal year ending July 31, 2005,
are independent registered public accountants as required by the Securities Act
and the Exchange Act.
SECTION 3.7. Binding Obligation. This Agreement has been duly authorized,
executed and delivered by Seller on behalf of Selling Fund and, assuming this
Agreement has been duly executed and delivered by Buyer and approved by the
shareholders of Selling Fund, constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms
from and with respect to the revenues and assets of Selling Fund, except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting creditors rights generally, or by
general equity principles (whether applied in a court of law or a court of
equity and including limitations on the availability of specific performance or
other equitable remedies).
SECTION 3.8. No Breaches or Defaults. The execution and delivery of this
Agreement by Seller on behalf of Selling Fund and performance by Seller of its
obligations hereunder has been duly authorized by all necessary trust action on
the part of Seller, other than approval by the shareholders of Selling Fund, and
(i) do not, and on the Closing Date will not, result in any violation of the
Governing Documents of Seller and (ii) do not, and on the Closing Date will not,
result in a breach of any of the terms or provisions of, or constitute (with or
without the giving of notice or the lapse of time or both) a default under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in the creation
or imposition of any Lien upon any property or assets of Selling Fund (except
for such breaches or defaults or Liens that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect) under (A)
any indenture, mortgage or loan agreement or any other material agreement or
instrument to which Seller is a party or by which it may be bound and which
relates to the assets of Selling Fund or to which any property of Selling Fund
may be subject; (B) any Permit (as defined below); or (C) any existing
applicable law, rule, regulation, judgment, order or decree of any Governmental
Authority having jurisdiction over Seller or any property of Selling Fund.
Seller is not under the jurisdiction of a court in a proceeding under Title 11
of the United States Code or similar case within the meaning of Section
368(a)(3)(A) of the Code.
SECTION 3.9. Authorizations or Consents. Other than those which shall have
been obtained or made on or prior to the Closing Date and those that must be
made after the Closing Date to comply with Section 2.5 of this Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made by Seller in
connection with the due execution and delivery by Seller of this Agreement and
the consummation by Seller of the transactions contemplated hereby.
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SECTION 3.10. Permits.Except for the absence of, or default under, Permits
(as defined below) that would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, Seller has in full force and
effect all approvals, consents, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights of Governmental Authorities
(collectively, "Permits") necessary for it to conduct its business as presently
conducted as it relates to Selling Fund. To the knowledge of Seller there are no
proceedings relating to the suspension, revocation or modification of any
Permit, except for such that would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 3.11. No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the
knowledge of Seller, has any litigation been overtly threatened in writing or,
if probable of assertion, orally, against Seller before any Governmental
Authority which questions the validity or legality of this Agreement or of the
actions contemplated hereby or which seeks to prevent the consummation of the
transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of Seller,
threatened in writing or, if probable of assertion, orally, against Seller
affecting any property, asset, interest or right of Selling Fund, that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect with respect to Selling Fund. There are not in existence on the
date hereof any plea agreements, judgments, injunctions, consents, decrees,
exceptions or orders that were entered by, filed with or issued by any
Governmental Authority relating to Seller's conduct of the business of Selling
Fund affecting in any significant respect the conduct of such business. Seller
is not, and has not been, to the knowledge of Seller, the target of any
investigation by the SEC or any state securities administrator with respect to
its conduct of the business of Selling Fund, other than as has been disclosed to
Seller's Board of Trustees.
SECTION 3.12. Contracts. Seller is not in default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party and which involves or affects the assets of Selling Fund,
by which the assets, business, or operations of Selling Fund may be bound or
affected, or under which it or the assets, business or operations of Selling
Fund receives benefits, and which default could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and, to the
knowledge of Seller there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default.
SECTION 3.13. Properties and Assets. Selling Fund has good and marketable
title to all properties and assets reflected in the Selling Fund Financial
Statements as owned by it, free and clear of all Liens, except as described in
the Selling Fund Financial Statements.
SECTION 3.14. Taxes.
(a) Selling 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
10
851(g) of the Code. Since inception, Selling Fund has qualified for treatment as
a regulated investment company for each taxable year 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. Selling 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. In order to (i) ensure
continued qualification of Selling Fund for treatment as a "regulated investment
company" for tax purposes and (ii) eliminate any tax liability of Selling Fund
arising by reason of undistributed investment company taxable income or net
capital gain, Seller will declare on or prior to the Valuation Date to the
shareholders of Selling Fund a dividend or dividends that, together with all
previous such dividends, shall have the effect of distributing (A) all of
Selling Fund's investment company taxable income (determined without regard to
any deductions for dividends paid) for the taxable year ended July 31, 2005 and
for the short taxable year beginning on August 1, 2005 and ending on the Closing
Date and (B) all of Selling Fund's net capital gain recognized in its taxable
year ended July 31, 2005 and in such short taxable year (after reduction for any
capital loss carryover).
(b) Selling Fund has timely filed all Returns required to be filed by
it and all Taxes with respect thereto have been paid, except where the failure
so to file or so to pay, would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. Adequate provision has been
made in the Selling Fund Financial Statements for all Taxes in respect of all
periods ended on or before the date of such financial statements, except where
the failure to make such provisions would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, assessed or asserted in writing
by any taxing authority against Selling Fund, and no deficiency has been
proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of Selling
Fund is currently being or has been audited with respect to income taxes or
other Taxes by any Federal, state, local or foreign Tax authority.
SECTION 3.15. Benefit and Employment Obligations. Except for any
obligations under the Trustee Benefit Plans, Selling Fund has no obligation to
provide any post-retirement or post-employment benefit to any Person, including
but not limited to, under any Benefit Plan, and has no obligation to provide
unfunded deferred compensation or other unfunded or self-funded benefits to any
Person.
SECTION 3.16. Brokers. No broker, finder or similar intermediary has acted
for or on behalf of Seller in connection with this Agreement or the transactions
contemplated hereby, and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or other commission in
connection therewith based on any agreement, arrangement or understanding with
Seller or any action taken by it.
SECTION 3.17. Voting Requirements. The Required Shareholder Vote is the
only vote of the holders of any class of shares of Selling Fund necessary to
approve this Agreement.
11
SECTION 3.18. State Takeover Statutes. No state takeover statute or similar
statute or regulation applies or purports to apply to this Agreement or any of
the transactions contemplated by this Agreement.
SECTION 3.19. Books and Records. The books and records of Seller relating
to Selling Fund, reflecting, among other things, the purchase and sale of
Selling Fund Shares, the number of issued and outstanding shares owned by each
Selling Fund Shareholder and the state or other jurisdiction in which such
shares were offered and sold, are complete and accurate in all material
respects.
SECTION 3.20. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Selling Fund as
of the date on which they were issued did not contain, and as supplemented by
any supplement thereto dated prior to or on the Closing Date do 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 not misleading.
SECTION 3.21. No Distribution. Buying Fund Shares are not being acquired
for the purpose of any distribution thereof, other than in accordance with the
terms of this Agreement.
SECTION 3.22. Liabilities of Selling Fund. The Liabilities of Selling Fund
that are to be assumed by Buying Fund in connection with the Reorganization, or
to which the assets of Selling Fund to be transferred in the Reorganization are
subject, were incurred by Selling Fund in the ordinary course of its business.
The fair market value of the assets of Selling Fund to be transferred to Buying
Fund in the Reorganization will equal or exceed the sum of the Liabilities to be
assumed by Buying Fund, plus the amount of Liabilities, if any, to which such
transferred assets will be subject.
SECTION 3.23. Value of Shares. The fair market value of the shares of each
class of Buying Fund received by Selling Fund Shareholders in the Reorganization
will be approximately equal, as of the Effective Time, to the fair market value
of the shares of each corresponding class of Selling Fund to be constructively
surrendered in exchange therefor.
SECTION 3.24. Shareholder Expenses. Selling Fund Shareholders will pay
their own expenses, if any, incurred in connection with the Reorganization.
SECTION 3.25. Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between Seller and Buyer that was issued or acquired,
or will be settled, at a discount. No consideration other than Buying Fund
Shares (and Buying Fund's assumption of Selling Fund's Liabilities, including
for this purpose any liabilities to which the assets of Selling Fund are
subject) will be given in exchange for the assets of Selling Fund acquired by
Buying Fund in connection with the Reorganization.
12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer, on behalf of Buying Fund, represents and warrants to Seller as
follows:
SECTION 4.1. Organization; Authority. Buyer is duly organized, validly
existing and in good standing under Applicable Law, with all requisite corporate
or trust power, as applicable, and authority to enter into this Agreement and
perform its obligations hereunder.
SECTION 4.2. Registration and Regulation of Buyer. Buyer is duly registered
with the SEC as an investment company under the Investment Company Act. Buying
Fund is in compliance in all material respects with all applicable laws, rules
and regulations, including, without limitation, the Investment Company Act, the
Securities Act, the Exchange Act and all applicable state securities laws.
Buying Fund is in compliance in all material respects with the applicable
investment policies and restrictions set forth in the Buyer Registration
Statement. The value of the net assets of Buying Fund is determined using
portfolio valuation methods that comply in all material respects with the
requirements of the Investment Company Act and the policies of Buying Fund and
all purchases and redemptions of Buying Fund Shares have been effected at the
net asset value per share calculated in such manner.
SECTION 4.3. Financial Statements. The books of account and related records
of Buying Fund fairly reflect in reasonable detail its assets, liabilities and
transactions in accordance with generally accepted accounting principles applied
on a consistent basis. The Buying Fund Financial Statements previously delivered
to Seller present fairly in all material respects the financial position of
Buying Fund as of the dates indicated and the results of operations and changes
in net assets for the periods then ended in accordance with generally accepted
accounting principles applied on a consistent basis for the periods then ended.
SECTION 4.4. No Material Adverse Changes; Contingent Liabilities. Since the
date of the Buying Fund Financial Statements, no material adverse change has
occurred in the financial condition, results of operations, business, assets or
liabilities of Buying Fund or the status of Buying Fund as a regulated
investment company under the Code, other than changes resulting from any change
in general conditions in the financial or securities markets or the performance
of any investments made by Buying Fund or occurring in the ordinary course of
business of Buying Fund or Buyer. There are no contingent liabilities of Buying
Fund not disclosed in the Buying Fund Financial Statements which are required to
be disclosed in accordance with generally accepted accounting principles. Except
as set forth on Schedule 4.4, no contingent liabilities of Buying Fund have
arisen since the date of the most recent financial statements included in the
Buying Fund Financial Statements which are required to be disclosed in
accordance with generally accepted accounting principles.
SECTION 4.5. Registration of Buying Fund Shares.
(a) Buying Fund currently has those classes of shares that are set
forth on Schedule 4.5(a). Under its Governing Documents, Buyer is authorized to
issue an unlimited number of shares of each such class.
13
(b) Buying Fund Shares to be issued pursuant to Section 2.6 shall on
the Closing Date be duly registered under the Securities Act by a Registration
Statement on Form N-14 of Buyer then in effect.
(c) Buying Fund Shares to be issued pursuant to Section 2.6 are duly
authorized and on the Closing Date will be validly issued and fully paid and
non-assessable and will conform to the description thereof contained in the
Registration Statement on Form N-14 then in effect. At the time of its
Reorganization, Buying Fund shall not have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any Person
could acquire shares of Buying Fund, except for the right of investors to
acquire shares of Buying Fund at net asset value in the normal course of its
business as a series of an open-end management investment company operating
under the Investment Company Act.
(d) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus"), which forms a part of Buyer's Registration Statement on
Form N-14, shall be furnished to the shareholders of Selling Fund entitled to
vote at the Shareholders Meeting in accordance with normal market practice for
such transactions. The Combined Proxy Statement/Prospectus and related Statement
of Additional Information of Buying Fund, when they become effective, shall
conform in all material respects to the applicable requirements of the
Securities Act and the Investment Company Act and shall not 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 shares of Buying Fund which have been or are being offered for
sale (other than the Buying Fund Shares to be issued in connection with the
Reorganization) have been duly registered under the Securities Act by the Buyer
Registration Statement and have been duly registered, qualified or are exempt
from registration or qualification under the securities laws of each state or
other jurisdiction in which such shares have been or are being offered for sale,
and no action has been taken by Buyer to revoke or rescind any such registration
or qualification.
SECTION 4.6. Accountants. Buying Fund Auditors, which have reported upon
the Buying Fund Financial Statements for the fiscal year ending December 31,
2004, are independent registered public accountants as required by the
Securities Act and the Exchange Act.
SECTION 4.7. Binding Obligation. This Agreement has been duly authorized,
executed and delivered by Buyer on behalf of Buying Fund and, assuming this
Agreement has been duly executed and delivered by Seller, constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms from and with respect to the revenues and assets of Buying Fund,
except as the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors' rights
generally, or by general equity principles (whether applied in a court of law or
a court of equity and including limitations on the availability of specific
performance or other equitable remedies).
14
SECTION 4.8. No Breaches or Defaults. The execution and delivery of this
Agreement by Buyer on behalf of Buying Fund and performance by Buyer of its
obligations hereunder have been duly authorized by all necessary trust action on
the part of Buyer and (i) do not, and on the Closing Date will not, result in
any violation of the Governing Documents of Buyer and (ii) do not, and on the
Closing Date will not, result in a breach of any of the terms or provisions of,
or constitute (with or without the giving of notice or the lapse of time or
both) a default under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation or imposition of any Lien upon any property or assets of
Buying Fund (except for such breaches or defaults or Liens that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect) under (A) any indenture, mortgage or loan agreement or any other
material agreement or instrument to which Buyer is a party or by which it may be
bound and which relates to the assets of Buying Fund or to which any properties
of Buying Fund may be subject; (B) any Permit; or (C) any existing applicable
law, rule, regulation, judgment, order or decree of any Governmental Authority
having jurisdiction over Buyer or any property of Buying Fund. Buyer is not
under the jurisdiction of a court in a proceeding under Title 11 of the United
States Code or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
SECTION 4.9. Authorizations or Consents. Other than those which shall have
been obtained or made on or prior to the Closing Date, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority will be required to be obtained or made by Buyer in connection with
the due execution and delivery by Buyer of this Agreement and the consummation
by Buyer of the transactions contemplated hereby.
SECTION 4.10. Permits. Except for the absence of, or default under, Permits
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, Buyer has in full force and effect all Permits
necessary for it to conduct its business as presently conducted as it relates to
Buying Fund. To the knowledge of Buyer there are no proceedings relating to the
suspension, revocation or modification of any Permit, except for such that would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 4.11. No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the
knowledge of Buyer, has any litigation been overtly threatened in writing or, if
probable of assertion, orally, against Buyer before any Governmental Authority
which questions the validity or legality of this Agreement or of the
transactions contemplated hereby, or which seeks to prevent the consummation of
the transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of Buyer,
threatened in writing or, if probable of assertion, orally, against Buyer,
affecting any property, asset, interest or right of Buying Fund, that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect with respect to Buying Fund. There are not in existence on the
date hereof any plea agreements, judgments, injunctions, consents, decrees,
exceptions or orders that were entered by, filed with or issued by any
Governmental Authority relating to Buyer's conduct
15
of the business of Buying Fund affecting in any significant respect the conduct
of such business. Buyer is not, and has not been, to the knowledge of Buyer, the
target of any investigation by the SEC or any state securities administrator
with respect to its conduct of the business of Buying Fund, other than as has
been disclosed to Buyer's Board of Trustees.
SECTION 4.12. Taxes.
(a) Buying 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. Since inception, Buying Fund has qualified for
treatment as a regulated investment company for each taxable year that has ended
prior to the Closing Date and will satisfy the requirements of Part I of
Subchapter M of the Code to maintain such qualification for its current taxable
year. Buying Fund has no earnings or profits accumulated in any taxable year in
which the provisions of Subchapter M of the Code did not apply to it.
(b) Buying Fund has timely filed all Returns required to be filed by
it and all Taxes with respect thereto have been paid, except where the failure
so to file or so to pay, would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. Adequate provision has been
made in the Buying Fund Financial Statements for all Taxes in respect of all
periods ending on or before the date of such financial statements, except where
the failure to make such provisions would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, assessed or asserted in writing
by any taxing authority against Buying Fund, and no deficiency has been
proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of Buying
Fund is currently being or has been audited with respect to income taxes or
other Taxes by any Federal, state, local or foreign Tax authority.
SECTION 4.13. Brokers. No broker, finder or similar intermediary has acted
for or on behalf of Buyer in connection with this Agreement or the transactions
contemplated hereby, and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or other commission in
connection therewith based on any agreement, arrangement or understanding with
Buyer or any action taken by it.
SECTION 4.14. Representations Concerning the Reorganization.
(a) There is no plan or intention by Buyer or any person related to
Buyer to acquire or redeem any Buying Fund Shares issued in the Reorganization,
except to the extent that Buying Fund is required by the Investment Company Act
to redeem any of its shares presented for redemption at net asset value in the
ordinary course of its business as an open-end, management investment company.
(b) Buying Fund has no plan or intention to sell or otherwise dispose
of any of the assets of Selling Fund acquired in the Reorganization, other than
in the ordinary course of its business and to the extent necessary to maintain
its status as a "regulated investment company"
16
under the Code; provided, however, that this Section 4.14(b) shall not preclude
any of the reorganizations of funds set forth on Schedule 4.14(b).
(c) Following the Reorganization, Buying Fund will continue an
"historic business" of Selling Fund or use a significant portion of Selling
Fund's "historic business assets" in a business. For purposes of this
representation, the terms "historic business" and "historic business assets"
shall have the meanings ascribed to them in Section 1.368-1(d) of the Treasury
Regulations; provided, however, that this Section 4.14(c) shall not preclude any
of the reorganizations of funds set forth on Schedule 4.14(b).
(d) Prior to or in the Reorganization, neither Buying Fund nor any
person related to Buying Fund (for purposes of this paragraph as defined in
Section 1.368-1(e)(3) of the Treasury Regulations) will have acquired directly
or through any transaction, agreement or arrangement with any other person,
shares of Selling Fund with consideration other than shares of Buying Fund.
There is no plan or intention by Buying Fund to redeem, or by any person related
to Buying Fund to acquire any of the Buying Fund Shares issued in the
Reorganization either directly or through any transaction, agreement, or
arrangement with any other person, other than redemptions in the ordinary course
of Buying Fund's business as an open-end investment company as required by the
Investment Company Act.
SECTION 4.15. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Buying Fund as of
the date on which it was issued does not contain, and as supplemented by any
supplement thereto dated prior to or on the Closing Date does 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 not misleading.
SECTION 4.16. Value of Shares. The fair market value of the shares of each
class of Buying Fund received by Selling Fund Shareholders in the Reorganization
will be approximately equal, as of the Effective Time, to the fair market value
of the shares of each corresponding class of Selling Fund to be constructively
surrendered in exchange therefor. The fair market value of the assets of Buying
Fund will exceed the amount of its liabilities immediately after the exchange.
SECTION 4.17. Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between Seller and Buyer that was issued or acquired,
or will be settled, at a discount. No consideration other than Buying Fund
Shares (and Buying Fund's assumption of Selling Fund's Liabilities, including
for this purpose any liabilities to which the assets of Selling Fund are
subject) will be given in exchange for the assets of Selling Fund acquired by
Buying Fund in connection with the Reorganization. The fair market value of the
assets of Selling Fund transferred to Buying Fund in the Reorganization will
equal or exceed the sum of the Liabilities assumed by Buying Fund, plus the
amount of liabilities, if any, to which such transferred assets are subject.
17
ARTICLE 5
COVENANTS
SECTION 5.1. Conduct of Business.
(a) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article 7), Seller shall conduct the business of Selling Fund only in the
ordinary course and substantially in accordance with past practices, and 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 Selling Fund in the
ordinary course in all material respects; provided, however, that this Section
5.1(a) shall not preclude any of the reorganizations of funds set forth on
Schedule 4.14(b).
(b) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article 7), Buyer shall conduct the business of Buying Fund only in the
ordinary course and substantially in accordance with past practices, and 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 Buying Fund in the
ordinary course in all material respects; provided, however, that this Section
5.1(b) shall not preclude any of the reorganizations of funds set forth on
Schedule 4.14(b).
SECTION 5.2. Expenses. Buying Fund shall bear all of its costs and expenses
incurred in connection with this Agreement and the Reorganization without any
reimbursement therefor. Prior to the submission of the Agreement to the Boards
of Trustees of Buyer and Seller for approval, the Investment Adviser, in the
ordinary course of its business as a registered investment advisor operating
under the Advisors Act, agreed to bear 75% of the costs and expenses of Selling
Fund incurred in connection with this Agreement and the Reorganization and other
transactions contemplated hereby; provided that any such expenses incurred by
Selling Fund shall not be reimbursed or paid for by the Investment Advisor or
any other Person unless those expenses are solely and directly related to the
Reorganization.
SECTION 5.3. Further Assurances. Each of the parties hereto shall execute
such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the Reorganization, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the Reorganization.
SECTION 5.4. Notice of Events. Buyer shall give prompt notice to Seller,
and Seller shall give prompt notice to Buyer, of (a) the occurrence or
non-occurrence of any event which to the knowledge of Buyer or to the knowledge
of Seller would be likely to result in any of the conditions specified in (i) in
the case of Seller, Sections 6.1 and 6.2 or (ii) in the case of Buyer, Sections
6.2 and 6.3, not being satisfied so as to permit the consummation of the
Reorganization
18
and (b) any material failure on its part, or on the part of the other party
hereto of which it has knowledge, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.5
shall not limit or otherwise affect the remedies available hereunder to any
party.
SECTION 5.5. Consents, Approvals and Filings. Each of Seller and Buyer
shall make all necessary filings, as soon as reasonably practicable, including,
without limitation, those required under the Securities Act, the Exchange Act,
the Investment Company Act and the Advisers Act, in order to facilitate prompt
consummation of the Reorganization and the other transactions contemplated by
this Agreement. In addition, each of Seller and Buyer shall use its reasonable
best efforts, and shall cooperate fully with each other (i) to comply as
promptly as reasonably practicable with all requirements of Governmental
Authorities applicable to the Reorganization and the other transactions
contemplated herein and (ii) to obtain as promptly as reasonably practicable all
necessary permits, orders or other consents of Governmental Authorities and
consents of all third parties necessary for the consummation of the
Reorganization and the other transactions contemplated herein. Each of Seller
and Buyer shall use reasonable efforts to provide such information and
communications
SECTION 5.6. Submission of Agreement to Shareholders. Seller shall take all
action necessary in accordance with applicable law and its Governing Documents
to convene the Shareholders Meeting. Seller shall, through its Board of
Trustees, recommend to the shareholders of Selling Fund approval of this
Agreement. Seller shall use its reasonable best efforts to hold a Shareholders
Meeting as soon as practicable and advisable after the date hereof.
ARTICLE 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
SECTION 6.1. Conditions Precedent of Buyer. The obligation of Buyer to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by Buyer.
(a) The representations and warranties of Seller on behalf of Selling
Fund set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date with the
same effect as though all such representations and warranties had been made as
of the Closing Date.
(b) Seller shall have complied with and satisfied in all material
respects all agreements and conditions relating to Selling Fund set forth herein
on its part to be performed or satisfied at or prior to the Closing Date.
(c) Buyer shall have received at the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of Seller, in such individual's
capacity as an officer of Seller and not as an individual, to the effect that
the conditions specified in Sections 6.1(a) and (b) have been satisfied and (ii)
a certificate, dated as of the Closing Date, from the Secretary or Assistant
Secretary (in such capacity) of Seller certifying as to the accuracy and
completeness of the attached Governing Documents of Seller, and resolutions,
consents and authorizations of or
19
regarding Seller with respect to the execution and delivery of this Agreement
and the transactions contemplated hereby.
(d) The dividend or dividends described in the last sentence of
Section 3.14(a) shall have been declared.
(e) Buyer shall have received from Seller confirmations or other
adequate evidence as to the tax costs and holding periods of the assets and
property of Selling Fund transferred to Buying Fund in accordance with the terms
of this Agreement.
(f) To the extent applicable, the Investment Adviser shall have
terminated or waived, in either case in writing, any rights to reimbursement
from Selling Fund to which it is entitled for fees and expenses absorbed by the
Investment Adviser pursuant to voluntary and contractual fee waiver or expense
limitation commitments between the Investment Adviser and Selling Fund.
SECTION 6.2. Mutual Conditions. The obligations of Seller and Buyer to
consummate the Reorganization are subject to the satisfaction, at or prior to
the Closing Date, of all of the following further conditions, any one or more of
which may be waived in writing by Seller and Buyer, but only if and to the
extent that such waiver is mutual.
(a) All filings required to be made prior to the Closing Date with,
and all consents, approvals, permits and authorizations required to be obtained
on or prior to the Closing Date from, Governmental Authorities in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein by Seller and Buyer shall have been made or
obtained, as the case may be; provided, however, that such consents, approvals,
permits and authorizations may be subject to conditions that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) This Agreement, the Reorganization of Selling Fund and related
matters shall have been approved and adopted at the Shareholders Meeting by the
shareholders of Selling Fund on the record date by the Required Shareholder
Vote.
(c) The assets of Selling Fund to be acquired by Buying Fund shall
constitute at least 90% of the fair market value of the net assets and at least
70% of the fair market value of the gross assets held by Selling Fund
immediately prior to the Reorganization. For purposes of this Section 6.2(c),
assets used by Selling Fund to pay the expenses it incurs in connection with
this Agreement and the Reorganization and to effect all shareholder redemptions
and distributions (other than regular, normal dividends and regular, normal
redemptions pursuant to the Investment Company Act, and not in excess of the
requirements of Section 852 of the Code, occurring in the ordinary course of
Selling Fund's business as a series of an open-end management investment
company) after the date of this Agreement shall be included as assets of Selling
Fund held immediately prior to the Reorganization.
(d) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Governmental Authority preventing the
consummation of the Reorganization on the Closing Date shall be in effect;
provided, however, that the party or
20
parties invoking this condition shall use reasonable efforts to have any such
order or injunction vacated.
(e) The Registration Statement on Form N-14 filed by Buyer with
respect to Buying Fund Shares to be issued to Selling Fund Shareholders in
connection with the Reorganization shall have become effective under the
Securities Act and shall include an undertaking therein to file the opinion
referenced in Section 6.2(f) as a post-effective amendment to such Registration
Statement after the Closing Date, and no stop order 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 Securities Act.
(f) Seller and Buyer shall have received on or before the Closing Date
an opinion of Buyer Counsel in form and substance reasonably acceptable to
Seller and Buyer, as to the matters set forth on Schedule 6.2(f). In rendering
such opinion, Buyer Counsel may request and rely upon representations contained
in certificates of officers of Seller, Buyer and others, and the officers of
Seller and Buyer shall use their best efforts to make available such truthful
certificates.
SECTION 6.3. Conditions Precedent of Seller. The obligation of Seller to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by Seller.
(a) The representations and warranties of Buyer on behalf of Buying
Fund set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date with the
same effect as though all such representations and warranties had been made as
of the Closing Date.
(b) Buyer shall have complied with and satisfied in all material
respects all agreements and conditions relating to Buying Fund set forth herein
on its part to be performed or satisfied at or prior to the Closing Date.
(c) Seller shall have received on the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of Buyer, in such individual's
capacity as an officer of Buyer and not as an individual, to the effect that the
conditions specified in Sections 6.3(a) and (b) have been satisfied and (ii) a
certificate, dated as of the Closing Date, from the Secretary or Assistant
Secretary of Buyer (in such capacity) certifying as to the accuracy and
completeness of the attached Governing Documents of Buyer and resolutions,
consents and authorizations of or regarding Buyer with respect to the execution
and delivery of this Agreement and the transactions contemplated hereby.
ARTICLE 7
TERMINATION OF AGREEMENT
SECTION 7.1. Termination. This Agreement may be terminated on or prior to
the Closing Date as follows:
21
(a) by mutual written consent of Seller and Buyer; or
(b) at the election of Seller or Buyer, to be effectuated by the
delivery by the terminating party to the other party of a written notice of such
termination:
(i) if the Closing Date shall not be on or before the Termination
Date, unless the failure to consummate the Reorganization is the result of a
willful and material breach of this Agreement by the party seeking to terminate
this Agreement;
(ii) if, upon a vote at the Shareholders Meeting or any final
adjournment thereof, the Required Shareholder Vote shall not have been obtained
as contemplated by Section 5.8; or
(iii) if any Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Reorganization and such order, decree, ruling or other
action shall have become final and nonappealable.
SECTION 7.2. Survival After Termination. If this Agreement is terminated in
accordance with Section 7.1 hereof and the Reorganization of Selling Fund is not
consummated, this Agreement shall become void and of no further force and effect
with respect to the Reorganization and Selling Fund, except for the provisions
of Section 5.3.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Survival of Representations, Warranties and Covenants. The
representations and warranties in this Agreement, and the covenants in this
Agreement that are required to be performed at or prior to the Closing Date,
shall terminate upon the consummation of the transactions contemplated
hereunder. The covenants in this Agreement that are required to be performed in
whole or in part subsequent to the Closing Date shall survive the consummation
of the transactions contemplated hereunder for a period of one (1) year
following the Closing Date.
SECTION 8.2. Governing Law. This Agreement shall be construed and
interpreted according to the laws of the State of Delaware applicable to
contracts made and to be performed wholly within such state.
SECTION 8.3. Binding Effect, Persons Benefiting, No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns of the parties and such Persons.
Nothing in this Agreement is intended or shall be construed to confer upon any
entity or Person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. Without the prior written consent of the parties
hereto, this Agreement may not be assigned by any of the parties hereto.
22
SECTION 8.4. Obligations of Buyer and Seller.
(a) Seller and Buyer hereby acknowledge and agree that Buying Fund is
a separate investment portfolio of Buyer, that Buyer is executing this Agreement
on behalf of Buying Fund, and that any amounts payable by Buyer under or in
connection with this Agreement shall be payable solely from the revenues and
assets of Buying Fund. Seller further acknowledges and agrees that this
Agreement has been executed by a duly authorized officer of Buyer in his or her
capacity as an officer of Buyer intending to bind Buyer as provided herein, and
that no officer, trustee or shareholder of Buyer shall be personally liable for
the liabilities or obligations of Buyer incurred hereunder. Finally, Seller
acknowledges and agrees that the liabilities and obligations of Buying Fund
pursuant to this Agreement shall be enforceable against the assets of Buying
Fund only and not against the assets of Buyer generally or assets belonging to
any other series of Buyer.
(b) Seller and Buyer hereby acknowledge and agree that Selling Fund is
a separate investment portfolio of Seller, that Seller is executing this
Agreement on behalf of Selling Fund and that any amounts payable by Seller under
or in connection with this Agreement shall be payable solely from the revenues
and assets of Selling Fund. Buyer further acknowledges and agrees that this
Agreement has been executed by a duly authorized officer of Seller in his or her
capacity as an officer of Seller intending to bind Seller as provided herein,
and that no officer, trustee or shareholder of Seller shall be personally liable
for the liabilities or obligations of Seller incurred hereunder. Finally, Buyer
acknowledges and agrees that the liabilities and obligations of Selling Fund
pursuant to this Agreement shall be enforceable against the assets of Selling
Fund only and not against the assets of Seller generally or assets belonging to
any other series of Seller.
SECTION 8.5. Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by Seller and Buyer.
SECTION 8.6. Enforcement. The parties agree irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 8.7. Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or a Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Each representation and warranty contained in Article 3 or 4 that
relates to a general category of a subject matter shall be deemed superseded by
a specific representation and warranty relating to a subcategory thereof to the
extent of such specific representation or warranty.
23
SECTION 8.8. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and each of which shall constitute one
and the same instrument.
SECTION 8.9. Entire Agreement; Exhibits and Schedules. This Agreement,
including the Exhibits, Schedules, certificates and lists referred to herein,
and any documents executed by the parties simultaneously herewith or pursuant
thereto, constitute the entire understanding and agreement of the parties hereto
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, written or oral, between the parties with respect
to such subject matter.
SECTION 8.10. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or when sent by telecopier
(with receipt confirmed), provided, in the case of a telecopied notice, a copy
is also sent by registered mail, return receipt requested, or by courier,
addressed as follows (or to such other address as a party may designate by
notice to the other):
(a) If to Seller:
AIM Stock Funds
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxx
(b) If to Buyer:
AIM Growth Series
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxx
SECTION 8.11. Representations by Investment Adviser.
24
(a) In its capacity as investment adviser to Seller, the Investment
Adviser represents to Buyer that to the best of its knowledge the
representations and warranties of Seller and Selling Fund contained in this
Agreement are true and correct as of the date of this Agreement. For purposes of
this Section 8.11(a), the best knowledge standard shall be deemed to mean that
the officers of the Investment Adviser who have substantive responsibility for
the provision of investment advisory services to Seller do not have actual
knowledge to the contrary after due inquiry.
(b) In its capacity as investment adviser to Buyer, the Investment
Adviser represents to Seller that to the best of its knowledge the
representations and warranties of Buyer and Buying Fund contained in this
Agreement are true and correct as of the date of this Agreement. For purposes of
this Section 8.11(b), the best knowledge standard shall be deemed to mean that
the officers of the Investment Adviser who have substantive responsibility for
the provision of investment advisory services to Buyer do not have actual
knowledge to the contrary after due inquiry.
SECTION 8.12. Successors and Assigns; Assignment. This Agreement shall
be binding upon and inure to the benefit of Seller, on behalf of Selling Fund,
and Buyer, on behalf of Buying Fund, and their respective successors and
permitted assigns. The parties hereto expressly acknowledge and agree that this
Agreement shall be binding upon and inure to the benefit of those Delaware
statutory trusts that are the resulting entities in the permitted
reorganizations of funds set forth on Schedule 4.14(b).
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AIM STOCK FUNDS, acting on behalf of
AIM SMALL COMPANY GROWTH FUND
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
AIM GROWTH SERIES, acting on behalf of
AIM SMALL CAP GROWTH FUND
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A I M ADVISORS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
26
EXHIBIT A
EXCLUDED LIABILITIES OF SELLING FUND
None.
A-1
SCHEDULE 2.1
CLASSES OF SHARES OF SELLING FUND AND CORRESPONDING CLASSES OF SHARES OF BUYING
FUND
Corresponding Classes of
Classes of Shares of Selling Fund Shares of Buying Fund
--------------------------------- --------------------------
AIM Small Company Growth Fund AIM Small Cap Growth Fund
Class A Shares Class A Shares
Class B Shares Class B Shares
Class C Shares Class C Shares
Class R Shares Class R Shares
Investor Class Shares Investor Class Shares
Institutional Class Shares Institutional Class Shares
1
SCHEDULE 3.4
CERTAIN CONTINGENT LIABILITIES OF SELLING FUND
None.
1
SCHEDULE 4.4
CERTAIN CONTINGENT LIABILITIES OF BUYING FUND
None.
1
SCHEDULE 4.5(A)
CLASSES OF SHARES OF BUYING FUND
Classes of Shares of Buying Fund
--------------------------------
Class A Shares
Class B Shares
Class C Shares
Class R Shares
Investor Class Shares
Institutional Shares
1
SCHEDULE 4.14(B)
PERMITTED REORGANIZATIONS OF FUNDS
AIM Aggressive Growth Fund into AIM Constellation Fund
AIM Xxxxxxxxxx Fund into AIM Constellation Fund
AIM Blue Chip Fund into AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund into AIM Dynamics Fund
AIM Premier Equity Fund into AIM Charter Fund
AIM V.I. Aggressive Growth Fund into AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund into AIM V.I. Capital Appreciation Fund
AIM V.I. Blue Chip Fund into AIM V.I. Large Cap Growth Fund
AIM V.I. Premier Equity Fund into AIM V.I. Core Equity Fund
1
SCHEDULE 6.2(F)
TAX OPINIONS
(i) The transfer of the assets of Selling Fund to Buying Fund in exchange
solely for Buying Fund Shares distributed directly to Selling Fund Shareholders
and Buying Fund's assumption of the Liabilities, as provided in the Agreement,
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code and Selling Fund and Buying Fund will be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
(ii) In accordance with Section 361(a) and Section 361(c)(1) of the Code,
no gain or loss will be recognized by Selling Fund on the transfer of its assets
to Buying Fund solely in exchange for Buying Fund Shares and Buying Fund's
assumption of the Liabilities or on the distribution of Buying Fund Shares to
Selling Fund Shareholders.
(iii) In accordance with Section 1032 of the Code, no gain or loss will be
recognized by Buying Fund upon the receipt of assets of Selling Fund in exchange
for Buying Fund Shares issued directly to Selling Fund Shareholders.
(iv) In accordance with Section 354(a)(1) of the Code, no gain or loss will
be recognized by Selling Fund Shareholders on the receipt of Buying Fund Shares
in exchange for Selling Fund Shares.
(v) In accordance with Section 362(b) of the Code, the basis to Buying Fund
of the assets of Selling Fund will be the same as the basis of such assets in
the hands of Selling Fund immediately prior to the Reorganization.
(vi) In accordance with Section 358(a) of the Code, a Selling Fund
Shareholder's basis for Buying Fund Shares received by the Selling Fund
Shareholder will be the same as his or her basis for Selling Fund Shares
exchanged therefor.
(vii) In accordance with Section 1223(1) of the Code, a Selling Fund
Shareholder's holding period for Buying Fund Shares will be determined by
including such Selling Fund Shareholder's holding period for Selling Fund Shares
exchanged therefor, provided that such Selling Fund Shareholder held such
Selling Fund Shares as a capital asset.
(viii) In accordance with Section 1223(2) of the Code, the holding period
with respect to the assets of Selling Fund transferred to Buying Fund in the
Reorganization will include the holding period for such assets in the hands of
Selling Fund.
(ix) In accordance with Section 381(a)(2) of the Code, Buying Fund will
succeed to and take into account the items of Selling Fund described in Section
381(c) of the Code, subject to the conditions and limitations specified in
Sections 381 through 384 of the Code and the Treasury Regulations thereunder.
