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EXHIBIT 12
[FREEDMAN, LEVY, KROLL & SIMONDS LETTERHEAD]
June 16, 2000
AIM Variable Insurance Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Re: Proposed Fund Reorganization
Dear Trustees:
You have requested our opinion about certain United States Federal income
tax consequences of the reorganization of AIM V.I. Global Growth and Income Fund
(the "Acquired Fund") into AIM V.I. Growth and Income Fund (the "Acquiring
Fund") (the "Reorganization"), each a series of AIM Variable Insurance Funds
("AVIF").
We are rendering this opinion in connection with the transaction described
in the Agreement and Plan of Reorganization (the "Agreement") by and between
among (a) AVIF and (b) A I M Advisors, Inc., ("AIM"), as entered into as of June
15, 2000. We adopt the applicable terms in the Agreement.
This opinion is for delivery to the Acquired Fund, the Acquiring Fund, and
their applicable shareholders. Only the Acquired Fund, the Acquiring Fund, and
their applicable shareholders may rely on this opinion.
FACTS
In rendering this opinion, we have assumed the truth and accuracy of the
following:
AVIF is a business trust under Delaware law and an open-end management
investment company operating as a series fund under the Investment Company Act
of 1940 ("1940 Act"). The Acquired Fund and the Acquiring Fund are each taxed as
a separate regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended ("Code").
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Shares of each of the Acquired Fund and the Acquiring Fund are sold
exclusively to separate accounts of life insurance companies (the "separate
accounts") in connection with the sale by those companies of variable annuity
contracts and variable life insurance contracts ("Contracts") to "Contract
Owners," and the payment by those Contract Owners of initial and additional
premiums to those companies for those Contracts. Accordingly, all shares of
the Acquired Fund and the Acquiring Fund are owned by separate accounts of
life insurance companies.
PROPOSED TRANSACTION
The Agreement contemplates the following transaction for the Acquired Fund:
(a) the acquisition of substantially all of the assets and the assumption
of all of the liabilities of the Acquired Fund by the Acquiring Fund,
in exchange solely for shares of voting stock of the Acquiring Fund
(the "voting stock");
(b) the distribution of that voting stock to shareholders of the Acquired
Fund; and
(c) the termination of the Acquired Fund as a series of AVIF.
Each shareholder of the Acquired Fund will receive that number of shares of
the Acquiring Fund voting stock representing interests with an aggregate net
asset value equal to the aggregate net asset value of its shares of the Acquired
Fund.
REPRESENTATIONS
In rendering our opinion, we have examined and relied on the truth and
accuracy of the Agreement and such other documents, records, and instruments as
we have deemed necessary to enable us to render the opinion. In addition, we
have relied on the following representations of AVIF, as set forth in the
Agreement and in the proxy statement/prospectus included in the registration
statement that AVIF will file with the SEC on Form N-14 under the Securities Act
of 1933, that the following facts and circumstances will exist as of the closing
date of the Reorganization ("Closing Date"):
(a) The fair market value of the voting stock of the Acquiring Fund
received by each shareholder of the Acquired Fund will be
approximately equal to the fair market value of the shares of the
Acquired Fund that such shareholder held before the Reorganization.
(b) There is no plan or intention by the shareholders of the Acquired Fund
to redeem a number of shares of the voting stock of the Acquiring Fund
received in the Reorganization that would reduce an Acquired Fund
shareholder's ownership of the
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voting stock to a number of shares having a value, as of the Closing
Date, of less than 50% of the value of all of the formerly outstanding
shares of the Acquired Fund as of the Closing Date.
(c) Following the Reorganization, the Acquiring Fund will continue the
historic business of the Acquired Fund or use a significant portion of
the Acquired Fund's historic business assets in its business.
(d) At the direction of the Acquired Fund, the Acquiring Fund will issue
directly to the Acquired Fund's shareholders pro rata the voting stock
that the Acquired Fund constructively receives in the Reorganization,
and the Acquired Fund will distribute its other properties (if any) to
its shareholders, on or as promptly as practicable after the Closing
Date.
(e) The Acquiring Fund has no plan or intention to reacquire any of its
voting stock issued in the Reorganization, except to the extent that
the Acquiring Fund is required by the 1940 Act to redeem any of its
shares of stock presented for redemption.
(f) The Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the assets of the Acquired Fund acquired in the
Reorganization, except for dispositions made in the ordinary course of
its business or dispositions necessary to maintain its status as a RIC
under the Code.
(g) The Acquiring Fund, the Acquired Fund, and each shareholder of the
Acquired Fund will pay its respective expenses, if any, incurred in
connection with the Reorganization.
(h) The Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets, and at least 70 percent of the fair market
value of the gross assets, held by the Acquired Fund immediately
before the Reorganization, including for this purpose any amounts used
by the Acquired Fund to pay its Reorganization expenses and all
redemptions and distributions made by the Acquired Fund immediately
before the Reorganization (other than redemptions pursuant to a demand
of a shareholder in the ordinary course of the Acquired Fund's
business as a series of an open-end management investment company
under the 1940 Act and regular, normal dividends not in excess of the
requirements of Section 852 of the Code).
(i) The Acquiring Fund and the Acquired Fund have each elected to be taxed
as a RIC under Section 851 of the Code and will each have qualified
for the special Federal tax treatment afforded RICs under the Code for
all taxable periods. These taxable periods include the taxable year of
the Acquiring Fund that includes the Closing Date and the last short
taxable period of the Acquired Fund ending on the Closing Date.
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(j) The liabilities of the Acquired Fund assumed by the Acquiring Fund and
the liabilities to which the transferred assets of the Acquired Fund
are subject were incurred by the Acquired Fund in the ordinary course
of its business.
(k) There is no intercompany indebtedness existing between the Acquiring
Fund and the Acquired Fund that was issued, acquired, or will be
settled at a discount.
(l) The Acquiring Fund does not own, directly or indirectly, nor has it
owned during the past five years, directly or indirectly, any shares
of the Acquired Fund.
(m) The fair market value of the assets of the Acquired Fund transferred
to the Acquiring Fund will equal or exceed the sum of the liabilities
assumed by the Acquiring Fund, plus the amount of liabilities, if any,
to which the transferred assets are subject.
(n) The Acquired Fund is not under the jurisdiction of a court in a United
States Code Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
(o) Immediately before the Reorganization, not more than 25 percent of the
value of the total assets of the Acquiring Fund or any Acquired Fund
has been, is, or will be invested in the stock or securities of any
one issuer, and not more than 50 percent of the value of the total
assets of the Acquiring Fund or the Acquired Fund has been, is, or
will be invested in the stock or securities of five or fewer issuers.
(p) The Acquiring Fund and the Acquired Fund will each have satisfied the
investment diversification requirements of Section 817(h) of the Code
for all taxable quarters since its inception, including the last short
taxable period of the Acquired Fund ending on the Closing Date and
taxable quarter of the Acquiring Fund that includes the Closing Date.
OPINION
Solely based on the foregoing facts, assumptions, and representations, and
our consideration of other questions we have deemed necessary or appropriate for
such purposes, and based on the assumption that the Reorganizations are
consummated in accordance with the terms of the Agreement, we are of the opinion
that, under current United States Federal income tax laws and regulations,
including official interpretations of the laws, in effect as of this date:
(1) The transfer of the assets of the Acquired Fund to the Acquiring Fund
in exchange for voting stock of the Acquiring Fund distributed
directly to the shareholders of the Acquired Fund, as provided in the
Agreement, will constitute a "reorganization" within the meaning of
Section 368(a)(1) of the Code, and the Acquired Fund and the Acquiring
Fund will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code.
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(2) In accordance with Section 361(a) and Section 361(c)(1) of the Code,
no gain or loss will be recognized by the Acquired Fund on the
transfer of its assets to the Acquiring Fund solely in exchange for
voting stock of the Acquiring Fund and the Acquiring Fund's assumption
of the Acquired Fund's liabilities, or on the distribution of the
voting stock to the Acquired Fund's shareholders.
(3) In accordance with Section 1032 of the Code, no gain or loss will be
recognized by the Acquiring Fund on the receipt of assets of the
Acquired Fund in exchange for Acquiring Fund voting stock and the
Acquiring Fund's assumption of the Acquired Fund's liabilities.
(4) In accordance with Section 354(a)(1) of the Code, no gain or loss will
be recognized by shareholders of the Acquired Fund on the receipt of
voting stock of the Acquiring Fund in constructive exchange for their
Acquired Fund shares.
(5) In accordance with Section 362(b) of the Code, the basis to the
Acquiring Fund of the assets of the Acquired Fund transferred to it
will be the same as the basis of those assets in the hands of the
Acquired Fund immediately before the Reorganization.
(6) In accordance with Section 358(a) of the Code, the Acquired Fund
shareholders' basis for voting stock of the Acquiring Fund received by
the Acquired Fund shareholder will be the same as the Acquired Fund
shareholders' basis for Acquired Fund shares constructively exchanged
therefor.
(7) In accordance with Section 1223(1) of the Code, the Acquired Fund
shareholders' holding period for voting stock of the Acquiring Fund
will include the Acquired Fund shareholders' holding period for the
Acquired Fund shares constructively exchanged therefor, provided that
the Acquired Fund shareholder held the Acquired Fund shares as a
capital asset.
(8) In accordance with Section 1223(2) of the Code, the holding period for
assets of the Acquired Fund transferred to the Acquiring Fund in the
Reorganization will include the holding period for those assets in the
hands of the Acquired Fund.
(9) The Acquired Fund and the Acquiring Fund will each be a RIC under
Subchapter M and will each comply with the investment diversification
requirements of Section 817(h) of the Code. Accordingly, the
Reorganization will not produce adverse Federal income tax
consequences by reason of income or gain for any Contract Owner.
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The opinion expressed in this letter represents our considered judgment as
to the status of the law at the time we render the opinion. However, the opinion
is not binding on the Internal
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Revenue Service or any court that could ultimately determine the taxation of the
items referred to herein. We do not express, nor should the reader infer, any
other opinion.
We hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement on Form N-14.
Very truly yours,
/s/ Freedman, Levy, Kroll & Simonds
