AGREEMENT
AND
PLAN OF REORGANIZATION
FOR
LIQUID ASSETS PORTFOLIO II,
A SEPARATE PORTFOLIO OF
SHORT TERM INVESTMENTS TRUST II
DECEMBER 8, 2008
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS......................................................2
SECTION 1.1. Definitions.............................................2
ARTICLE 2 PLAN OF REORGANIZATION; TRANSFER OF ASSETS, ASSUMPTION OF
STATED LIABILITIES AND ISSUANCE OF BUYER FUND SHARES...................5
SECTION 2.1. Plan of Reorganization..................................5
SECTION 2.2. Delivery of Assets and Buyer Fund Shares;
Assumption of Liabilities...............................5
SECTION 2.3. Computation of Net Asset Value; Value of
Assets and Liabilities..................................5
SECTION 2.4. Redemption Requests after the Closing...................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER.........................6
SECTION 3.1. Organization; Authority.................................6
SECTION 3.2. Registration and Regulation of Seller...................6
SECTION 3.3. Selling Fund Shares; Business Operations................6
SECTION 3.4. Binding Obligation......................................7
SECTION 3.5. No Breaches or Defaults.................................7
SECTION 3.6. Authorizations or Consents..............................7
SECTION 3.7. No Actions, Suits or Proceedings........................7
SECTION 3.8. Contracts...............................................8
SECTION 3.9. Properties and Assets...................................8
SECTION 3.10. Taxes...................................................8
SECTION 3.11. Brokers.................................................9
SECTION 3.12. Voting Requirements.....................................9
SECTION 3.13. State Takeover Statutes.................................9
SECTION 3.14. No Distribution.........................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER..........................9
SECTION 4.1. Organization; Authority.................................9
SECTION 4.2. Registration and Regulation of Buyer....................9
SECTION 4.3. Financial Statements...................................10
SECTION 4.4. No Material Adverse Changes; Contingent
Liabilities............................................10
SECTION 4.5. Registration of Buying Fund Shares.....................10
SECTION 4.6. Accountants............................................11
SECTION 4.7. Binding Obligation.....................................11
SECTION 4.8. No Breaches or Defaults................................11
SECTION 4.9. Authorizations or Consents.............................11
SECTION 4.10. Permits................................................12
SECTION 4.11. No Actions, Suits or Proceedings.......................12
SECTION 4.12. Taxes..................................................12
SECTION 4.13. Brokers................................................13
SECTION 4.14. Representations Concerning the LAP Reorganization......13
ARTICLE 5 COVENANTS.......................................................14
SECTION 5.1. Expenses...............................................14
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SECTION 5.2. Further Assurances.....................................14
SECTION 5.3. Consents, Approvals and Filings........................14
SECTION 5.4. Tax Matters............................................14
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION......................14
SECTION 6.1. Conditions Precedent of Buyer..........................14
SECTION 6.2. Mutual Conditions......................................15
SECTION 6.3. Conditions Precedent of Seller.........................15
ARTICLE 7 MISCELLANEOUS...................................................15
SECTION 7.1. Survival of Representations, Warranties and
Covenants..............................................15
SECTION 7.2. Governing Law..........................................16
SECTION 7.3. Binding Effect, Persons Benefiting,
Assignment.............................................16
SECTION 7.4. Obligations of Buyer and Seller........................16
SECTION 7.5. Amendments.............................................16
SECTION 7.6. Enforcement............................................17
SECTION 7.7. Interpretation.........................................17
SECTION 7.8. Counterparts...........................................17
SECTION 7.9. Entire Agreement; Exhibits and Schedules...............17
SECTION 7.10. Notices................................................17
SECTION 7.11. Representations by Investment Adviser..................18
SECTION 7.12. Assignment of Rights...................................18
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 8, 2008, by and
among Short Term Investments Trust II, a Delaware statutory trust ("Seller"),
acting on behalf of Liquid Assets Portfolio II ("Selling Fund"), a separate
series of Seller, Short Term Investments Trust, a Delaware statutory trust
("Buyer"), acting on behalf of Liquid Assets Portfolio ("Buying Fund"), a
separate series of Buyer, and Invesco Aim Advisors, Inc., a Delaware corporation
(the "Investment Adviser").
BACKGROUND
WHEREAS, the Securities Lending Investment Fund (the "SLIF"), a series
portfolio of Xxxxx Brothers Investment Trust ("BBIT"), a Delaware statutory
trust, is an unregistered investment company formed primarily for the investment
of cash collateral delivered in connection with securities lending transactions
arranged by Xxxxx Brothers Xxxxxxxx & Co., as agent ("BBH");
WHEREAS, Selling Fund is an unregistered investment company formed for the
purpose of acquiring the assets of the SLIF pursuant to an Agreement and Plan of
Reorganization, dated December 8, 2008, between Seller, on behalf of Selling
Fund, and BBIT, on behalf of the SLIF (the "SLIF Agreement and Plan of
Reorganization"), and is contemplated by this Agreement to become a registered
investment company prior to the Effective Time;
WHEREAS, the Investment Adviser is the investment adviser of (i) Selling
Fund and (ii) Buying Fund;
WHEREAS, Invesco Aim Capital Management, Inc. ("Invesco Aim Capital") and
BBH desire to reorganize the SLIF into Buying Fund through a series of
transactions, so that upon consummation of those transactions, the shareholders
of the SLIF will become shareholders of Buying Fund;
WHEREAS, pursuant to a direction letter dated November 12, 2008, the
trustee of BBIT authorized and empowered BBH and Invesco Aim Capital (or either
of them) to take any and all actions that may be necessary or appropriate in
connection with the transactions contemplated by this Agreement and the SLIF
Agreement and Plan of Reorganization; and
WHEREAS, the transactions described in the foregoing recitals will occur
in the following manner: first, pursuant to the SLIF Agreement and Plan of
Reorganization, the SLIF will sell all of its assets and stated liabilities to
Selling Fund in return for shares of Selling Fund (the "Interim
Reorganization"); second, Selling Fund will sell all of its assets and
liabilities to Buying Fund in exchange for the Buying Fund Shares (such
transaction, the "LAP Reorganization"); and third, Selling Fund will distribute
the Buying Fund Shares to the SLIF (as the sole shareholder of the Selling Fund)
and the SLIF will distribute the Buying Fund Shares to the shareholders of the
SLIF;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, the parties hereto
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):
"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.
"Assets" means all assets and property of Selling Fund, including, without
limitation, all cash, securities, commodities and futures interests, and
dividends or interest or other receivables that are owned by Selling Fund, and
any deferred or prepaid expenses shown as an asset on the books of Selling Fund
on the Closing Date.
"BBH" is defined in the recitals hereto.
"BBIT" is defined in the recitals hereto.
"Buyer" is defined in the introductory paragraph.
"Buyer Custodian" means The Bank of New York Mellon 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. 811-02729.
"Buying Fund" is defined in the introductory paragraph.
"Buying Fund Auditors" means Pricewaterhouse Coopers, LLP.
"Buying Fund Financial Statements" means the audited financial statements
of Buying Fund for the fiscal year ended August 31, 2008.
"Buying Fund Shares" means Institutional Class shares of Buying Fund
issued pursuant to Section 2.1 of this Agreement.
"Closing" is defined in Section 2.1.
"Closing Date" means December 8, 2008, or such other date as the parties
may mutually agree upon.
"Close of Business of Seller" means 5:00 p.m. Eastern Time on the
Closing Date.
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"Code" means the Internal Revenue Code of 1986, as amended, and all rules
and regulations adopted pursuant thereto.
"Effective Time" means 6:30 p.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, the agreement and declaration of trust and bylaws, each as amended.
"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 Financial Industry Regulatory
Authority, the Commodity Futures Trading Commission, and the National Futures
Association).
"Interim Reorganization" is defined in the recitals to this Agreement.
"Investment Adviser" is defined in the introductory paragraph.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted pursuant thereto and no-action
and interpretive positions of the SEC thereunder.
"LAP Reorganization" is defined in the recitals to this Agreement.
"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 Selling Fund Shares on the Closing Date.
"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.
"Permit" and "Permits" mean all approvals, consents, authorizations,
certifications, filings, franchises, licenses, notices, permits and rights of
Governmental Authorities.
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"Person" means an individual or a corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"Return" means any return (including any information 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" is defined in the introductory paragraph.
"Seller Board of Trustees" means the board of trustees of Seller.
"Seller Custodian" means Bank of New York Mellon acting in its capacity as
custodian for the assets of Selling Fund.
"Seller Registration Statement" means the registration statement on Form
N-8A of Seller.
"Selling Fund" is defined in the introductory paragraph.
"Selling Fund Shares" means the outstanding shares of Selling Fund.
"SLIF" is defined in the recitals hereto.
"SLIF Agreement and Plan of Reorganization" means that certain agreement
and plan of reorganization by and among Seller, BBIT and the Investment Adviser,
dated December 8, 2008.
"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, property taxes,
withholding taxes, payroll taxes, minimum taxes, windfall profit taxes, ad
valorem or other taxes, stamp taxes, duties, fees, assessments or charges,
whether payable directly or by withholding, together with any related penalties,
fines, additions to tax or interest, imposed by the United States or any state,
county, local or foreign government or subdivision or agency thereof, and
including any transferee or secondary liability in respect of any tax (whether
imposed by law, contractual agreement or otherwise).
"Treasury Regulations" means the Federal income tax regulations adopted
pursuant to the Code.
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ARTICLE 2
PLAN OF REORGANIZATION; TRANSFER OF ASSETS, ASSUMPTION OF
STATED LIABILITIES AND ISSUANCE OF BUYER FUND SHARES.
SECTION 2.1. Plan of Reorganization. Subject to the terms and conditions
herein set forth and on the basis of the representations and warranties
contained herein, Seller, on behalf of Selling Fund, agrees to transfer all of
the Assets to Buying Fund, and Buyer agrees in exchange therefor, on behalf of
Buying Fund, to deliver to Selling Fund the Buying Fund Shares and to assume the
Liabilities as described in Section 2.2. Such transactions shall take place at
the closing to be held at the offices of Buyer on the date hereof (the
"Closing").
SECTION 2.2. Delivery of Assets and Buyer Fund Shares; Assumption of
Liabilities.
(a) At the Closing and with effect as of the Effective Time, (i)
Seller shall instruct Seller Custodian to transfer all of the Assets to the
account of Buying Fund maintained at Buyer Custodian for the account of Buying
Fund, (ii) Buying Fund hereby assumes and agrees to discharge all of the Stated
Liabilities as and when due in accordance with their respective terms, and (iii)
Buyer shall deliver a number of Buying Fund Shares equal to the number of
Selling Fund Shares held by the shareholder(s) of Selling Fund at the Effective
Time, in the manner specified in Section 2.2(b). The Assets so transferred 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. Upon delivery of the Assets, Buying Fund will receive good and
marketable title to the Assets free and clear of all Liens.
If Selling Fund is unable to make delivery in the manner
contemplated by this Section 2.2(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 or custodian, then Buyer shall
waive the delivery requirements of this Section 2.2(a) with respect to said
undelivered securities if Selling Fund has delivered to Buyer Custodian by or on
the Closing Date, executed copies of an agreement of assignment and escrow and
due bills executed on behalf of said broker or custodian, together with such
other documents as may be required by Buyer or Buyer Custodian, including
brokers' confirmation slips.
(b) The SLIF will be the sole shareholder of Selling Fund
immediately after the Closing. Buyer shall deliver the Buying Fund Shares to be
issued pursuant to Section 2.2(a) directly to the shareholders of record of the
SLIF in accordance with instructions provided by the SLIF. 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 Buying Fund
Shares by such SLIF shareholders. Buyer shall forward a confirmation of such
ownership to such SLIF shareholders.
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SECTION 2.3. Computation of Net Asset Value; Value of Assets and
Liabilities.
(a) The xxxx-to-market net asset value per share of Buying Fund
shall be computed in accordance with the policies and procedures of Buying Fund,
and the xxxx-to-market net asset value per share of Selling Fund shall be
computed in accordance with the policies and procedures of Selling Fund.
(b) 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
adopted by the Seller Board of Trustees.
(c) 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 2.4. Redemption Requests after the Closing. The share transfer
books of Selling Fund will be permanently closed as of 5:30 p.m. Eastern Time on
the Closing Date. Requests for the redemption of Selling Fund Shares received in
proper form after 5:30 p.m. Eastern Time on the Closing Date shall be deemed to
be redemption requests with respect to the Buying Fund Shares that will be held
by the SLIF shareholders after the consummation of the LAP Reorganization.
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
are exempt from registration or qualification under the Securities Act and the
securities laws of each state or other jurisdiction in which such shares have
been or are being offered for sale. Selling Fund is in compliance in all
material respects with all applicable laws, rules and regulations, including,
without limitation, the Investment Company 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 as adopted by the Seller
Board of Trustees. The value of the net assets of Selling Fund is determined
using portfolio valuation methods that comply in all material respects with the
requirements of Rule 2a-7 under 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.
6
SECTION 3.3. Selling Fund Shares; Business Operations.
(a) The Selling Fund Shares have been duly authorized and validly
issued and are fully paid and non-assessable.
(b) At the time of the Closing, Selling Fund will not have
outstanding any warrants, options, convertible securities or any other type of
right pursuant to which any Person may 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.
SECTION 3.4. 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 authorized, executed and delivered by Buyer, constitutes
the legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms with respect to the 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 3.5. 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 and do not result in any violation of the Governing Documents
of Seller.
SECTION 3.6. 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 Seller in connection with
the due execution and delivery by Seller of this Agreement and the consummation
by Seller of the transactions contemplated hereby.
SECTION 3.7. 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 LAP 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.
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SECTION 3.8. 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 are bound or
affected, or under which it or the Assets, business or operations of Selling
Fund receives benefits, 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 3.9. Properties and Assets. Since its formation, Selling Fund has
not created any Liens on any of its properties or Assets and has good and
marketable title to all such properties and Assets.
SECTION 3.10. Taxes.
(a) Selling Fund is treated as a separate taxable person for U.S.
federal income tax purposes and in each state where it does business. Selling
Fund is a shell entity formed solely to effect the reorganization of the SLIF
into Selling Fund and Selling Fund into Buying Fund. Selling Fund is classified,
and has been continuously so classified from its date of organization until the
present, as a partnership for U.S. federal income tax purposes within the
meaning of Section 7701(a)(2) of the Code, that is not a publicly traded
partnership within the meaning of Section 7704(b) of the Code, and in each state
where the Selling Fund does business or is required to file Tax Returns. Selling
Fund will qualify as a partnership that is not a publicly traded partnership as
of the Closing, and consummation of the transactions contemplated by the
Agreement will not cause it to fail to be qualified as a partnership that is not
a publicly traded partnership as of the Closing. Neither Seller on behalf of
Selling fund nor Selling Fund has filed an election on Form 8832, Entity
Classification Election, or on any other form, or on any comparable state tax
form, to be classified as an association taxable as a corporation.
(b) Selling Fund has timely filed all Tax Returns that are
required to be filed by it in all jurisdictions in which such Tax Returns are
required to be filed, and all such Returns accurately state, in all material
respects, the amount of Tax owed for the periods covered by the Returns, or, in
the case of information Returns, the amount and character of income required to
be reported by Selling Fund. Selling Fund has paid or made provision and
properly accounted for all Taxes shown to be due on such Tax Returns or on any
actual or proposed deficiency assessments received with respect to Selling Fund,
except where the failure to make such provisions would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
The amounts established as provisions for Taxes in the books and records of
Selling Fund as of the Closing will, to the extent required by generally
accepted accounting principles, be sufficient for the payment of all Taxes of
any kind, whether accrued, due, absolute, contingent or otherwise, which were or
will be payable by Selling Fund, for all periods or fiscal years (or portions
thereof) ending on or before the Closing, 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
8
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. No Tax Return filed by Selling Fund is
currently being audited by the Internal Revenue Service or by any state or local
taxing authority, nor is Seller aware of any proposed audit. To the knowledge of
Seller, there are no levies, liens or encumbrances relating to Taxes existing,
threatened or pending with respect to the Assets of Selling Fund. Selling fund
has not filed a Code Section 6662 (formerly Code Section 6661) disclosure
statement with respect to any return nor participated in a "reportable
transaction" or "listed transaction" as such terms are defined in Code section
6707A(c).
SECTION 3.11. 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 3.12. Voting Requirements. No vote of the holders of any class of
shares of Selling Fund is necessary to approve this Agreement or any of the
transactions contemplated by this Agreement.
SECTION 3.13. State Takeover Statutes. No state takeover statute or
similar statute or regulation applies to this Agreement or any of the
transactions contemplated by this Agreement.
SECTION 3.14. No Distribution. The Buying Fund Shares are not being
acquired for the purpose of any distribution thereof, other than in accordance
with the terms of this Agreement.
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 trust
power 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.
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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 audited Buying Fund Financial
Statements previously delivered to Seller present fairly in all material
respects the financial position of Buying Fund as of the date(s) indicated and
the results of operations and changes in net assets for the period(s) then ended
in accordance with generally accepted accounting principles applied on a
consistent basis for the period(s) 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. 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) Under its Governing Documents, Buyer is authorized to issue an
unlimited number of Institutional Class shares.
(b) The Buying Fund Shares to be issued pursuant to Section 2.1
shall on the Closing Date be duly registered under the Securities Act by a
Registration Statement on Form N-1A of Buyer then in effect.
(c) The Buying Fund Shares to be issued pursuant to Section 2.1
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-1A then in effect. Buying Fund does not
have outstanding any warrants, options, convertible securities or any other type
of right pursuant to which any Person may 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 Buying Fund prospectus, which forms a part of Buyer's
Registration Statement on Form N-1A (the "Buying Fund Prospectus"), shall be
furnished to the shareholders of Selling Fund on or before the Closing. The
Buying Fund Prospectus and related Statement of Additional Information of Buying
Fund conform in all material respects to the applicable requirements of the
Securities Act and the Investment Company Act and do not include any
10
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 misleading.
(e) The shares of Buying Fund which have been or are being offered
for sale by Buyer (other than the Buying Fund Shares to be issued in connection
with the LAP 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 or period, as
applicable, ended on the date of the most recent financial statements included
in the Buying Fund Financial Statements are independent 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).
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 result in any violation of the Governing
Documents of Buyer and (ii) do 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.
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.
11
SECTION 4.10. Permits. 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, and there has occurred no default under any Permit, except for the
absence of Permits and for defaults under Permits the absence or default of
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. 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 LAP 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 of the business of Buying
Fund affecting in any significant respect the conduct of such business. Except
as identified on Schedule 4.11 of this Agreement, 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.
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. Buying Fund has qualified for
treatment as a regulated investment company for each taxable year since
inception that has ended prior to the Closing Date and will 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 Tax Returns that are required
to be filed by it in all jurisdictions in which such Tax Returns are required to
be filed, and all such Returns accurately state, in all material respects, the
amount of Tax owed for the periods covered by the Returns, or, in the case of
information Returns, the amount and character of income required to be reported
by Buying Fund. Buying Fund has paid or made provision and properly accounted
for all Taxes shown to be due on such Tax Returns or on any actual or proposed
deficiency assessments received with respect to Buying Fund, except where the
failure to make such provisions would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. The amounts established
as provisions for Taxes in the books and records of
12
Buying Fund as of the Closing will, to the extent required by generally accepted
accounting principles, be sufficient for the payment of all Taxes of any kind,
whether accrued, due, absolute, contingent or otherwise, which were or will be
payable by Buying Fund, for all periods or fiscal years (or portions thereof)
ending on or before the Closing, 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. No Tax Return filed by Buying Fund is currently being audited by the
Internal Revenue Service or by any state or local taxing authority nor is Buyer
aware of any proposed audit. To the knowledge of the Buyer, there are no levies,
liens or encumbrances relating to Taxes existing, threatened or pending with
respect to the assets of Buying Fund. Buying fund has not filed a Code Section
6662 (formerly Code Section 6661) disclosure statement with respect to any
return nor participated in a "reportable transaction" or "listed transaction" as
such terms are defined in Code section 6707A(c).
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 LAP 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 LAP
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 LAP Reorganization,
other than in the ordinary course of its business and to the extent necessary to
maintain its status as a "regulated investment company" under the Code.
(c) 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.
13
ARTICLE 5
COVENANTS
SECTION 5.1. Expenses. The Investment Adviser shall bear the costs and
expenses of Buying Fund and Selling Fund incurred in connection with this
Agreement and the LAP Reorganization and other transactions contemplated hereby.
SECTION 5.2. 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.
SECTION 5.3. Consents, Approvals and Filings. Each of Seller and Buyer
shall make all necessary filings with Governmental Authorities as soon as
reasonably practicable, in order to facilitate prompt consummation of the LAP
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
LAP 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 LAP Reorganization and the other
transactions contemplated herein. Each of Seller and Buyer shall use reasonable
efforts to provide such information and communications to Governmental
Authorities as such Governmental Authorities may request.
SECTION 5.4. Tax Matters. The parties agree to use their best efforts to
cause the SLIF to prepare and file its U.S. federal, state, local and foreign
income Tax Returns (including information returns) for all periods ending on or
before the Effective Time on the Closing Date of the reorganization of Selling
Fund into LAP on the basis that: (i) the transfer by the SLIF of its assets to
Selling Fund pursuant to the SLIF Agreement and Plan of Reorganization and the
transfer by Selling Fund of its Assets to Buying Fund pursuant to this Agreement
are component parts of a single transaction, the substance of which is a taxable
transfer by the SLIF of its assets to the Buying Fund; and (ii) Selling Fund is
a continuation of the SLIF pursuant to Code Section 708(a). The parties agree to
make any tax filings and reports and take any positions consistent with the
foregoing.
ARTICLE 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
SECTION 6.1. Conditions Precedent of Buyer. The obligation of Buyer to
consummate the LAP Reorganization is subject to the satisfaction, or waiver by
Buyer on the Closing Date of each of the following conditions.
(a) Buyer shall have received at the Closing Date 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
14
resolutions, consents and authorizations of or regarding Seller with respect to
the execution and delivery of this Agreement and the transactions contemplated
hereby.
(b) Selling Fund shall have declared a dividend to shareholders of
record on the Closing Date in an amount equal to all of Selling Fund's
undistributed income and gains realized and estimated to be realized through the
Closing.
SECTION 6.2. Mutual Conditions. The obligations of Seller and Buyer to
consummate the LAP Reorganization are subject to the satisfaction or waiver (by
both parties) on the Closing Date of each of the following conditions.
(a) The SLIF Reorganization shall have been consummated.
(b) Seller shall have filed, on behalf of Selling Fund, a notice
of registration on Form N-8A pursuant to Section 8 of the Investment Company
Act.
(c) The xxxx-to-market net asset value per share of Buying Fund
and Selling Fund, calculated as of 5:30 p.m. Eastern Time in accordance with
Section 2.3 of this Agreement, shall exceed $0.9975.
(d) The impact of the consummation of the LAP Reorganization on
the pro forma xxxx-to-market net asset value per share of LAP, calculated as of
5:30 p.m. Eastern Time in accordance with Section 2.3 of this Agreement, shall
not exceed $0.0005.
(e) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Governmental Authority preventing the
consummation of the LAP Reorganization on the Closing Date shall be in effect.
SECTION 6.3. Conditions Precedent of Seller. The obligation of Seller to
consummate the LAP Reorganization is subject to the satisfaction or waiver on
the Closing Date of the following condition.
(a) Seller shall have received on the Closing Date 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
MISCELLANEOUS
SECTION 7.1. 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 survive the execution and delivery of this Agreement and Closing,
regardless of any investigation made by the parties hereto for a period of one
(1) year. The covenants in this Agreement that are required to be performed in
15
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 7.2. 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 7.3. Binding Effect, Persons Benefiting, Assignment. This
Agreement shall be binding upon and inure to the benefit of Seller, on behalf of
Selling Fund, Buyer, on behalf of Buying Fund and the Investment Adviser, and
their respective successors and permitted assigns. 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.
Except as provided in Section 7.12 of this Agreement, without the prior written
consent of the parties hereto, neither this Agreement nor any of the rights,
duties or obligations hereunder, may be assigned by any of the parties hereto.
SECTION 7.4. 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 7.5. Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by the parties hereto.
16
SECTION 7.6. 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 7.7. Interpretation. When a reference is made in this Agreement to
a Section or Schedule, such reference shall be to a Section of, 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.
SECTION 7.8. 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 7.9. 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 7.10. 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:
Short Term Investments Trust II
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxx
17
with a copy to:
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: X. Xxxxxxx Berkley
(b) If to Buyer:
Short Term Investments Trust
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxx
with a copy to:
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: X. Xxxxxxx Berkley
SECTION 7.11. Representations by Investment Adviser.
(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 7.11(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 7.11(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 7.12. Assignment of Rights. Buyer, on behalf of the Buying Fund,
acknowledges that Seller has assigned its rights under this Agreement to BBIT,
on behalf of the SLIF, effective immediately after the Closing, and consents to
such assignment and agrees that BBIT shall have the right to enforce any breach
hereof to the same extent and in the same manner as if BBIT were Seller.
Included in the Assets of Selling Fund that are being transferred to Buying Fund
at the Closing are Selling Fund's rights under the SLIF Agreement and Plan of
Reorganization. Seller represents to Buyer that BBIT, on behalf of the SLIF, has
consented to such transfer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SHORT TERM INVESTMENTS TRUST II, acting
on behalf of LIQUID ASSETS PORTFOLIO II
By: /s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
SHORT TERM INVESTMENTS TRUST acting on
behalf of LIQUID ASSETS PORTFOLIO
By: /s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
INVESCO AIM ADVISORS, INC.
By: /s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
19
SCHEDULE 4.11
o In July 2008, the SEC conducted an examination which focused on proxy
solicitation of the AIM Fund Complex, Regulation S transactions for fixed income
funds and risk management and internal controls for AIM for the period
October 1, 2007 through June 30, 2008. The examination was concluded on July 18,
2008. As of November 30, 2008 we have not received the results of the
examination.
o In January 2008, as part of a sweep exam of money market funds, the SEC
examined the money market funds managed by A I M Advisors, Inc. The exam focused
on compliance with Investment Company Act Rule 2a-7. There were no deficiencies
cited.
o In June 2006, the SEC examined A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Private Asset Management, Inc., the Funds, Fund
Management Company, AISI, and ADI. The examination included the review of
portfolio management, best execution and trading practices, pricing of clients'
portfolios and calculation of net asset value, protection of private client
information, fund shareholder order processing, anti-money laundering, fund
governance, and revenue sharing agreements. The SEC examination of AIM concluded
on June 16th, 2006. AIM received the SEC response on September 27, 2006. There
were no material items noted in the SEC comment letter.
