AIM FLOATING RATE FUND
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
December 6, 2005, by and between AIM Floating Rate Fund, a Delaware statutory
trust ("AFRF"), acting on its own behalf and on behalf of AIM Floating Rate Fund
and AIM Counselor Series Trust, a Delaware statutory trust (the "Trust"), acting
on its own behalf and on behalf of its series portfolio AIM Floating Rate Fund.
BACKGROUND
AFRF is organized as a series management investment company and is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended. AFRF currently publicly offers shares of
beneficial interest representing interests in its single series portfolio which
has been designated as AIM Floating Rate Fund and is referred to in this
Agreement as the "Current Fund."
The Board of Trustees of AFRF has designated multiple classes of shares of
beneficial interest that represent interests in the Current Fund. Each of these
classes is listed on Schedule A to this Agreement and is referred to in this
Agreement as a "Current Fund Class."
The Board of Trustees of AFRF has determined that it would be in the best
interests of the shareholders of the Current Fund for the Current Fund to
reorganize as an investment portfolio of the Trust for the sole purpose of
converting the Current Fund from a closed-end investment company to an open-end
investment company. In anticipation of such reorganization, the Board of
Trustees of the Trust has established an additional series portfolio
corresponding to the Current Fund and designated such series portfolio as AIM
Floating Rate Fund (the "New Fund"), and has designated multiple classes of
shares of beneficial interest in the New Fund (each a "New Fund Class").
Schedule A lists the New Fund Classes.
The Current Fund desires to provide for its reorganization (the
"Reorganization") through the transfer of all of its assets to the New Fund in
exchange for the assumption by the New Fund of the liabilities of the Current
Fund and the issuance by the Trust to the Current Fund of shares of beneficial
interest in the New Fund ("New Fund Shares"). New Fund Shares received by the
Current Fund will have an aggregate net asset value equal to the aggregate net
asset value of the shares of the Current Fund immediately prior to the
Reorganization (the "Current Fund Shares"). The Current Fund will then
distribute the New Fund Shares it has received to its shareholders.
The Reorganization is subject to, and shall be effected in accordance with,
the terms of this Agreement. This Agreement is intended to be and is adopted by
AFRF, on its own behalf and on behalf of the Current Fund, and by the Trust, on
its own behalf and on behalf of the New Fund, as a Plan of Reorganization within
the meaning of the regulations under Section 368(a) of the Internal Revenue Code
of 1986, as amended.
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
Any capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the preamble or background to this Agreement. In addition,
the following terms shall have the following meanings:
1.1 "Assets" shall mean all assets including, without limitation, all cash,
cash equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on the Current Fund's books, and other property owned by the
Current Fund at the Effective Time.
1.2 "Closing" shall mean the consummation of the transfer of Assets,
assumption of Liabilities and issuance of shares described in Sections 2.1 and
2.2 of this Agreement, together with the related acts necessary to consummate
the Reorganization, to occur on the date set forth in Section 3.1.
1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 "Current Fund" shall mean the single series portfolio of AFRF
established as AIM Floating Rate Fund.
1.5 "Current Fund Class" shall mean each class of shares of beneficial
interest in the Current Fund as shown on Schedule A.
1.6 "Current Fund Shares" shall mean the shares of the Current Fund
outstanding immediately prior to the Reorganization.
1.7 "Effective Time" shall have the meaning set forth in Section 3.1.
1.8 "Liabilities" shall mean all liabilities of the Current Fund including,
without limitation, all debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
determinable at the Effective Time, and whether or not specifically referred to
herein.
1.9 "New Fund" shall mean the series portfolio of the Trust established as
AIM Floating Rate Fund.
1.10 "New Fund Class" shall mean each class of shares of beneficial
interest in the New Fund as set forth on Schedule A, certain of which shall
correspond to the existing Current Fund Classes as shown on Schedule B.
1.11 "New Fund Shares" shall mean those shares of beneficial interest in
the New Fund issued to the Current Fund hereunder.
1.12 "RIC" shall mean a "regulated investment company" (as defined under
Subchapter M of the Code).
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1.13 "SEC" shall mean the Securities and Exchange Commission.
1.14 "Securities Act" shall mean the Securities Act of 1933, as amended.
1.15 "Shareholder(s)" shall mean the Current Fund's shareholder(s) of
record, determined as of the Effective Time.
1.16 "Shareholders Meeting" shall have the meaning set forth in Section
5.1.
1.17 "Transfer Agent" shall have the meaning set forth in Section 2.2.
1.18 "1940 Act" shall mean the Investment Company Act of 1940, as amended.
2. PLAN OF REORGANIZATION.
2.1 AFRF agrees, on behalf of the Current Fund, to assign, sell, convey,
transfer and deliver all of the Assets of the Current Fund to the New Fund. The
Trust, on behalf of the New Fund, agrees in exchange therefor:
(a) to issue and deliver to the Current Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares of each New
Fund Class designated on Schedule B equal to the number of full and
fractional Current Fund Shares of each Current Fund Class designated on
Schedule B; and
(b) to assume all of the Current Fund's Liabilities.
Such transactions shall take place at the Closing.
2.2 At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Shares issued pursuant to Section 5.2 shall be
redeemed by the New Fund at a redemption price equal to $10.00 per share and (b)
the Current Fund shall distribute the New Fund Shares received by it pursuant to
Section 2.1 to the Current Fund's Shareholders in exchange for such
Shareholders' Current Fund Shares. Such distribution shall be accomplished
through opening accounts, by the transfer agent for the Trust (the "Transfer
Agent"), on the New Fund's share transfer books in the Shareholders' names and
transferring New Fund Shares to such accounts. Each Shareholder's account shall
be credited with the respective pro rata number of full and fractional (rounded
to the third decimal place) New Fund Shares of each New Fund Class due that
Shareholder. All outstanding Current Fund Shares, including those represented by
certificates, shall simultaneously be canceled on the Current Fund's share
transfer books. The Trust shall not issue certificates representing the New Fund
Shares in connection with the Reorganization. However, certificates representing
Current Fund Shares shall represent New Fund Shares after the Reorganization.
2.3 Following receipt of the required shareholder vote and as soon as
reasonably practicable after the Closing, the status of the Current Fund as a
designated series of AFRF shall be terminated.
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2.4 Following receipt of the required shareholder vote and as soon as
reasonably practicable after distribution of the New Fund Shares pursuant to
Section 2.2, AFRF shall cause a Form N-8F to be filed with the SEC to deregister
AFRF as a registered investment company and, following the filing of Form N-8F
and the issuance by the SEC of an order declaring that AFRF has ceased to be an
investment company, AFRF shall file Certificate of Cancellation with the
Secretary of State of the State of Delaware to dissolve AFRF as a Delaware
statutory trust; provided, however, that the filing of Form N-8F and Certificate
of Cancellation as aforesaid shall not be required if the Reorganization shall
not have been consummated.
2.5 Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder of the Current Fund Shares exchanged
therefor shall be paid by the person to whom such New Fund Shares are to be
issued, as a condition of such transfer.
2.6 Any reporting responsibility of AFRF or the Current Fund to a public
authority is and shall remain its responsibility up to and including the date on
which it is terminated.
3. CLOSING.
3.1 The Closing shall occur at the principal office of AFRF on April 13,
2006, or on such other date and at such other place upon which the parties may
agree. All acts taking place at the Closing shall be deemed to take place
simultaneously as of AFRF's and the Trust's close of business on the date of the
Closing or at such other time as the parties may agree (the "Effective Time").
3.2 AFRF or its fund accounting agent shall deliver to the Trust at the
Closing, a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by the Current Fund to the New
Fund, as reflected on the New Fund's books immediately following the Closing,
does or will conform to such information on the Current Fund's books immediately
before the Closing. AFRF shall cause the custodian for the Current Fund to
deliver at the Closing a certificate of an authorized officer of the custodian
stating that (a) the Assets held by the custodian will be transferred to the New
Fund at the Effective Time, and (b) all necessary taxes in conjunction with the
delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
3.3 AFRF shall deliver to the Trust at the Closing a list of the names and
addresses of each Shareholder of the Current Fund and the number of outstanding
Current Fund Shares of each Current Fund Class owned by each Shareholder, all as
of the Effective Time, certified by AFRF's Secretary or Assistant Secretary. The
Trust shall cause the Transfer Agent to deliver at the Closing a certificate as
to the opening on the New Fund's share transfer books of accounts in the
Shareholders' names. The Trust shall issue and deliver a confirmation to AFRF
evidencing the New Fund Shares to be credited to the Current Fund at the
Effective Time or provide evidence satisfactory to AFRF that such shares have
been credited to the Current Fund's account on such books. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts, or other documents as the other party or its counsel may
reasonably request.
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3.4 AFRF and the Trust shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES.
4.1 AFRF represents and warrants on its own behalf and on behalf of the
Current Fund as follows:
(a) AFRF is a statutory trust duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and its Amended and
Restated Certificate of Trust has been duly filed in the Office of the
Secretary of State of Delaware;
(b) AFRF is duly registered as a closed-end series management
investment company under the 1940 Act, and such registration is in full
force and effect;
(c) The Current Fund is a duly established and designated series of
AFRF;
(d) The current prospectus and statement of additional information for
Current 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
Effective Time 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.
(e) At the Closing, the Current Fund will have good and marketable
title to its Assets and full right, power, and authority to sell, assign,
transfer, and deliver its Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, the New Fund will acquire
good and marketable title to the Assets;
(f) The New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
(g) The Current Fund is a "fund" as defined in Section 851(g)(2) of
the Code; the Current Fund qualified for treatment as a RIC for each
taxable year since it commenced operations that has ended (or will end)
before the Closing and will continue to meet all the requirements for such
qualification for its current taxable year (and the Assets will be invested
at all times through the Effective Time in a manner that ensures compliance
with the foregoing); the Current Fund has no earnings and profits
accumulated in any taxable year in which the provisions of Subchapter M did
not apply to it; and the Current Fund has made all distributions for each
calendar year that has ended (or will end) before the Closing that are
necessary to avoid the imposition of federal excise tax or has paid or
provided for the payment of any excise tax imposed for any such calendar
year;
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(h) During the five-year period ending on the date of the
Reorganization, neither AFRF nor any person related to AFRF (as defined in
Section 1.368-1(e)(3) of the Federal income tax regulations adopted
pursuant to the Code 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, acquired shares of the Current Fund for consideration
other than shares of the Current Fund, except for shares redeemed in the
ordinary course of the Current Fund's business as a closed-end investment
company (which business shall be deemed to include the Current Fund's
acquisition of shares pursuant to periodic repurchase offers made to its
shareholders in accordance with Rule 23c-3 of the 1940 Act). There is no
plan or intention of the Shareholders who individually own 5% or more of
any Current Fund Shares and, to the best of AFRF's knowledge, there is no
plan or intention of the remaining Shareholders to redeem or otherwise
dispose of any New Fund Shares to be received by them in the
Reorganization. AFRF does not anticipate dispositions of Current Fund
Shares or New Fund Shares at the time of or soon after the Reorganization
to exceed the usual rate and frequency of redemptions of shares of the New
Fund as a series of an open-end investment company. Consequently, AFRF is
not aware of any plan that would cause the percentage of Shareholder
interests, if any, that will be disposed of as a result of or at the time
of the Reorganization to be one percent (1%) or more of the shares of the
Current Fund outstanding as of the Effective Time;
(i) The Liabilities were incurred by the Current Fund in the ordinary
course of its business and are associated with the Assets;
(j) AFRF 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;
(k) As of the Effective Time, the Current Fund will not have
outstanding any warrants, options, convertible securities, or any other
type of rights pursuant to which any person could acquire Current Fund
Shares except for the right of investors to acquire its shares at net asset
value in the normal course of its business as a series of a closed-end
non-diversified management investment company operating under the 1940 Act;
(l) At the Effective Time, the performance of this Agreement with
respect to the Current Fund shall have been duly authorized by all
necessary action by the Current Fund's shareholders;
(m) The fair market value of the Assets of the Current Fund
transferred to the New Fund will equal or exceed the sum of the Liabilities
assumed by the New Fund plus the amount of Liabilities, if any, to which
the transferred Assets are subject; and
(n) The Liabilities to be assumed by the New Fund and the Liabilities,
if any, to which the transferred Assets are subject, were incurred by the
Current Fund in the ordinary course of its business and are associated with
the transferred Assets.
4.2 The Trust represents and warrants on its own behalf and on behalf of
the New Fund as follows:
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(a) The Trust is a statutory trust duly organized, validly existing,
and in good standing under the laws of the State of Delaware, and its
Certificate of Trust has been duly filed in the office of the Secretary of
State of Delaware;
(b) The Trust is duly registered as an open-end management investment
company under the 1940 Act. At the Effective Time, the New Fund Shares to
be issued pursuant to Section 2.1 of this Agreement shall be duly
registered under the Securities Act by a Registration Statement on Form
N-14 filed with the SEC;
(c) At the Effective Time, the New Fund will be a duly established and
designated series of the Trust;
(d) The New Fund has not commenced operations nor will it commence
operations until after the Closing;
(e) Prior to the Effective Time, there will be no issued and
outstanding shares in the New Fund or any other securities issued by the
Trust on behalf of the New Fund, except as provided in Section 5.2;
(f) No consideration other than New Fund Shares (and the New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets in
the Reorganization;
(g) The New Fund Shares to be issued and delivered to the Current Fund
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of the New Fund, fully paid and nonassessable and
will conform to the description thereof contained in the Trust's
Registration Statement on Form N-14 then in effect;
(h) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus"), which forms a part of the Trust's Registration
Statement on Form N-14, shall be furnished to the shareholders of the
Current 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 the
New Fund, when they become effective, shall conform in all material
respects to the applicable requirements of the Securities Act and the 1940
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.
(i) The New Fund will be a "fund" as defined in Section 851(g)(2) of
the Code and will meet all the requirements to qualify for treatment as a
RIC for its taxable year in which the Reorganization occurs;
(j) The Trust, on behalf of the New Fund, has no plan or intention to
issue additional New Fund Shares following the Reorganization except for
shares issued in the ordinary course of its business as an open-end
investment company; nor does the Trust, on behalf of the New Fund, have any
plan or intention to redeem or otherwise reacquire
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any New Fund Shares issued pursuant to the Reorganization, other than in
the ordinary course of such business or to the extent necessary to comply
with its legal obligation under Section 22(e) of the 1940 Act;
(k) The New Fund does not have any plan or intention to sell or
otherwise dispose of any of the Assets, except for dispositions made in the
ordinary course of its business or dispositions necessary to maintain its
qualification as a RIC, although in the ordinary course of its business the
New Fund will continuously review its investment portfolio (as the Current
Fund did before the Reorganization) to determine whether to retain or
dispose of particular stocks or securities, including those included in the
Assets; and
(l) There is no plan or intention for the New Fund to be dissolved or
merged into another corporation or statutory trust or "fund" thereof
(within the meaning of Section 851(g)(2) of the Code) following the
Reorganization.
4.3 Each of AFRF and the Trust, on its own behalf and on behalf of the
Current Fund or the New Fund, as appropriate, represents and warrants as
follows:
(a) The fair market value of the New Fund Shares of the New Fund
received by each Shareholder will be equal to the fair market value of the
Current Fund Shares of the Current Fund surrendered in exchange therefor;
(b) Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares of the New Fund and will own
such shares solely by reason of their ownership of the Current Fund Shares
of the Current Fund immediately before the Reorganization;
(c) The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
(d) There is no intercompany indebtedness between the Current Fund and
the New Fund that was issued or acquired, or will be settled, at a
discount; and
(e) Immediately following consummation of the Reorganization, the New
Fund will hold the same assets, except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization, and be subject to
the same liabilities that the Current Fund held or was subject to
immediately prior to the Reorganization. Assets used to pay (i) expenses,
(ii) all redemptions (other than redemptions at the usual rate and
frequency of the Current Fund as a series of an closed-end investment
company, which redemptions shall be deemed to include the Current Fund's
acquisition of shares pursuant to periodic repurchase offers made to its
shareholders in accordance with Rule 23c-3 of the 1940 Act), and (iii)
distributions (other than regular, normal distributions), made by the
Current Fund after the date of this Agreement will, in the aggregate,
constitute less than one percent (1%) of its net assets.
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5. COVENANTS.
5.1 As soon as practicable after the date of this Agreement, AFRF shall
call a meeting of the shareholders of the Current Fund (the "Shareholders
Meeting") to consider and act on this Agreement and, in connection therewith,
the sale of the Current Fund's assets and the termination of the Current Fund as
a designated series of AFRF. The Board of Trustees of AFRF shall recommend that
shareholders approve this Agreement and, in connection therewith, the sale of
the Current Fund's assets and the termination of the Current Fund as a
designated series of AFRF. Approval of this Agreement by the shareholders of the
Current Fund will authorize AFRF, and AFRF hereby agrees, to vote on the matters
referred to in Sections 5.2 and 5.3 for the New Fund.
5.2 Prior to the Closing, AFRF shall acquire one New Fund Share in each New
Fund Class of the New Fund for the purpose of enabling AFRF to ratify the
selection of the Trust's independent accountants, and to vote on the matters
referred to in Section 5.3.
5.3 Immediately prior to the Closing, the Trust (on its own behalf and with
respect to the New Fund or each New Fund Class, as appropriate) shall enter into
a Master Investment Advisory Agreement, a Master Sub-Advisory Agreement, a
Master Administrative Services Agreement, Master Distribution Agreement, a
Custodian Agreement, and a Transfer Agency and Servicing Agreement; shall adopt
plans of distribution pursuant to Rule 12b-l of the 1940 Act, a multiple class
plan pursuant to Rule 18f-3 of the 1940 Act; and shall enter into or adopt, as
appropriate, such other agreements and plans as are necessary for the New Fund's
operation as a series of an open-end investment company. Each such agreement and
plan shall have been approved by the Trust's trustees and, to the extent
required by law, by such of those trustees who are not "interested persons" of
the Trust (as defined in the 0000 Xxx) and by AFRF as the sole shareholder of
the New Fund.
5.4 The Trust shall file with the SEC one or more post-effective amendments
to the Trust's Registration Statement on Form N-lA under the Securities Act, and
the 1940 Act, which will contain such amendments to such Registration Statement
on Form N-1A as are determined by the Trust to be necessary and appropriate to
effect the Reorganization, and shall use its best efforts to have such
post-effective amendment or amendments to the Registration Statement become
effective prior to the Closing.
5.5 The Trust shall file with the SEC a Registration Statement on Form N-14
under the Securities Act, and the 1940 Act, (i) which will contain such
amendments to such Registration Statement on Form N-14 as are determined by the
Trust to be necessary and appropriate to effect the Reorganization, and (ii)
will register the New Fund Shares to be issued pursuant to Section 2.1 of this
Agreement, and shall use its best efforts to have such post-effective amendment
or amendments to the Registration Statement become effective prior to the
Closing.
6. CONDITIONS PRECEDENT.
The obligations of AFRF, on its own behalf and on behalf of the Current
Fund, and the Trust, on its own behalf and on behalf of the New Fund, will be
subject to (a) performance by the
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other party of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other party
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
6.1 The shareholders of the Current Fund shall have approved this Agreement
and the transactions contemplated by this Agreement in accordance with
applicable law.
6.2 All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state securities
authorities) deemed necessary by either AFRF or the Trust to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain such consults, orders,
and permits would not involve a risk of a material adverse effect on the assets
or properties of either the Current Fund or the New Fund, provided that either
AFRF or the Trust may for itself waive any of such conditions.
6.3 The Registration Statement on Form N-14 filed by the Trust with respect
to New Fund Shares to be issued to Current 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
6.4 in 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.
6.4 Each of AFRF and the Trust shall have received an opinion from Xxxxxxx
Xxxxx Xxxxxxx & Xxxxxxxxx, LLP as to the federal income tax consequences
mentioned below. In rendering such opinion, such counsel may rely as to factual
matters, exclusively and without independent verification, on the
representations made in this Agreement (or in separate letters of representation
that AFRF and the Trust shall use their best efforts to deliver to such counsel)
and the certificates delivered pursuant to Section 3.4. Such opinion shall be
substantially to the effect that, based on the facts and assumptions stated
therein and conditioned on consummation of the Reorganization in accordance with
this Agreement, for federal income tax purposes:
(a) The Reorganization will constitute a "reorganization" within the
meaning of section 368(a) of the Code, and the Current Fund and the New
Fund will each be "a party to a reorganization" within the meaning of
section 368(b) of the Code;
(b) No gain or loss will be recognized to the Current Fund on the
transfer of its Assets to the New Fund in exchange solely for the New
Fund's New Fund Shares and the New Fund's assumption of the Current Fund's
Liabilities or on the subsequent distribution of those New Fund Shares to
its Shareholders, in constructive exchange for their Current Fund Shares,
in liquidation of the Current Fund;
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(c) No gain or loss will be recognized to the New Fund on its receipt
of the Current Fund's Assets in exchange for New Fund Shares and its
assumption of the Current Fund's Liabilities;
(d) The New Fund's basis for the Current Fund's Assets will be the
same as the basis thereof in the Current Fund's hands immediately before
the Reorganization, and the New Fund's holding period for those Assets will
include the Current Fund's holding period therefor;
(e) A Shareholder will recognize no gain or loss on the constructive
exchange of Current Fund Shares solely for New Fund Shares pursuant to the
Reorganization; and
(f) A Shareholder's basis for the New Fund Shares of the New Fund to
be received in the Reorganization will be the same as the basis for the
Current Fund Shares of the Current Fund to be constructively surrendered in
exchange for such New Fund Shares, and a Shareholder's holding period for
such New Fund Shares will include its holding period for such Current Fund
Shares, provided that such Current Fund Shares are held as capital assets
by the Shareholder at the Effective Time.
6.5 No stop-order suspending the effectiveness of the Registration
Statement on Form N-1A shall have been issued, and no proceeding for that
purpose shall have been initiated or threatened by the SEC (and not withdrawn or
terminated).
At any time prior to the Closing, any of the foregoing conditions (except
those set forth in Sections 6.1, 6.3 and 6.4) may be waived by the trustees of
either AFRF or the Trust if, in their judgment, such waiver will not have a
material adverse effect on the interests of the Current Fund's Shareholders.
7. EXPENSES.
Except as otherwise provided in Section 4.3(c), all expenses incurred in
connection with the transactions contemplated by this Agreement (regardless of
whether they are consummated) will be borne by the parties as they mutually
agree.
8. ENTIRE AGREEMENT.
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties.
9. AMENDMENT.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding its approval with respect to the Current Fund by the
shareholders of the Current Fund, in such manner as may be mutually agreed upon
in writing by the parties; provided that following such approval no such
amendment shall have a material adverse effect on the Shareholders' interests.
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10. TERMINATION.
This Agreement may be terminated with respect to the Current Fund at any
time at or prior to the Effective Time, whether before or after approval by the
shareholders of the Current Fund:
10.1 By either AFRF or the Trust (a) in the event of the other party's
material breach of any representation, warranty, or covenant contained herein to
be performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such condition will
not or cannot be met, or (c) if the Closing has not occurred on or before
December 31, 2006; or
10.2 By the parties' mutual agreement.
Except as otherwise provided in Section 7, in the event of termination
under Sections 10.1(c) or 10.2, there shall be no liability for damages on the
part of either AFRF or the Trust or the Current Fund or the New Fund, to the
other.
11. MISCELLANEOUS.
11.1 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
11.2 Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
11.3 The execution and delivery of this Agreement have been authorized by
the Trust's trustees, and this Agreement has been executed and delivered by a
duly authorized officer of the Trust in his or her capacity as an officer of the
Trust intending to bind the Trust as provided herein, and no officer, trustee or
shareholder of the Trust shall be personally liable for the liabilities or
obligations of the Trust incurred hereunder. The liabilities and obligations of
the Trust pursuant to this Agreement shall be enforceable against the assets of
the New Fund only and not against the assets of the Trust generally.
11.4 The execution and delivery of this Agreement have been authorized by
the AFRF's trustees, and this Agreement has been executed and delivered by a
duly authorized officer of AFRF in his or her capacity as an officer of AFRF
intending to bind AFRF as provided herein, and no officer, trustee or
shareholder of AFRF shall be personally liable for the liabilities or
obligations of AFRF incurred hereunder. The liabilities and obligations of AFRF
pursuant to this Agreement shall be enforceable against the assets of the
Current Fund only and not against the assets of AFRF generally.
12
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
Attest: AIM FLOATING RATE FUND, on behalf of its
single series portfolio AIM Floating
Rate Fund
/s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------- ------------------------------------
Title: President
Attest: AIM COUNSELOR SERIES TRUST, on behalf of
its series portfolio AIM Floating Rate
Fund
/s/ Xxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------- ------------------------------------
Title: President
13
SCHEDULE A
Classes of Shares of the Current Fund
Class B Shares
Class C Shares
Classes of Shares of the New Fund
Class A Shares
Class B1 Shares
Class C Shares
Class R Shares
Institutional Class Shares
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SCHEDULE B
CLASSES OF THE CURRENT FUND CORRESPONDING CLASSES OF THE NEW FUND
--------------------------- -------------------------------------
Class B Shares that are not subject Class A Shares
to an Early Withdrawal Charge as of
the Effective Time
Class B Shares that are subject to Class B-1 Shares
an Early Withdrawal Charge as of
the Effective Time
Class C Shares Class C Shares
15
