Sub-Item 77Q1(g)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is adopted as of
this 4th day of August, 2011 by and among (i) Invesco Prime Income Trust (the
"Target Fund"); (ii) Invesco ▇▇▇ ▇▇▇▇▇▇ Senior Loan Fund (the "Acquiring Fund");
and (iii) Invesco Advisers, Inc. ("IAI").
WHEREAS, the parties hereto intend for the Acquiring Fund and the Target
Fund to enter into a transaction pursuant to which: (i) the Acquiring Fund will
acquire the assets and assume the liabilities of the Target Fund in exchange for
Class IB Shares of the Acquiring Fund of equal value to the net assets of the
Target Fund being acquired, and (ii) the Target Fund will distribute such Class
IB Shares of the Acquiring Fund to shareholders of the Target Fund, in
connection with the liquidation of the Target Fund, all upon the terms and
conditions hereinafter set forth in this Agreement (the "Reorganization");
WHEREAS, each of the Target Fund and the Acquiring Fund is a closed-end,
registered investment company of the management type; and
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation with respect to the Reorganization within the
meaning of Section 368(a)(1) of the United States Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, and intending to be legally bound, the parties
hereto covenant and agree as follows:
1. DESCRIPTION OF THE REORGANIZATION
1.1 Provided that all conditions precedent to the Reorganization set forth
herein have been satisfied as of the Closing Date (as defined in Section 3.1),
and based on the representations and warranties each party provides to the
others, the Target Fund and the Acquiring Fund agree to take the following steps
with respect to the Reorganization:
(a) The Target Fund shall transfer all of its Assets, as defined and
set forth in Section 1.1(b), to the Acquiring Fund, and the Acquiring Fund
in exchange therefor shall assume the Liabilities, as defined and set forth
in Section 1.1(c), and deliver to the Target Fund the number of full and
fractional Acquiring Fund Class IB Shares determined in the manner set
forth in Section 2.
(b) The assets of the Target Fund to be transferred to the Acquiring
Fund shall consist of all assets and property, including, without
limitation, all cash, securities, commodities and futures interests, claims
(whether absolute or contingent, known or unknown, accrued or unaccrued and
including, without limitation, any interest in pending or future legal
claims in connection with past or present portfolio holdings, whether in
the form of class action claims, opt-out or other direct litigation claims,
or regulator or government-established investor recovery fund claims, and
any and all resulting recoveries) and dividends or interest receivable that
are owned by the Target Fund and any deferred or prepaid expenses shown as
an asset on the books of the Target Fund on the Closing Date, except for
cash, bank deposits or cash equivalent securities in an amount necessary to
pay the estimated costs of extinguishing any Excluded Liabilities (as
defined in Section 1.1(c)) and cash in an amount necessary to pay any
distributions pursuant to Section 7.1(f) (collectively, "Assets").
(c) The Acquiring Fund shall assume all of the liabilities of the
Target Fund, whether accrued or contingent, known or unknown, existing at
the Closing Date, except for the Target Fund's Excluded Liabilities (as
defined below), if any, pursuant to this Agreement (collectively, with
respect to the Target Fund, "Liabilities"). If prior to the Closing Date
the Acquiring Fund identifies a liability that the Acquiring Fund and the
Target Fund mutually agree should not be assumed by the Acquiring Fund,
such liability shall be excluded from the definition of Liabilities
hereunder and shall be listed on a Schedule of Excluded Liabilities to be
signed by the Acquiring Fund and the Target Fund at Closing and attached to
this Agreement as Schedule 1.1(c) (the "Excluded Liabilities"). The Assets
minus the Liabilities of the Target Fund shall be referred to herein as the
Target Fund's "Net Assets."
(d) As soon as is reasonably practicable after the Closing (as defined
in Section 3.1), the Target Fund will distribute on a pro rata basis to its
shareholders of record ("Target Fund Shareholders") the Class IB Shares of
the Acquiring Fund received by the Target Fund pursuant to Section 1.1(a)
and thereafter the Target Fund will as promptly as practicable completely
liquidate and dissolve. Such distribution and liquidation will be
accomplished, with respect to the Target Fund's shares, by the transfer of
the Acquiring Fund Class IB Shares then credited to the account of the
Target Fund on the books of the Acquiring Fund to open accounts of Class IB
Shares on the share records of the Acquiring Fund in the names of the
Target Fund Shareholders on a pro rata basis. The aggregate net asset value
of the Acquiring Fund Class IB Shares to be so credited to the
corresponding Target Fund Shareholders shall be equal to the aggregate net
asset value of the corresponding Target Fund's shares owned by the Target
Fund Shareholders on the Valuation Date. All issued and outstanding shares
of the Target Fund, including any outstanding share certificates, will
simultaneously be canceled on the books of the Target Fund. The Acquiring
Fund shall not issue certificates representing Class IB shares in
connection with such transactions.
(e) Ownership of Acquiring Fund Class IB Shares will be shown on its
books, as such are maintained by the Acquiring Fund's transfer agent.
2. VALUATION
2.1 With respect to each Reorganization:
(a) The value of the Target Fund's Assets shall be the value of such
Assets computed as of immediately after the close of regular trading on the
New York Stock Exchange ("NYSE"), which shall reflect the declaration of
any dividends, on the business day next preceding the Closing Date (the
"Valuation Date"), using the Target Fund's valuation procedures established
by the Acquiring Fund's Board of Trustees, which shall be provided to the
Acquiring Fund prior to the Valuation Date.
(b) The net asset value per share of each class of the Acquiring Fund
Class IB Shares issued in connection with the Reorganization shall be the
net asset value per share computed on the Valuation Date using the
Acquiring Fund's valuation procedures established by the Acquiring Fund's
Board of Trustees, which are the same as the Target Fund's valuation
procedures.
(c) The number of Class IB Shares issued by the Acquiring Fund
(including fractional shares, if any, rounded to the nearest thousandth) in
exchange for the Target Fund's Net Assets shall be determined by dividing
the value of the Net Assets of the Target Fund attributable to Target Fund
shares by the net asset value per share of the Class IB Shares of the
Acquiring Fund.
(d) All computations of value shall be made by the Target Fund's and
the Acquiring Fund's designated recordkeeping agent using the valuation
procedures described in this Section 2.
3. CLOSING AND CLOSING DATE
3.1 The Reorganization shall close on December 19, 2011 or such other date
as the parties may agree (the "Closing Date"). All acts taking place at the
closing of the Reorganization (the "Closing") shall be deemed to take place
simultaneously as of immediately prior to the opening of regular trading on the
NYSE on the Closing Date of the Reorganization unless otherwise agreed to by the
parties (the "Closing Time").
3.2 With respect to the Reorganization:
(a) The Target Fund's portfolio securities, investments or other
assets that are represented by a certificate or other written instrument
shall be transferred and delivered by the Target Fund as of the Closing
Date to the Acquiring Fund's Custodian for the account of the Acquiring
Fund, duly endorsed in proper form for transfer and in such condition as to
constitute good delivery thereof. The Target Fund shall direct the Target
Fund's custodian (the "Target Custodian") to deliver to the Acquiring
Fund's Custodian as of the Closing Date by book entry, in accordance with
the customary practices of Target Custodian and any securities depository
(as defined in Rule 17f-4 under the Investment Company Act of 1940, as
amended (the "1940 Act")), in which the Assets are deposited, the Target
Fund's portfolio securities and instruments so held. The cash to be
transferred by the Target Fund shall be delivered to the Acquiring Fund's
Custodian by wire transfer of federal funds or other appropriate means on
the Closing Date.
(b) The Target Fund shall direct the Target Custodian for each Target
Fund to deliver, at the Closing, a certificate of an authorized officer
stating that (i) except as permitted by Section 3.2(a), the Assets have
been delivered in proper form to the Acquiring Fund no later than the
Closing Time on the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets, including all applicable
Federal, state and foreign stock transfer stamps, if any, have been paid or
provision for payment has been made.
(c) At such time prior to the Closing Date as the parties mutually
agree, the Target Fund shall provide (i) instructions and related
information to the Acquiring Fund or its transfer agent with respect to the
Target Fund Shareholders, including names, addresses, dividend reinvestment
elections and tax withholding status of the Target Fund Shareholders as of
the date agreed upon (such information to be updated as of the Closing
Date, as necessary) and (ii) the information and documentation maintained
by the Target Fund or its agents relating to the identification and
verification of the Target Fund Shareholders under the USA PATRIOT ACT and
other applicable anti-money laundering laws, rules and regulations and such
other information as the Acquiring Fund may reasonably request. The
Acquiring Fund and its transfer agent shall have no obligation to inquire
as to the validity, propriety or correctness of any such instruction,
information or documentation, but shall, in each case, assume that such
instruction, information or documentation is valid, proper, correct and
complete.
(d) The Target Fund shall direct its transfer agent (the "Target
Transfer Agent") to deliver to the Acquiring Fund at the Closing a
certificate of an authorized officer stating that its records, as provided
to the Acquiring Fund, contain the names and addresses of the Target Fund
Shareholders and the number of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall
issue and deliver to the Secretary of the Target Fund a confirmation
evidencing the Acquiring Fund Class IB Shares to be credited on the Closing
Date, or provide other evidence satisfactory to the Target Fund that such
Acquiring Fund Class IB Shares have been credited to the Target Fund
Shareholders' accounts on the books of the Acquiring Fund. At the Closing,
each party shall deliver to the other such bills of sale, checks,
assignments, certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.
(e) In the event that on the Valuation Date or the Closing Date (a)
the NYSE or another primary trading market for portfolio securities of the
Target Fund (each, an "Exchange") shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading
on such Exchange or elsewhere shall be disrupted so that, in the judgment
of the Board of Trustees of the Acquiring Fund or the Target Fund or the
authorized officers of either of such entities,accurate appraisal of
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the value of the net assets of the Acquiring Fund or the Target Fund,
respectively, is impracticable, the Closing Date shall be postponed until
the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Target Fund represents and warrants to the Acquiring Fund as
follows:
(a) The Target Fund is an unincorporated business trust, duly formed,
validly existing, and in good standing under the laws of The Commonwealth
of Massachusetts with power under its Agreement and Declaration of Trust
and by-laws ("Governing Documents") to own all of its Assets, to carry on
its business as it is now being conducted and to enter into this Agreement
and perform its obligations hereunder;
(b) The Target Fund is a registered investment company classified as a
management company of the closed-end type, and its registration with the
U.S. Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act, and the registration of the shares of the
Target Fund under the Securities Act of 1933, as amended ("1933 Act"), are
in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority or the Financial Industry Regulatory Authority, Inc.
("FINRA") is required for the consummation by the Target Fund of the
transactions contemplated herein, except such as have been obtained or will
be obtained at or prior to the Closing Date under the 1933 Act, the
Securities Exchange Act of 1934, as amended ("1934 Act"), the 1940 Act and
state securities laws;
(d) The current prospectus and statement of additional information
("SAI") of the Target Fund and each prospectus and SAI of the Target Fund
used at all times between the commencement of operations of the Target Fund
and the date of this Agreement conforms or conformed at the time of its use
in all material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission thereunder and
does not or did not at the time of its use include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) The Target Fund is in compliance in all material respects with the
applicable investment policies and restrictions, including the fundamental
and non-fundamental policies related to such fund's monthly repurchase
offers, set forth in the Target Fund's prospectus and SAI;
(f) Except as otherwise disclosed to and accepted by or on behalf of
the Acquiring Fund, the Target Fund will on the Closing Date have good
title to the Assets and full right, power, and authority to sell, assign,
transfer and deliver such Assets free of adverse claims, including any
liens or other encumbrances, and upon delivery and payment for such Assets,
the Acquiring Fund will acquire good title thereto, free of adverse claims
and subject to no restrictions on the full transfer thereof, including,
without limitation, such restrictions as might arise under the 1933 Act,
provided that the Acquiring Fund will acquire Assets that are segregated as
collateral for the Acquired Fund's derivative positions, including without
limitation, as collateral for swap positions and as margin for futures
positions, subject to such segregation that apply to such Assets;
(g) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Acquiring Fund, the Target Fund is not engaged currently,
and the execution, delivery and performance of this Agreement will not
result in, (i) a material violation of the Target Fund's Governing
Documents or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Target Fund is a party or by which it is
bound, or (ii) the acceleration of any obligation, or the imposition of any
lien, encumbrance, penalty or additional fee under any agreement,
indenture, instrument, contract, lease, judgment or decree to which the
Target Fund is a party or by which it is bound;
(h) Except as otherwise disclosed to and accepted, in writing, by or
on behalf of the Acquiring Fund, all material contracts or other
commitments of the Target Fund, other than this (i) Agreement, (ii) the
revolving credit facility agreement with ▇▇▇▇▇▇, LLC and Citibank, N.A.
dated May 27, 2010 and (iii) certain investment contracts, including swap
agreements, options, futures and forward contracts, will terminate with
respect to the Target Fund without liability to the Target Fund or may
otherwise be assigned to the Acquiring Fund without the payment of any fee
(penalty or otherwise) or acceleration of any obligations of the Target
Fund on or prior to the Closing Date;
(i) Except as otherwise disclosed in writing to and accepted by or on
behalf of the Acquiring Fund, no litigation or administrative proceeding or
investigation of or before any court, tribunal, arbitrator, governmental
body or FINRA is currently pending or, to the Target Fund's knowledge,
threatened against the Target Fund that, if adversely determined, would
materially and adversely affect the Target Fund's financial condition or
the conduct of its business. The Target Fund, without any special
investigation or inquiry, knows of no facts that might form the basis for
the institution of such proceedings and the Target Fund is not a party to
or subject to the provisions of any order, decree or judgment of any court,
governmental body or FINRA that materially and adversely affects its
business or its ability to consummate the transactions herein contemplated;
(j) The financial statements of the Target Fund for the Target Fund's
most recently completed fiscal year have been audited by the independent
registered public accounting firm identified in the Target Fund's
prospectus or SAI included in the Target Fund's registration statement on
Form N-2 (the "Prospectus" and "Statement of Additional Information"). Such
statements, as well as the unaudited, semi-annual financial statements for
the semi-annual period next succeeding the Target Fund's most recently
completed fiscal year, if any, were prepared in accordance with accounting
principles generally accepted
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in the United States of America ("GAAP") consistently applied, and
such statements present fairly, in all material respects, the financial
condition of the Target Fund as of the end date of such period in
accordance with GAAP, and there are no known contingent liabilities of the
Target Fund required to be reflected on a balance sheet (including the
notes thereto) in accordance with GAAP as of such date not disclosed
therein;
(k) Since the last day of the Target Fund's most recently completed
fiscal year, there has not been any material adverse change in the Target
Fund's financial condition, assets, liabilities or business, other than
changes occurring in the ordinary course of business;
(l) On the Closing Date, all material Returns (as defined below) of
the Target Fund required by law to have been filed by such date (including
any extensions) shall have been filed and are or will be true, correct and
complete in all material respects, and all Taxes (as defined below) shown
as due or claimed to be due by any government entity shall have been paid
or provision has been made for the payment thereof. To the Target Fund's
knowledge, no such Return is currently under audit by any Federal, state,
local or foreign Tax authority; no assessment has been asserted with
respect to such Returns; there are no levies, liens or other encumbrances
on the Target Fund or its assets resulting from the non-payment of any
Taxes; no waivers of the time to assess any such Taxes are outstanding nor
are any written requests for such waivers pending; and adequate provision
has been made in the Target Fund financial statements for all Taxes in
respect of all periods ended on or before the date of such financial
statements. As used in this Agreement, "Tax" or "Taxes" means (i) any tax,
governmental fee or other like assessment or charge of any kind whatsoever
(including, but not limited to, withholding on amounts paid to or by any
person), together with any interest, penalty, addition to tax or additional
amount imposed by any governmental authority (domestic or foreign)
responsible for the imposition of any such tax. "Return" means reports,
returns, information returns, elections, agreements, declarations, or other
documents of any nature or kind (including any attached schedules,
supplements and additional or supporting material) filed or required to be
filed with respect to Taxes, including any claim for refund, amended return
or declaration of estimated Taxes (and including any amendments with
respect thereto);
(m) The Target Fund has elected to be a regulated investment company
under Subchapter M of the Code and is a fund that is treated as a separate
corporation under Section 851(g) of the Code. The Target Fund has qualified
for treatment as a regulated investment company for each taxable year since
inception that has ended prior to the Closing Date and will have satisfied
the requirements of Part I of Subchapter M of the Code to maintain such
qualification for the period beginning on the first day of its current
taxable year and ending on the Closing Date. The Target 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;
(n) All issued and outstanding shares of the Target Fund are, and on
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Target Fund and, in every state where
offered or sold, such offers and sales have been in compliance in all
material respects with applicable registration and/or notice requirements
of the 1933 Act and state and District of Columbia securities laws. All of
the issued and outstanding shares of the Target Fund will, at the time of
Closing, be held by the persons and in the amounts set forth in the records
of the Target Fund Transfer Agent on behalf of the Target Fund;
(o) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the Board of Trustees of the Target Fund,
and subject to the approval of the shareholders of the Target Fund and the
due authorization, execution and delivery of this Agreement by the other
parties hereto, this Agreement will constitute a valid and binding
obligation of the Target Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(p) As of the date of this Agreement or within a certain time
thereafter as mutually agreed by the parties, the Target Fund has provided
the Acquiring Fund with all information relating to the Target Fund
reasonably necessary for the preparation of the N-14 Registration Statement
(as described in Section 8.4 hereof), in compliance with the 1933 Act, the
1934 Act and the 1940 Act in connection with the meeting of shareholders of
the Target Fund to approve this Agreement and the transactions contemplated
hereby. As of the effective date of the N-14 Registration Statement, the
date of the meeting of shareholders of the Target Fund and the Closing
Date, such information provided by any Target Fund will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading; provided, however, that the representations and warranties in
this subparagraph shall not apply to statements in or omissions from the
N-14 Registration Statement made in reliance upon and in conformity with
information that was furnished by the Acquiring Fund for use therein;
(q) The Target Fund is in material compliance with the conditions set
forth in all Exemptive Orders granted by the Commission that are currently
applicable to such fund;
(r) The books and records of the Target Fund are true and correct in
all material respects and contain no material omissions with respect to
information required to be maintained under the laws, rules and regulations
applicable to the Target Fund;
(s) The Target Fund is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code; and
(t) The Target Fund has no unamortized or unpaid organizational fees
or expenses.
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4.2 The Acquiring Fund represents and warrants to the Target Fund as
follows:
(a) The Acquiring Fund is an unincorporated business trust, duly
formed, validly existing, and in good standing under the laws of The
Commonwealth of Massachusetts, with power under its Agreement and
Declaration of Trust (the "Agreement and Declaration of Trust") and
by-laws, to own all of its properties and assets and to carry on its
business as it is now being, and as it is contemplated to be, conducted,
and to enter into this Agreement and perform its obligations hereunder;
(b) The Acquiring Fund is a registered investment company classified
as a management company of the closed-end type, and its registration with
the Commission as an investment company under the 1940 Act and the
registration of the shares of the Acquiring Fund under the 1933 Act are in
full force and effect;
(c) No consent, approval, authorization, or order of any court,
governmental authority or FINRA is required for the consummation by the
Acquiring Fund of the transactions contemplated herein, except such as have
been or will be obtained (at or prior to the Closing Date) under the 1933
Act, the 1934 Act, the 1940 Act and state securities laws;
(d) The prospectuses and SAI of the Acquiring Fund to be used in
connection with the Reorganization will conform at the time of their use in
all material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission thereunder and
will not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not materially misleading;
(e) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result in, (i) a
material violation of the Acquiring Fund's Agreement and Declaration of
Trust or by-laws or of any agreement, indenture, instrument, contract,
lease or other undertaking to which the Acquiring Fund is a party or by
which it is bound, or (ii) the acceleration of any obligation, or the
imposition of any lien, encumbrance, penalty, or additional fee under any
agreement, indenture, instrument, contract, lease, judgment or decree to
which the Acquiring Fund is a party or by which it is bound;
(f) Except as otherwise disclosed in writing to and accepted by or on
behalf of the Target Fund, no litigation or administrative proceeding or
investigation of or before any court, tribunal, arbitrator, governmental
body or FINRA is currently pending or, to the Acquiring Fund's knowledge,
threatened against the Acquiring Fund that, if adversely determined, would
materially and adversely affect the Acquiring Fund's financial condition or
the conduct of its business. The Acquiring Fund, without any special
investigation or inquiry, knows of no facts that might form the basis for
the institution of such proceedings and the Acquiring Fund is not a party
to or subject to the provisions of any order, decree or judgment of any
court, governmental body or FINRA that materially and adversely affects its
business or its ability to consummate the transactions herein contemplated;
(g) The Acquiring Fund is in compliance in all material respects with
the applicable investment policies and restrictions, including the
fundamental and non-fundamental policies related to such fund's monthly
repurchase offers, set forth in the Acquiring Fund's prospectus and SAI;
(h) The financial statements of the Acquiring Fund for the Acquiring
Fund's most recently completed fiscal year have been audited by the
independent registered public accounting firm identified in the Acquiring
Fund's prospectus or SAI included in the Acquiring Fund's registration
statement on Form N-2. Such statements, as well as the unaudited,
semi-annual financial statements for the semi-annual period next succeeding
the Acquiring Fund's most recently completed fiscal year, if any, were
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP") consistently applied, and such statements
present fairly, in all material respects, the financial condition of the
Acquiring Fund as of the end date of such period in accordance with GAAP,
and there are no known contingent liabilities of the Acquiring Fund
required to be reflected on a balance sheet (including the notes thereto)
in accordance with GAAP as of such date not disclosed therein;
(i) Since the last day of the Acquiring Fund's most recently completed
fiscal year, there has not been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business;
(j) On the Closing Date, all material Returns of the Acquiring Fund
required by law to have been filed by such date (including any extensions)
shall have been filed and are or will be true, correct and complete in all
material respects, and all Taxes shown as due or claimed to be due by any
government entity shall have been paid or provision has been made for the
payment thereof. To the Acquiring Fund's knowledge, no such Return is
currently under audit by any Federal, state, local or foreign Tax
authority; no assessment has been asserted with respect to such Returns;
there are no levies, liens or other encumbrances on the Acquiring Fund or
its assets resulting from the non-payment of any Taxes; and no waivers of
the time to assess any such Taxes are outstanding nor are any written
requests for such waivers pending; and adequate provision has been made in
the Acquiring Fund financial statements for all Taxes in respect of all
periods ended on or before the date of such financial statements;
(k) The Acquiring Fund has elected to be a regulated investment
company under Subchapter M of the Code and is a fund that is treated as a
separate corporation under Section 851(g) of the Code. The Acquiring Fund
has qualified for treatment as a regulated investment company for each
taxable year since inception that has ended prior to the Closing Date and
has satisfied the requirements of Part I of Subchapter M of the Code to
maintain such qualification for the period beginning on the
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first day of its current taxable year and ending on the Closing Date.
The Acquiring 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;
(l) All issued and outstanding Acquiring Fund shares are, and on the
Closing Date will be, duly authorized and validly issued and outstanding,
fully paid and non-assessable by the Acquiring Fund and, in every state
where offered or sold, such offers and sales have been in compliance in all
material respects with applicable registration and/or notice requirements
of the 1933 Act and state and District of Columbia securities laws;
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the trustees of the Acquiring Fund, and
subject to the approval of shareholders of the Target Fund and the due
authorization, execution and delivery of this Agreement by the other
parties hereto, this Agreement will constitute a valid and binding
obligation of the Acquiring Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) The Class IB Shares of the Acquiring Fund to be issued and
delivered to the Target Fund, for the account of the Target Fund
Shareholders, pursuant to the terms of this Agreement, will on the Closing
Date have been duly authorized and, when so issued and delivered, will be
duly and validly issued Acquiring Fund Class IB Shares, and, upon receipt
of the Target Fund's Assets in accordance with the terms of this Agreement,
will be fully paid and non-assessable by the Acquiring Fund;
(o) The Acquiring Fund is in material compliance with the conditions
set forth in all Exemptive Orders granted by the Commission that are
currently applicable to such fund;
(p) The books and records of the Acquiring Fund are true and correct
in all material respects and contain no material omissions with respect to
information required to be maintained under laws, rules, and regulations
applicable to the Acquiring Fund; and
(q) The Acquiring Fund is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code;
(r) The Acquiring Fund has no unamortized or unpaid organizational
fees or expenses for which it does not expect to be reimbursed by Invesco
or its affiliates.
5. COVENANTS OF THE ACQUIRING FUND AND THE TARGET FUND
5.1 With respect to the Reorganization:
(a) The Acquiring Fund and the Target Fund each: (i) will operate its
business in the ordinary course and substantially in accordance with past
practices between the date hereof and the Closing Date for the
Reorganization, it being understood that such ordinary course of business
may include the declaration and payment of customary dividends and
distributions, and any other distribution that may be advisable, and the
implementation of repurchase offers as required by the fundamental policies
of the applicable fund and the procedures adopted by such fund's Board of
Trustees, and (ii) shall use its reasonable best efforts to preserve intact
its business organization and material assets and maintain the rights,
franchises and business and customer relations necessary to conduct the
business operations of the Acquiring Fund or the Target Fund, as
appropriate, in the ordinary course in all material respects.
(b) The Target Fund will call a meeting of the shareholders of the
Target Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated
herein.
(c) The Target Fund covenants that the Acquiring Fund shares to be
issued pursuant to this Agreement are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms of
this Agreement.
(d) Subject to the provisions of this Agreement, the Acquiring Fund
and the Target Fund will each take, or cause to be taken, all action, and
do or cause to be done all things, reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
(e) As soon as is reasonably practicable after the Closing, the Target
Fund will make one or more liquidating distributions to its shareholders
consisting of the applicable class of shares of the Acquiring Fund received
at the Closing, as set forth in Section 1.1(d) hereof.
(f) The Acquiring Fund and the Target Fund shall each use their
reasonable best efforts prior to Closing to fulfill or obtain the
fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement.
(g) The Target Fund shall, from time to time, as and when reasonably
requested by the Acquiring Fund, execute and deliver or cause to be
executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action, as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the Assets and otherwise to
carry out the intent and purpose of this Agreement.
(h) The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and
such of the state blue sky or securities laws as may be necessary in order
to continue its operations after the Closing Date.
6
(i) A statement of the earnings and profits (accumulated and current)
of the Target Fund for federal income tax purposes that will be carried
over to the Acquiring Fund as a result of Section 381 of the Code will be
provided to the Acquiring Fund within ninety (90) days after the Closing
Date.
(j) It is the intention of the parties that the Reorganization will
qualify as a reorganization with the meaning of Section 368(a) of the Code.
None of the parties to this Agreement shall take any action or cause any
action to be taken (including, without limitation, the filing of any tax
return) that is inconsistent with such treatment or results in the failure
of the Reorganization to qualify as a reorganization with the meaning of
Section 368(a) of the Code.
(k) Any reporting responsibility of the Target Fund, including, but
not limited to, the responsibility for filing regulatory reports, tax
returns relating to tax periods ending on or prior to the Closing Date
(whether due before or after the Closing Date), or other documents with the
Commission, any state securities commission, and any Federal, state or
local tax authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Target Fund.
(l) The Acquiring Fund covenants that Target Fund shareholders who
receive Class IB Shares of the Acquiring Fund in connection with the
Reorganization will continue to pay the early withdrawal charges imposed on
repurchases of shares of the Target Fund on the same schedule as is
currently applicable to such shares as disclosed in the current Target Fund
prospectus; and that such Target Fund shareholders will receive credit for
the length of time that they held Target Fund shares in the calculation of
such early withdrawal charge.
(m) If reasonably requested by the Acquiring Fund in writing, the
Target Fund will provide the Acquiring Fund with (1) a statement of the
respective tax basis and holding period of all investments to be
transferred by the Target Fund to the Acquiring Fund, (2) a copy (which may
be in electronic form) of the shareholder ledger accounts including,
without limitation, the name, address and taxpayer identification number of
each shareholder of record, the number of shares of beneficial interest
held by each shareholder, the dividend reinvestment elections applicable to
each shareholder, and the backup withholding and nonresident alien
withholding certifications, notices or records on file with the Target Fund
with respect to each shareholder, for all of the shareholders of record of
the Target Fund as of the close of business on the Valuation Date, who are
to become holders of the Acquiring Fund as a result of the transfer of
Assets (the "Target Fund Shareholder Documentation"), certified by its
transfer agent or its President or Vice-President to the best of their
knowledge and belief, (3) all FIN 48 work papers and supporting statements
pertaining to the Target Fund (the "FIN 48 Workpapers"), and (4) the tax
books and records of the Target Fund for purposes of preparing any returns
required by law to be filed for tax periods ending after the Closing Date.
(n) After the Closing Date, except as otherwise agreed to by the
parties, the Target Fund shall or shall cause its agents to prepare any
federal, state or local tax returns, including any Forms 1099, required to
be filed by it with respect to the Target Fund's final taxable year ending
with its complete liquidation and for any prior periods or taxable years
and shall further cause such tax returns and Forms 1099 to be duly filed
with the appropriate taxing authorities.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND
6.1 The obligations of the Target Fund to consummate the transactions
provided for herein shall be subject, at the Target Fund's election, to the
performance by the Acquiring Fund of all of the obligations to be performed by
it hereunder on or before the Closing Date, and, in addition thereto, the
following conditions:
(a) All representations and warranties of the Acquiring Fund contained
in this Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date;
(b) The Acquiring Fund shall have delivered to the Target Fund on the
Closing Date a certificate executed in its name by its President or Vice
President and Treasurer, in form and substance reasonably satisfactory to
the Target Fund and dated as of the Closing Date, to the effect that the
representations and warranties of or with respect to the Acquiring Fund
made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement;
(c) The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be
performed or complied with by the Acquiring Fund on or before the Closing
Date; and
(d) The Target Fund shall have received on the Closing Date the
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP ("▇▇▇▇▇▇▇ ▇▇▇▇"),
counsel to the Acquiring Fund (which may rely on certificates of officers
or trustees of the Acquiring Fund) covering the following points:
(i) The Acquiring Fund is an unincorporated business trust,
validly existing and in good standing under the applicable laws of The
Commonwealth of Massachusetts.
(ii) The Acquiring Fund is registered as a closed-end management
investment company under the 1940 Act.
(iii) The Acquiring Fund has the statutory trust power and
authority to execute, deliver and perform all of its obligations under
the Agreement under the applicable laws of The Commonwealth of
Massachusetts. The execution and delivery of the Agreement and the
consummation by the Acquiring Fund of the transactions contemplated
thereby have been duly authorized by all requisite statutory trust
action on the part of the Acquiring Fund under the applicable laws of
The
7
Commonwealth of Massachusetts. The Agreement has been duly
executed and delivered by the Acquiring Fund under the applicable laws
of The Commonwealth of Massachusetts.
(iv) The Agreement constitutes the valid and binding obligation
of the Acquiring Fund, enforceable against the Acquiring Fund in
accordance with its terms under the applicable laws of The
Commonwealth of Massachusetts.
(v) The execution and delivery by the Acquiring Fund of the
Agreement and the performance by the Acquiring Fund of its obligations
under the Agreement do not conflict with the Certificate of Trust, the
Declaration of Trust or the By-laws of the Acquiring Fund.
(vi) Neither the execution, delivery or performance by the
Acquiring Fund of the Agreement nor the compliance by the Acquiring
Fund with the terms and provisions thereof will contravene any
provision of any applicable law.
(vii) No approval by any court, regulatory body, administrative
agency or governmental body, which has not been obtained or taken and
is not in full force and effect, is required to authorize, or is
required in connection with, the execution or delivery of the
Agreement by the Acquiring Fund or the enforceability of the Agreement
against the Acquiring Fund.
(viii) The Acquiring Fund Shares have been duly authorized and,
when delivered to the Target Fund in accordance with the terms of the
Agreement, will be validly issued, fully paid and nonassessable and
free and clear of any preemptive rights or any similar rights arising
under the applicable laws of The Commonwealth of Massachusetts or the
Acquiring Fund's Declaration of Trust or By-laws.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
7.1 The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at the Acquiring Fund's election, to the
performance by the Target Fund of all of the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
(a) All representations and warranties of the Target Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date;
(b) The Target Fund shall have delivered to the Acquiring Fund at or
before the Closing Time (i) a statement of the Target Fund's Assets,
together with a list of portfolio securities of the Target Fund, as of the
Closing Time, certified by the Treasurer of the Target Fund, (ii) the
Target Fund Shareholder Documentation and (iii) the FIN 48 Workpapers;
(c) The Target Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or Vice
President and Treasurer, in form and substance reasonably satisfactory to
the Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of or with respect to the Target Fund made
in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement;
(d) The Target Custodian shall have delivered to the Acquiring Fund at
or before the Closing Time, the certificate contemplated by Sections 3.2(b)
of this Agreement, duly executed by an authorized officer of the Target
Custodian;
(e) The Target Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be
performed or complied with by the Target Fund, on or before the Closing
Date;
(f) The Target Fund shall have declared and paid a distribution or
distributions prior to the Closing Time that, together with all previous
distributions, shall have the effect of distributing to its shareholders
(i) all of its investment company taxable income (determined without regard
to any deductions for dividends paid) and all of its net realized capital
gain, if any, for the period from the close of its last fiscal year to the
Closing Time on the Closing Date; and (ii) any such undistributed
investment company taxable income and net realized capital gain from any
prior period to the extent not otherwise already distributed;
(g) The Acquiring Fund shall have received on the Closing Date the
opinion of Stradley, Ronon, ▇▇▇▇▇▇▇ & Young, LLP, counsel to the Target
Fund (which may rely on certificates of officers or directors/trustees of
the Target Fund) covering the following points:
(i) The Target Fund is a registered investment company classified
as a management company of the closed-end type under the 1940 Act.
(ii) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not,
contravene any provision of federal law.
8
(iii) No approval by any federal court, regulatory body,
administrative agency or governmental body, which has not been
obtained or taken and is not in full force and effect, is required in
connection with, the execution or delivery of the Agreement by the
Target Fund or the enforceability of the Agreement against the Target
Fund.
(iv) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not, result
in a breach or default under any agreement pertaining to the Target
Fund identified as an exhibit in Part C of the registration statement
on Form N-2 last filed by the Target Fund or, to the knowledge of such
counsel, result in the acceleration of any obligation or the
imposition of any penalty under any such agreement.
and
(h) The Acquiring Fund shall have received on the Closing Date the
opinion of a law firm mutually acceptable to the Target Fund and the
Acquiring Fund (which may rely on certificates of officers or
directors/trustees of the Target Fund) covering the following points:
(i) The Target Fund is an unincorporated business trust, duly
organized, incorporated or formed, validly existing and in good
standing under the applicable laws of The Commonwealth of
Massachusetts, and has the trust power to own all of the Target Fund's
properties and assets, and to conduct its business, including that of
the Target Fund, as described in its Governing Documents or in the
most recently filed registration statement of the Target Fund.
(ii) The Target Fund has the power and authority to execute,
deliver and perform all of its obligations under the Agreement under
the laws of the Commonwealth of Massachusetts.
(iii) The execution and delivery of the Agreement and the
consummation by the Target Fund of the transactions contemplated
thereby have been duly authorized by all trust action on the part of
the Target Fund under the applicable laws of the Commonwealth of
Massachusetts.
(iv) The Agreement has been duly executed and delivered by the
Target Fund under the applicable laws of the Commonwealth of
Massachusetts.
(v) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not, result
in a violation of, as appropriate, the Target Fund's Governing
Documents.
(vi) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated hereby will not,
contravene any provision of any applicable law of the Commonwealth of
Massachusetts.
(vii) The Agreement is a valid and binding obligation of the
Target Fund, enforceable against the Target Fund in accordance with
its terms under the applicable laws of the Commonwealth of
Massachusetts, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent conveyance, reorganization, receivership, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a
proceeding in equity or at law) and to an implied covenant of good
faith and fair dealing.
(viii) No approval by any court, regulatory body, administrative
agency or governmental body of the Commonwealth of Massachusetts,
which has not been obtained or taken and is not in full force and
effect, is required in connection with, the execution or delivery of
the Agreement by the Target Fund or the enforceability of the
Agreement against the Target Fund.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
TARGET FUND
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to the Target Fund or the Acquiring Fund,
either the Target Fund or the Acquiring Fund or both shall, at its option, not
be required to consummate the transactions contemplated by this Agreement:
8.1 The Agreement shall have been approved by the requisite vote of the
holders of the outstanding shares of the Target Fund in accordance with the
provisions of the Target Fund's Governing Documents, Massachusetts law, and the
1940 Act and any other applicable law. Notwithstanding anything herein to the
contrary, neither the Target Fund nor the Acquiring Fund may waive the
conditions set forth in this Section 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending or, to the Target Fund's or the Acquiring Fund's knowledge, threatened
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Target Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a
9
risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Target Fund, provided that either party hereto may for
itself waive any of such conditions;
8.4 A registration statement on Form N-14 under the 1933 Act properly
registering the Acquiring Fund shares to be issued in connection with the
Reorganization shall have become effective under the 1933 Act and no stop orders
suspending the effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated under the
1933 Act; and
8.5 The Target Fund and the Acquiring Fund shall have received on or before
the Closing Date an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇, counsel for the Acquiring Fund, in
form and substance reasonably acceptable to the Target Fund and the Acquiring
Fund, as to the matters set forth on Schedule 8.5. In rendering such opinion,
▇▇▇▇▇▇▇ ▇▇▇▇ may request and rely upon representations contained in certificates
of officers of the Target Fund, the Acquiring Fund and others.
9. FEES AND EXPENSES
9.1 IAI will bear all expenses relating to the Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES AND COVENANTS
10.1 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder,
provided that the covenants to be performed after the Closing shall survive the
Closing.
11. TERMINATION
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned with respect to the Reorganization by mutual agreement of the
parties.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in a writing signed
by the parties hereto to be bound by such Amendment.
13. HEADINGS; GOVERNING LAW; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
13.1 The Article and Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts and applicable Federal law,
without regard to its principles of conflicts of laws.
13.3 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other parties. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
13.4 This agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be considered an original and all of
which counterparts taken together will constitute one and the same instrument.
13.5 It is expressly agreed that the obligations of the parties hereunder
shall not be binding upon any of their respective directors or trustees,
shareholders, nominees, officers, agents, or employees personally, but shall
bind only the property of the Target Fund or the Acquiring Fund as provided in
the Governing Documents of the Target Fund or the Agreement and Declaration of
Trust of the Acquiring Fund, respectively. The execution and delivery by such
officers shall not be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the property
of such party.
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
approved and executed on behalf of the Acquiring Fund, the Target Fund and
Invesco Advisers, Inc.
INVESCO ADVISERS, INC. INVESCO PRIME INCOME TRUST
By: By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------ --------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Co-President and Co-Chief Title: Senior Vice President
Executive Officer
INVESCO ▇▇▇ ▇▇▇▇▇▇ SENIOR LOAN FUND
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
11