SUB-ITEM 77Q1(G)
APPENDIX I
AGREEMENT
AND
PLAN OF REORGANIZATION
FOR
ATLANTIC WHITEHALL EQUITY INCOME FUND
A SEPARATE PORTFOLIO OF
ATLANTIC WHITEHALL FUNDS TRUST
JULY 7, 2009
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS ................................................... 2
SECTION 1.1. Definitions ............................................ 2
ARTICLE 2 TRANSFER OF ASSETS ............................................ 6
SECTION 2.1. Reorganization of Selling Fund ......................... 6
SECTION 2.2. Computation of Net Asset Value ......................... 6
SECTION 2.3. Valuation Date ......................................... 6
SECTION 2.4. Delivery ............................................... 6
SECTION 2.5. Termination of Series and Redemption of Selling Fund
Shares ................................................. 7
SECTION 2.6. Issuance of Shell Fund Shares .......................... 7
SECTION 2.7. Investment Securities .................................. 8
SECTION 2.8. Liabilities ............................................ 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER ...................... 8
SECTION 3.1. Organization; Authority ................................ 8
SECTION 3.2. Registration and Regulation of Seller .................. 8
SECTION 3.3. Financial Statements ................................... 9
SECTION 3.4. No Material Adverse Changes; Contingent Liabilities .... 9
SECTION 3.5. Selling Fund Shares; Business Operations ............... 9
SECTION 3.6. Accountants ............................................ 10
SECTION 3.7. Binding Obligation ..................................... 10
SECTION 3.8. No Breaches or Defaults ................................ 10
SECTION 3.9. Authorizations or Consents ............................. 10
SECTION 3.10. Permits ................................................ 11
SECTION 3.11. No Actions, Suits or Proceedings ....................... 11
SECTION 3.12. Contracts .............................................. 11
SECTION 3.13. Properties and Assets .................................. 11
SECTION 3.14. Taxes .................................................. 12
SECTION 3.15. Benefit and Employment Obligations ..................... 12
SECTION 3.16. Brokers ................................................ 12
SECTION 3.17. Voting Requirements .................................... 13
SECTION 3.18. State Takeover Statutes ................................ 13
SECTION 3.19. Books and Records ...................................... 13
SECTION 3.20. Prospectus and Statement of Additional Information ..... 13
SECTION 3.21. No Distribution ........................................ 13
SECTION 3.22. Liabilities of Selling Fund ............................ 13
SECTION 3.23. Shareholder Expenses ................................... 13
SECTION 3.24. Intercompany Indebtedness; Consideration ............... 13
SECTION 3.25. Information Supplied by Seller ......................... 13
SECTION 3.26. Selling Fund Fiscal Year ............................... 13
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TABLE OF CONTENTS
(continued)
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER ....................... 14
SECTION 4.1. Organization; Authority ................................ 14
SECTION 4.2. Registration and Regulation of Buyer ................... 14
SECTION 4.3. Financial Statements ................................... 14
SECTION 4.4. Registration of Shell Fund Shares ...................... 14
SECTION 4.5. Accountants ............................................ 15
SECTION 4.6. Binding Obligation ..................................... 15
SECTION 4.7. No Breaches or Defaults ................................ 15
SECTION 4.8. Authorizations or Consents ............................. 16
SECTION 4.9. Permits ................................................ 16
SECTION 4.10. No Actions, Suits or Proceedings ....................... 16
SECTION 4.11. Taxes .................................................. 16
SECTION 4.12. Brokers ................................................ 17
SECTION 4.13. Representations Concerning the Reorganization .......... 17
SECTION 4.14. Prospectus and Statement of Additional Information ..... 17
SECTION 4.15. Intercompany Indebtedness; Consideration ............... 18
ARTICLE 5 COVENANTS ..................................................... 18
SECTION 5.1. Conduct of Business .................................... 18
SECTION 5.2. Expenses ............................................... 18
SECTION 5.3. Further Assurances ..................................... 18
SECTION 5.4. Notice of Events ....................................... 18
SECTION 5.5. Consents, Approvals and Filings ........................ 19
SECTION 5.6. Submission of Agreement to Shareholders ................ 19
SECTION 5.7. Distribution ........................................... 19
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION .................... 19
SECTION 6.1. Conditions Precedent of Buyer .......................... 19
SECTION 6.2. Mutual Conditions ...................................... 21
SECTION 6.3. Conditions Precedent of Seller ......................... 22
ARTICLE 7 TERMINATION OF AGREEMENT ...................................... 23
SECTION 7.1. Termination ............................................ 23
SECTION 7.2. Survival After Termination ............................. 23
ARTICLE 8 MISCELLANEOUS ................................................. 24
SECTION 8.1. Survival of Representations, Warranties and Covenants .. 24
SECTION 8.2. Governing Law .......................................... 24
SECTION 8.3. Binding Effect, Persons Benefiting, No Assignment ...... 24
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SECTION 8.4. Obligations of Buyer and Seller ........................ 24
SECTION 8.5. Amendments ............................................. 25
SECTION 8.6. Enforcement ............................................ 25
SECTION 8.7. Interpretation ......................................... 25
SECTION 8.8. Counterparts ........................................... 25
SECTION 8.9. Entire Agreement; Exhibits and Schedules ............... 25
SECTION 8.10. Notices ................................................ 25
SECTION 8.11. Representations by Investment Adviser .................. 26
SECTION 8.12. Successors and Assigns; Assignment ..................... 27
EXHIBIT A Excluded Liabilities of Selling Fund
SCHEDULE 6.2(f) Tax Opinions
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of July 7, 2009 (this
"Agreement"), by and among Atlantic Whitehall Funds Trust, a Delaware statutory
trust ("Seller"), acting on behalf of Atlantic Whitehall Equity Income Fund
("Selling Fund"), a separate series of Seller, AIM Equity Funds, a Delaware
statutory trust ("Buyer"), acting on behalf of AIM Disciplined Equity Fund
("Shell Fund"), a newly created series portfolio of Buyer, Invesco Aim Advisors,
Inc. ("Invesco Aim"), and Xxxxx Xxx Investment Counsel, Inc., a Delaware
corporation ("Xxxxx Xxx").
WITNESSETH
WHEREAS, Seller is a management investment company registered with the SEC
(as defined below) under the Investment Company Act (as defined below) that
offers separate series of its shares representing interests in its investment
portfolios, including Selling Fund, for sale to the public; and
WHEREAS, Buyer is a management investment company registered with the SEC
under the Investment Company Act that offers separate series of its shares
representing interests in investment portfolios, including Shell Fund, for sale
to the public; and
WHEREAS, Seller desires to provide for the reorganization of Selling Fund
through the transfer of all of its Assets (as defined below) to Shell Fund in
exchange for the assumption by Shell Fund of the Liabilities (as defined below)
of Selling Fund and the issuance by Buyer of shares of Shell Fund in the manner
set forth in this Agreement; and
WHEREAS, Invesco Aim serves as the investment adviser to Shell Fund and is
making certain representations, warranties and agreements set forth in this
Agreement; and
WHEREAS, Xxxxx Xxx serves as the investment adviser to Selling Fund and is
making certain representations, warranties and agreements set forth in this
Agreement; and
WHEREAS, the Board of Directors of Buyer has determined that the exchange
of all of the assets of Selling Fund for Shell Fund Shares (as defined below)
and the assumption of the liabilities of Selling Fund, as described in Section
2.8 herein, by Shell Fund is in the best interests of Shell Fund and its
shareholders and that the interests of the existing shareholders of Shell Fund
would not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees of Seller has determined that the exchange
of all of the assets of Selling Fund for Shell Fund Shares (as defined below)
and the assumption of the liabilities of Selling Fund by Shell Fund, as
described in Section 2.8 herein, is in the best interests of Selling Fund and
its shareholders and that the interests of the existing shareholders of Selling
Fund would not be diluted as a result of this transaction; and
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WHEREAS, this Agreement is intended to be and is adopted by the parties
hereto as a Plan of Reorganization within the meaning of the regulations under
Section 368(a) of the Code (as defined below).
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, Seller and Buyer agree
as follows:
Article 1
DEFINITIONS
SECTION 1.1. Definitions. For all purposes in this Agreement, the following
terms shall have the respective meanings set forth in this Section 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined):
"Advisers Act" means the Investment Advisers Act of 1940, as amended, and
all rules and regulations of the SEC adopted pursuant thereto.
"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.
"AML Documentation" means the information and documentation maintained by
Seller or its agents relating to the identification and verification of Selling
Fund Shareholders under the USA PATRIOT ACT and other applicable anti-money
laundering laws, rules and regulations.
"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, any
deferred or prepaid expenses shown as an asset on the books of Selling Fund at
the Closing, and 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.
"Benefit Plan" means any material "employee benefit plan" (as defined in
Section 3(3) of ERISA) and any material bonus, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
vacation, retirement, profit sharing, welfare plans or other plan, arrangement
or understanding maintained or contributed to by Seller on behalf of Selling
Fund, or otherwise providing benefits to any current or former employee, officer
or director/trustee of Seller.
"Buyer" means AIM Equity Funds, a Delaware statutory trust.
"Buyer Counsel" means Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP.
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"Buyer Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of Shell Fund.
"Buyer Registration Statement" means the registration statement on Form
N-1A of Buyer, as amended, 1940 Act Registration No. 811-01424.
"Closing" means the transfer of the Assets of Selling Fund to Shell Fund,
the assumption of the Liabilities by Shell Fund and the issuance of Shell Fund
Shares directly to Selling Fund Shareholders as described in Section 2.1 of this
Agreement.
"Closing Date" means September 21, 2009, or such other date as the parties
may mutually agree upon.
"Code" means the Internal Revenue Code of 1986, as amended, and all rules
and regulations adopted pursuant thereto.
"Effective Time" means immediately before the opening of business of the
Shell Fund on the Closing Date, or such other time as the parties may mutually
agree.
"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,
Trust Instrument, Amended and Restated Agreement and Declaration of Trust,
Amended and Restated Bylaws and Bylaws.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including the SEC)
or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the NASD Regulation, Inc., the
Commodity Futures Trading Commission, the National Futures Association, the
Investment Management Regulatory Organization Limited and the Office of Fair
Trading).
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted pursuant thereto.
"Liabilities" means the liabilities of Selling Fund (i) incurred in the
ordinary course of business and included as a liability on the books and records
of Selling Fund (and reflected in Selling Fund's net asset value) and set forth
in Selling Fund's Statement of Assets and Liabilities as of the Closing Date
delivered by the Seller, on behalf of Selling Fund, to Buyer, on behalf of Shell
Fund, pursuant to Section 6.1(f) hereof or (ii) as otherwise mutually agreed to
in writing by Buyer and Seller and identified on Exhibit A hereof as of the
Closing Date.
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"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"majority of the outstanding voting securities" means the affirmative vote
of the lesser of: (a) 67% or more of the voting securities of Selling Fund
present or represented by proxy at the Shareholders Meeting, if the holders of
more than 50% of the outstanding voting securities of Selling Fund are present
or represented by proxy; or (b) more than 50% of the outstanding voting
securities of Selling Fund.
"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.
"Performance Calculation Information" shall have the meaning set forth in
Section 3.19 of this Agreement.
"Permits" shall have the meaning set forth in Section 3.10 of this
Agreement.
"Person" means an individual or a corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"Registration Statement on Form N-14" means the registration statement on
Form N-14 pursuant to which the Shell Fund Shares to be issued pursuant to
Section 2.6 shall be registered under the Securities Act.
"Reorganization" means the acquisition of the Assets of Selling Fund by
Shell Fund in consideration of the assumption by Shell Fund of the Liabilities
and the issuance by Buyer of Shell Fund Shares directly to Selling Fund
Shareholders as described in this Agreement.
"Required Shareholder Vote" means, the affirmative vote of a "majority of
the outstanding voting securities" of the Selling Fund.
"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted pursuant thereto.
"Seller" means Atlantic Whitehall Funds Trust, a Delaware statutory trust.
"Seller Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of Selling Fund.
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"Seller Registration Statement" means the registration statement on Form
N-1A of Seller, as amended, 1940 Act Registration No. 811-08738.
"Selling Fund" means Atlantic Whitehall Equity Income Fund, a separate
series of Seller.
"Selling Fund Auditors" means Ernst & Young L.L.P.
"Selling Fund Financial Statements" means the audited Statement of Assets
and Liabilities, Statements of Operations and Changes in Net Assets, and
Schedule of Investments of Selling Fund at November 30, 2008.
"Selling Fund Shareholders" means the holders of record of the outstanding
Institutional Class shares of Selling Fund as of the close of regular trading on
the NYSE on the Valuation Date.
"Selling Fund Shares" means the issued and outstanding Institutional Class
shares of Selling Fund.
"Shareholders Meeting" means a meeting of the shareholders of Selling Fund
convened in accordance with Applicable Law and the Governing Documents of Seller
to consider and vote upon the approval of this Agreement, and any adjournments
thereof.
"Shell Fund" means AIM Disciplined Equity Fund, a separate series of Buyer.
"Shell Fund Auditors" means PricewaterhouseCoopers LLP.
"Shell Fund Share" and "Shell Fund Shares" means Class Y shares of Shell
Fund issued pursuant to Section 2.6 of this Agreement.
"Xxxxx Xxx" means Xxxxx Xxx Investment Counsel, Inc., a Delaware
corporation
"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, or windfall profit taxes) ad
valorem or other taxes, stamp taxes, duties, fees, assessment 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).
"Termination Date" means December 31, 2009, or such later date as the
parties may mutually agree upon.
"Treasury Regulations" means the Federal income tax regulations adopted
pursuant to the Code.
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"USA PATRIOT ACT" means Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act
of 2001, Pub. L. No. 107-56, and rules and regulations adopted pursuant thereto.
"Valuation Date" shall have the meaning set forth in Section 2.2 of this
Agreement.
Article 2
TRANSFER OF ASSETS
SECTION 2.1. Reorganization of Selling Fund. At the Effective Time, Seller
shall deliver all of the Assets of Selling Fund to Buyer Custodian for the
account of Shell Fund in exchange for the assumption by Shell Fund of the
Liabilities and delivery by Buyer directly to the holders of record as of the
Effective Time of the issued and outstanding Institutional Class shares of
Selling Fund of a number of Class Y shares of Shell Fund (including, if
applicable, fractional shares rounded to the nearest thousandth), having an
aggregate net asset value equal to the value of the net assets of Selling Fund
so transferred, assigned and delivered, all determined and adjusted as provided
in Section 2.2 below. Upon delivery of such Assets, Shell Fund will receive good
and marketable title to such Assets free and clear of all Liens.
SECTION 2.2. Computation of Net Asset Value.
(a) The net asset value per share of Class Y shares of Shell Fund, and
the value of the Assets and the amount of the Liabilities shall, in each case,
be determined as of the close of regular trading on the NYSE, and after the
declaration of any dividends, on the business day next preceding the Closing
Date (the "Valuation Date").
(b) The net asset value of each Shell Fund Share shall be the net
asset value per share computed with respect to Class Y as of the Valuation Date,
using the evaluation procedures set forth in Shell Fund's then-current
prospectus and statement of additional information and valuation procedures
established by Shell Fund's Board of Trustees.
(c) The value of the Institutional Class shares of Selling Fund and
the value of the Assets and the amount of the Liabilities of the Institutional
Class shares of Selling Fund to be transferred to the Shell Fund pursuant to
this Agreement shall be computed as of the Valuation Date, using the evaluation
procedures set forth in Selling Fund's then-current prospectus and statement of
additional information and valuation procedures established by Selling Fund's
Board of Trustees.
(d) Subject to Sections 2.2(b) and (c) above, all computations of
value regarding the Assets and Liabilities of Selling Fund and the net asset
value per share of Class Y shares of Shell Fund to be issued pursuant to this
Agreement shall be made by agreement of Seller and Buyer. The parties agree to
use commercially reasonable efforts to resolve any material pricing differences
between the prices of portfolio securities determined in accordance with their
respective pricing policies and procedures.
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SECTION 2.3. Valuation Date. The share transfer books of Selling Fund will
be permanently closed as of the close of business on the Valuation Date and only
requests for the redemption of shares of Selling Fund received in proper form
prior to the close of regular trading on the NYSE on the Valuation Date shall be
accepted by Selling Fund. Redemption requests thereafter received by Selling
Fund shall be deemed to be redemption requests for the Class Y shares of the
Shell Fund Shares (assuming that the transactions contemplated by this Agreement
have been consummated), to be distributed to Selling Fund Shareholders under
this Agreement.
SECTION 2.4. Delivery.
(a) No later than three (3) business days preceding the Closing Date,
Seller shall instruct Seller Custodian to transfer all Assets held by Selling
Fund to the account of Shell Fund maintained at Buyer Custodian. Such Assets
shall be delivered by Seller to Buyer Custodian on the Closing Date. The Assets
so delivered shall be duly endorsed in proper form for transfer in such
condition as to constitute a good delivery thereof, in accordance with the
custom of brokers, and shall be accompanied by all necessary state stock
transfer stamps, if any, or a check for the appropriate purchase price thereof.
Cash held by Selling Fund shall be delivered on the Closing Date and shall be in
the form of currency or wire transfer in Federal funds, payable to the order of
the account of Shell Fund at Buyer Custodian.
(b) If, on the Closing Date, Selling Fund is unable to make delivery
in the manner contemplated by Section 2.4(a) of securities held by Selling Fund
for the reason that any of such securities purchased prior to the Closing Date
have not yet been delivered to Selling Fund or its broker, then Buyer shall
waive the delivery requirements of Section 2.4(a) with respect to said
undelivered securities if Selling Fund has delivered to Buyer Custodian by or on
the Closing Date, and with respect to said undelivered securities, executed
copies of an agreement of assignment and escrow and due bills executed on behalf
of said broker or brokers, together with such other documents as may be required
by Buyer or Buyer Custodian, including brokers' confirmation slips.
SECTION 2.5. Termination of Series and Cancellation of Selling Fund Shares.
Following receipt of the Required Shareholder Vote and as soon as reasonably
practicable after the Closing, Seller shall cancel the issued and outstanding
shares of Selling Fund from Selling Fund Shareholders in accordance with its
Governing Documents and all issued and outstanding shares of Selling Fund shall
thereupon be canceled on the books of Seller.
SECTION 2.6. Issuance of Shell Fund Shares. At the Effective Time, Selling
Fund Shareholders of record, determined as of the Effective Time, shall be
issued that number of full and fractional Class Y shares of Shell Fund having a
net asset value equal to the net asset value of such shares of Selling Fund held
by Selling Fund Shareholders on the Valuation Date in accordance with Sections
2.1 and 2.2. Seller shall provide instructions to the transfer agent of Shell
Fund with respect to the Shell Fund Shares to be issued to Selling Fund
Shareholders, including names, addresses, dividend reinvestment elections and
tax withholding status of Selling Fund Shareholders and backup withholding and
nonresident alien withholding certifications, notices or records on file with
respect to Selling Fund Shareholders. Seller shall also provide to the transfer
agent of Shell Fund the AML Documentation and such other information as Buyer
may reasonably request.
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Buyer 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. Buyer shall record on its books the ownership of
the Shell Fund Shares by Selling Fund Shareholders and shall forward a
confirmation of such ownership to Selling Fund Shareholders. No redemption or
repurchase of such shares credited to former Selling Fund Shareholders in
respect of Selling Fund Shares represented by unsurrendered share certificates
shall be permitted until such certificates have been surrendered to Buyer for
cancellation, or if such certificates are lost or misplaced, until lost
certificate affidavits have been executed and delivered to Buyer.
SECTION 2.7. Investment Securities. On or prior to the Valuation Date,
Seller shall deliver a list setting forth the securities and other investments
Selling Fund then owned together with the respective Federal income tax bases
thereof and holding periods therefor. Seller shall provide to Buyer on or before
the Valuation Date detailed tax basis accounting records for each security and
other investment to be transferred to it pursuant to this Agreement. Such
records shall be prepared in accordance with the requirements for specific
identification tax lot accounting and clearly reflect the bases used for
determination of gain and loss realized on the sale of any security or other
investment transferred to Shell Fund hereunder. Such records shall be made
available by Seller prior to the Valuation Date for inspection by the Treasurer
of Buyer (or his or her designee) or Shell Fund Auditors upon reasonable
request.
SECTION 2.8. Liabilities. Selling Fund shall use reasonable best efforts to
discharge all of its known liabilities, so far as may be practical, prior to the
Closing Date. Shell Fund shall not assume any liabilities of Selling Fund other
than the Liabilities, including, without limitation, any liability for
recoupment of advisory fees waived or expenses paid pursuant to that certain
Expense Limitation Undertaking by and between Seller and Xxxxx Xxx.
Article 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller, on behalf of Selling Fund, represents and warrants to Buyer as
follows:
SECTION 3.1. Organization; Authority. Seller is duly organized, validly
existing and in good standing under Applicable Law, with all requisite trust
power and authority to enter into this Agreement and perform its obligations
hereunder.
SECTION 3.2. Registration and Regulation of Seller. Seller is duly
registered with the SEC as an investment company under the Investment Company
Act and all Selling Fund Shares which have been or are being offered for sale
have been duly registered under the Securities Act and have been duly
registered, qualified or are exempt from registration or qualification under the
securities laws of each state or other jurisdiction in which such shares have
been or are being offered for sale, and no action has been taken by Seller to
revoke or rescind any such registration or qualification. To the best of its
knowledge, Selling Fund is in compliance in all material respects with all
applicable laws, rules and regulations, including, without limitation, the
Investment Company Act, the Securities Act, the Exchange Act and all applicable
state securities laws. Selling Fund is in compliance in all material respects
with the investment policies and restrictions
8
applicable to it set forth in the Seller Registration Statement. 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 the Investment
Company Act and the policies of Selling Fund and all purchases and redemptions
of Selling Fund Shares have been effected at the net asset value per share
calculated in such manner.
SECTION 3.3. Financial Statements. The Selling Fund Financial Statements
have been audited by Ernst & Young L.L.P, an independent registered public
accounting firm, and are in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP") consistently applied, and such statements (copies of
which have been furnished to Shell Fund) present fairly, in all material
respects, the financial condition of Selling Fund as of such date in accordance
with U.S. GAAP, and there are no known contingent liabilities of Selling Fund
required to be reflected on a balance sheet (including the notes thereto) in
accordance with U.S. GAAP as of such date not disclosed therein.
SECTION 3.4. No Material Adverse Changes; Contingent Liabilities. Since the
date of the Selling Fund Financial Statements, no material adverse change has
occurred in the financial condition, results of operations, business, assets or
liabilities of Selling Fund or the status of Selling Fund as a regulated
investment company under the Code, other than changes resulting from any change
in general conditions in the financial or securities markets or the performance
of any investments made by Selling Fund or occurring in the ordinary course of
business of Selling Fund or Seller. There are no contingent liabilities of
Selling Fund not disclosed in the Selling Fund Financial Statements and no
contingent liabilities of Selling Fund have arisen since the date of the most
recent financial statements included in the Selling Fund Financial Statements.
SECTION 3.5. Selling Fund Shares; Business Operations.
(a) Selling Fund Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(b) During the five-year period ending on the date of the
Reorganization, neither Selling Fund nor any person related to Selling Fund (as
defined in Section 1.368-1(e)(3) of the Treasury Regulations without regard to
Section 1.368-1(e)(3)(i)(A)) will have directly or through any transaction,
agreement, or arrangement with any other person, (i) acquired shares of Selling
Fund for consideration other than shares of Selling Fund, except for shares
redeemed in the ordinary course of Selling Fund's business as an open-end
investment company as required by the Investment Company Act, or (ii) made
distributions with respect to Selling Fund's shares, except for (a)
distributions necessary to satisfy the requirements of Sections 852 and 4982 of
the Code for qualification as a regulated investment company and avoidance of
excise tax liability and (b) additional distributions, to the extent such
additional distributions do not exceed 50 percent of the value (without giving
effect to such distributions) of the proprietary interest in Selling Fund on the
Effective Date.
(c) At the time of its Reorganization, Selling Fund shall not have
outstanding any warrants, options, convertible securities or any other type of
right pursuant to which any Person may acquire Selling Fund Shares, except for
the right of investors to acquire Selling Fund
9
Shares at the public offering price in the normal course of its business as a
series of an open-end management investment company operating under the
Investment Company Act.
(d) Seller does not have, and has not had during the six (6) months
prior to the date of this Agreement, any employees, and shall not hire any
employees from and after the date of this Agreement through the Closing Date.
SECTION 3.6. Accountants. Selling Fund Auditors, which have reported upon
the Selling Fund Financial Statements for the fiscal year or period, as
applicable, ended on the date of the most recent financial statements included
in the Selling Fund Financial Statements are independent public accountants as
required by the Securities Act and the Exchange Act.
SECTION 3.7. Binding Obligation. This Agreement has been duly authorized,
executed and delivered by Seller on behalf of Selling Fund and, assuming this
Agreement has been duly executed and delivered by Buyer and approved by the
shareholders of Selling Fund, constitutes a legal, valid and binding obligation
of Seller enforceable against Seller in accordance with its terms from and with
respect to the revenues and assets of Selling Fund, except as the enforceability
hereof may be limited by bankruptcy, insolvency, reorganization or similar laws
relating to or affecting creditors rights generally, or by general equity
principles (whether applied in a court of law or a court of equity and including
limitations on the availability of specific performance or other equitable
remedies).
SECTION 3.8. No Breaches or Defaults. The execution and delivery of this
Agreement by Seller on behalf of Selling Fund and performance by Seller of its
obligations hereunder have been duly authorized by all necessary trust action on
the part of Seller, other than approval by the shareholders of Selling Fund, and
(i) do not, and on the Closing Date will not, result in any violation of the
Governing Documents of Seller and (ii) do not, and on the Closing Date will not,
result in a breach of any of the terms or provisions of, or constitute (with or
without the giving of notice or the lapse of time or both) a default under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in the creation
or imposition of any Lien upon any Assets or penalty or additional fee of
Selling Fund (except for such breaches or defaults or Liens that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect) under (A) any indenture, mortgage or loan agreement or any other
material agreement or instrument to which Seller is a party or by which it may
be bound and which relates to the Assets or business of Selling Fund or to which
any property of Selling Fund may be subject; (B) any Permit (as defined below);
or (C) any existing applicable law, rule, regulation, judgment, order or decree
of any Governmental Authority having jurisdiction over Seller or any property of
Selling Fund. Seller is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
SECTION 3.9. Authorizations or Consents. Other than those which shall have
been obtained or made on or prior to the Closing Date and those that must be
made after the Closing Date to comply with Section 2.5 of this Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made
10
by Seller in connection with the execution and delivery by Seller of this
Agreement and the consummation by Seller of the transactions contemplated
hereby.
SECTION 3.10. Permits. Seller has in full force and effect all approvals,
consents, authorizations, registrations, certificates, filings, franchises,
licenses, notices, permits and rights of Governmental Authorities (collectively,
"Permits") necessary for it to conduct its business as presently conducted as it
relates to Selling Fund, 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 Seller there are
no proceedings relating to the suspension, revocation or modification of any
Permit, except for such that would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 3.11. No Actions, Suits or Proceedings.
(a) To the knowledge of Seller, there is no pending action, suit or
proceeding, nor has any litigation been overtly threatened in writing or, if
probable of assertion, threatened orally against Seller before any Governmental
Authority which questions the validity or legality of this Agreement or of the
actions contemplated hereby or which seeks to prevent the consummation of the
transactions contemplated hereby, including the Reorganization.
(b) To the knowledge of Seller, there are no judicial, administrative
or arbitration actions, suits, or proceedings instituted or pending or
threatened in writing or, if probable of assertion, threatened 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. To the knowledge of
Seller, 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 material investigation by the SEC or any
state securities administrator with respect to its conduct of the business of
Selling Fund, other than as has been disclosed in the Seller Registration
Statement.
SECTION 3.12. Contracts. Seller is not in default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party and which involves or affects the Assets of Selling Fund,
by which the Assets, business, or operations of Selling Fund may be bound or
affected, or under which it or the Assets, business or operations of Selling
Fund receives benefits, 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 (including the Reorganization) that,
with the lapse of time or the giving of notice or both, would constitute such a
default.
SECTION 3.13. Properties and Assets. Selling Fund has good and marketable
title to all Assets, including properties and assets reflected in the Selling
Fund Financial Statements as owned by it, free and clear of all Liens, except as
described in the Selling Fund Financial Statements.
11
SECTION 3.14. Taxes.
(a) Selling Fund has elected to be a regulated investment company
under Subchapter M of the Code and is a fund that is treated as a separate
corporation under Section 851(g) of the Code. Selling 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. Selling Fund has no earnings and profits
accumulated in any taxable year in which the provisions of Subchapter M of the
Code did not apply to it. In order to (i) ensure continued qualification of
Selling Fund for treatment as a "regulated investment company" for tax purposes
and (ii) eliminate any tax liability of Selling Fund arising by reason of
undistributed investment company taxable income or net capital gain, Seller will
declare on or prior to the Valuation Date to the shareholders of Selling Fund a
dividend or dividends that, together with all previous such dividends, shall
have the effect of distributing (A) all of Selling Fund's investment company
taxable income (determined without regard to any deductions for dividends paid)
for the taxable year ended November 30, 2008 and (B) all of Selling Fund's net
capital gain recognized in its taxable year ended November 30, 2008 (after
reduction for any capital loss carryover).
(b) Selling Fund has timely filed all Returns required to be filed by
it and all Taxes with respect thereto have been paid, except where the failure
so to file or so to pay, would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. Adequate provision has been
made in the Selling Fund Financial Statements for all Taxes in respect of all
periods ended on or before the date of such financial statements, except where
the failure to make such provisions would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, assessed or asserted in writing
by any taxing authority against Selling Fund, and no deficiency has been
proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of Selling
Fund is currently being or has been audited with respect to income taxes or
other Taxes by any Federal, state, local or foreign Tax authority.
SECTION 3.15. Benefit and Employment Obligations. Selling Fund has no
obligation to provide any post-retirement or post-employment benefit to any
Person. Immediately after the Closing Date and as a result of the Closing,
Selling Fund will have no obligation to provide any post-retirement or
post-employment benefit to any Person, including but not limited to under any
Benefit Plan, and will have no obligation to provide unfunded deferred
compensation or other unfunded or self-funded benefits to any Person.
SECTION 3.16. Brokers. No broker, finder or similar intermediary has acted
for or on behalf of Seller in connection with this Agreement or the transactions
contemplated hereby, and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or other commission in
connection therewith based on any agreement, arrangement or understanding with
Seller or any action taken by it.
12
SECTION 3.17. Voting Requirements. The Required Shareholder Vote is the
only vote of the holders of any class of shares of Selling Fund necessary to
approve this Agreement.
SECTION 3.18. State Takeover Statutes. No state takeover statute or similar
statute or regulation applies or purports to apply to this Agreement or any of
the transactions contemplated by this Agreement.
SECTION 3.19. Books and Records. The books and records of Seller relating
to Selling Fund, reflecting, among other things, the performance returns of
Selling Fund that are or have been included in Selling Fund's prospectuses,
advertisements and sales literature and the information used to calculate such
performance returns ("Performance Calculation Information"), the purchase and
sale of Selling Fund Shares, the identity and tax status of Selling Fund
Shareholders, the AML Documentation, the number of issued and outstanding shares
owned by each Selling Fund Shareholder and the state or other jurisdiction in
which such shares were offered and sold, are complete and accurate in all
material respects.
SECTION 3.20. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Selling Fund as
of the date on which they were issued did not contain, and as supplemented by
any supplement thereto dated prior to or on the Closing Date do not contain, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
SECTION 3.21. No Distribution. Shell Fund Shares are not being acquired for
the purpose of any distribution thereof, other than in accordance with the terms
of this Agreement.
SECTION 3.22. Liabilities of Selling Fund. The Liabilities that are to be
assumed by Shell Fund in connection with the Reorganization, or to which the
assets of Selling Fund to be transferred in the Reorganization are subject, were
incurred by Selling Fund in the ordinary course of its business. The fair market
value of the assets of Selling Fund to be transferred to Shell Fund in the
Reorganization will equal or exceed the sum of the Liabilities to be assumed by
Shell Fund.
SECTION 3.23. Shareholder Expenses. Selling Fund Shareholders will pay
their own expenses, if any, incurred in connection with the Reorganization.
SECTION 3.24. Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between Seller and Buyer that was issued or acquired,
or will be settled, at a discount. No consideration other than Shell Fund Shares
(and Shell Fund's assumption of the Liabilities) will be given in exchange for
the Assets of Selling Fund acquired by Shell Fund in connection with the
Reorganization.
SECTION 3.25. Information Supplied by Seller. The information supplied by
Seller regarding Seller or Selling Fund that is included or referenced in the
Registration Statement on Form N-14 of Buyer contemplated by section 4.4(b) of
this Agreement shall be true, accurate and complete in all respects.
SECTION 3.26. Selling Fund Fiscal Year. The Selling Fund has not changed
its annual accounting period (fiscal year) within the past five years.
13
Article 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer, on behalf of Shell 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. Shell
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. Shell
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 Shell 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 Shell Fund and all purchases and
redemptions of Shell Fund Shares have been effected at the net asset value per
share calculated in such manner.
SECTION 4.3. Financial Statements. Shell Fund is a newly created series
portfolio of Seller formed for the purpose of receiving the Assets of the
Selling Fund in connection with the Reorganization. Accordingly, Shell Fund has
not prepared books of account and related records or financial statements.
SECTION 4.4. Registration of Shell Fund Shares.
(a) Shell Fund currently has Class Y shares. Under its Governing
Documents, Buyer is authorized to issue an unlimited number of shares of such
class.
(b) Shell Fund Shares to be issued pursuant to Section 2.6 shall on
the Closing Date be duly registered under the Securities Act by a Registration
Statement on Form N-14 of Buyer then in effect.
(c) On the Closing Date, Shell Fund will have good and marketable
title to Shell Fund's Assets, free of any liens or other encumbrances, except
those liens or encumbrances incurred in the ordinary course of Shell Fund's
business or as to which Selling Fund has received notice and necessary
documentation at or prior to the Closing;
(d) Shell Fund Shares to be issued pursuant to Section 2.6 are duly
authorized and on the Closing Date, assuming the consummation of the
Reorganization in accordance with this Agreement, will be validly issued and
fully paid and non-assessable and will conform to the description thereof
contained in the Registration Statement on Form N-14 then in effect. At the time
of its Reorganization, Shell Fund shall not have outstanding any warrants,
options, convertible securities or any other type of right pursuant to which any
Person could acquire shares of Shell Fund, except for the right of investors to
acquire shares of Shell Fund at the
14
public offering price in the normal course of its business as a series of an
open-end management investment company operating under the Investment Company
Act.
(e) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus"), which forms a part of Buyer's Registration Statement on
Form N-14, shall be furnished to the shareholders of Selling Fund entitled to
vote at the Shareholders Meeting in accordance with normal market practice for
such transactions. The Combined Proxy Statement/Prospectus and related Statement
of Additional Information of Shell Fund, when they become effective, shall
conform in all material respects to the applicable requirements of the
Securities Act and the Investment Company Act and shall not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided that, with
respect to information in the Combined Proxy Statement/Prospectus derived from
information supplied by Seller or its agents, Buyer is relying on the accuracy
of Seller's representation in Section 3.25 in making this representation.
(f) The shares of Shell Fund which have been or are being offered for
sale (other than the Shell Fund Shares to be issued in connection with the
Reorganization) have been duly registered under the Securities Act by the Buyer
Registration Statement and have been duly registered, qualified or are exempt
from registration or qualification under the securities laws of each state or
other jurisdiction in which such shares have been or are being offered for sale,
and no action has been taken by Buyer to revoke or rescind any such registration
or qualification.
SECTION 4.5. Accountants. Shell Fund Auditors are independent public
accountants as required by the Securities Act and the Exchange Act.
SECTION 4.6. Binding Obligation. This Agreement has been duly authorized,
executed and delivered by Buyer on behalf of Shell 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 Shell 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 4.7. No Breaches or Defaults. The execution and delivery of this
Agreement by Buyer on behalf of Shell Fund and performance by Buyer of its
obligations hereunder have been duly authorized by all necessary trust action on
the part of Buyer and (i) do not, and on the Closing Date will not, result in
any violation of the Governing Documents of Buyer and (ii) do not, and on the
Closing Date will not, result in a breach of any of the terms or provisions of,
or constitute (with or without the giving of notice or the lapse of time or
both) a default under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation or imposition of any Lien upon any property or assets of
Shell 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
15
bound and which relates to the assets of Shell Fund or to which any properties
of Shell 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 Shell Fund. Buyer is not under
the jurisdiction of a court in a proceeding under Title 11 of the United States
Code or similar case within the meaning of Section 368(a)(3)(A) of the Code.
SECTION 4.8. Authorizations or Consents. Other than those which shall have
been obtained or made on or prior to the Closing Date, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority will be required to be obtained or made by Buyer in connection with
the due execution and delivery by Buyer of this Agreement and the consummation
by Buyer of the transactions contemplated hereby.
SECTION 4.9. Permits. Buyer has in full force and effect all Permits
necessary for it to conduct its business as presently conducted as it relates to
Shell 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 4.10. No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the
knowledge of Buyer, has any litigation been overtly threatened in writing or, if
probable of assertion, orally, against Buyer before any Governmental Authority
which questions the validity or legality of this Agreement or of the
transactions contemplated hereby, or which seeks to prevent the consummation of
the transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of Buyer,
threatened in writing or, if probable of assertion, orally, against Buyer,
affecting any property, asset, interest or right of Shell Fund, that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect with respect to Shell 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 Shell Fund
affecting in any significant respect the conduct of such business. Buyer is not,
and has not been, to the knowledge of Buyer, the target of any material
investigation by the SEC or any state securities administrator with respect to
its conduct of the business of Shell Fund, other than as has been disclosed in
the Shell Fund Registration Statement.
SECTION 4.11. Taxes.
(a) Shell Fund intends to elect 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. Shell Fund will satisfy the
requirements of Part I of Subchapter M of the Code to maintain qualification as
a regulated investment company for its current taxable year.
16
Shell 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) Shell Fund has timely filed all Returns required to be filed by it
and all Taxes with respect thereto have been paid, except where the failure so
to file or so to pay, would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 4.12. 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 4.13. Representations Concerning the Reorganization.
(a) There is no plan or intention by Buyer or any person related to
Buyer to acquire or redeem any Shell Fund Shares issued in the Reorganization,
except to the extent that Shell 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) Shell Fund has no plan or intention to sell or otherwise dispose
of any of the Assets of Selling Fund acquired in the Reorganization, other than
in the ordinary course of its business and to the extent necessary to maintain
its status as a "regulated investment company" under the Code.
(c) Following the Reorganization, Shell Fund will continue an
"historic business" of Selling Fund or use a significant portion of Selling
Fund's "historic business assets" in a business. For purposes of this
representation, the terms "historic business" and "historic business assets"
shall have the meanings ascribed to them in Section 1.368-1(d) of the Treasury
Regulations.
(d) Prior to or in the Reorganization, neither Shell Fund nor any
person related to Shell Fund (for purposes of this paragraph as defined in
Section 1.368-1(e)(3) of the Treasury Regulations) will have acquired directly
or through any transaction, agreement or arrangement with any other person,
shares of Selling Fund with consideration other than shares of Shell Fund. There
is no plan or intention by Shell Fund to redeem, or by any person related to
Shell Fund to acquire, any of the Shell Fund Shares issued in the Reorganization
either directly or through any transaction, agreement or arrangement with any
other person, other than redemptions in the ordinary course of Shell Fund's
business as an open-end investment company as required by the Investment Company
Act.
SECTION 4.14. Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Shell 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.
17
SECTION 4.15. Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between Seller and Buyer that was issued or acquired,
or will be settled, at a discount. No consideration other than Shell Fund Shares
(and Shell Fund's assumption of the Liabilities) will be given in exchange for
the Assets of Selling Fund acquired by Shell Fund in connection with the
Reorganization. The fair market value of the Assets of Selling Fund transferred
to Shell Fund in the Reorganization will equal or exceed the sum of the
Liabilities assumed by Shell Fund.
Article 5
COVENANTS
SECTION 5.1. Conduct of Business.
(a) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article 7), Seller shall conduct the business of Selling Fund only in the
ordinary course and substantially in accordance with past practices, and shall
use its reasonable best efforts to preserve intact its business organization and
material assets and maintain the rights, franchises and business and customer
relations necessary to conduct the business operations of Selling Fund in the
ordinary course in all material respects.
(b) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article 7), Buyer shall conduct the business of Shell Fund only in the
ordinary course and substantially in accordance with past practices, and shall
use its reasonable best efforts to preserve intact its business organization and
material assets and maintain the rights, franchises and business and customer
relations necessary to conduct the business operations of Shell Fund in the
ordinary course in all material respects.
SECTION 5.2. Expenses. Invesco Aim shall bear the costs and expenses of
Buyer and Shell Fund incurred in connection with the transactions contemplated
by this Agreement and no costs or expenses of Seller or Selling Fund incurred in
connection with the transactions contemplated by this Agreement shall be charged
to or borne by Seller, Selling Fund, Buyer or Shell Fund.
SECTION 5.3. Further Assurances. Each of the parties hereto shall execute
such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the Reorganization, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the Reorganization.
SECTION 5.4. Notice of Events. Buyer shall give prompt notice to Seller,
and Seller shall give prompt notice to Buyer, of (a) the occurrence or
non-occurrence of any event which to
18
the knowledge of Buyer or to the knowledge of Seller would be likely to result
in any of the conditions specified in (i) in the case of Seller, Sections 6.1
and 6.2 or (ii) in the case of Buyer, Sections 6.2 and 6.3, not being satisfied
so as to permit the consummation of the Reorganization and (b) any material
failure on its part, or on the part of the other party hereto of which it has
knowledge, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.4 shall not limit or otherwise affect
the remedies available hereunder to any party.
SECTION 5.5. Consents, Approvals and Filings. Each of Seller and Buyer
shall make all necessary filings, as soon as reasonably practicable, including,
without limitation, those required under the Securities Act, the Exchange Act,
the Investment Company Act and the Advisers Act, in order to facilitate prompt
consummation of the Reorganization and the other transactions contemplated by
this Agreement. In addition, each of Seller and Buyer shall use its reasonable
best efforts, and shall cooperate fully with each other (i) to comply as
promptly as reasonably practicable with all requirements of Governmental
Authorities applicable to the Reorganization and the other transactions
contemplated herein and (ii) to obtain as promptly as reasonably practicable all
necessary permits, orders or other consents of Governmental Authorities and
consents of all third parties necessary for the consummation of the
Reorganization and the other transactions contemplated herein, provided that
nothing in this Section shall require Buyer to request a ruling from the
Internal Revenue Service as to the federal tax consequences of the
Reorganization. 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 5.6. Submission of Agreement to Shareholders. Subject to the
Registration Statement on Form N-14 becoming declared effective by the SEC,
Seller shall take all action necessary in accordance with applicable law and its
Governing Documents to convene the Shareholders Meeting. Seller shall recommend
to the shareholders of Selling Fund approval of this Agreement. Seller shall use
its reasonable best efforts to hold a Shareholders Meeting as soon as
practicable and advisable after the date hereof.
SECTION 5.7. Statement of Earnings and Profits. As promptly as practicable,
but in any case within sixty days after the Closing Date, the Seller shall
furnish the Buyer, in such form as is reasonably satisfactory to the Buyer, a
statement of the earnings and profits and of any capital loss carryovers and
other items of the Selling Fund for federal income tax purposes that will be
carried over by the Shell Fund as a result of Sections 381 through 384 of the
Code. Such statement will be reviewed by Selling Fund Auditors and certified by
the Seller's Treasurer.
Article 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
SECTION 6.1. Conditions Precedent of Buyer. The obligation of Buyer to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by Buyer.
19
(a) The representations and warranties of Seller on behalf of Selling
Fund set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date with the
same effect as though all such representations and warranties had been made as
of the Closing Date.
(b) Seller shall have complied with and satisfied in all material
respects all agreements and conditions relating to Selling Fund set forth herein
on its part to be performed or satisfied at or prior to the Closing Date.
(c) Buyer shall have received at the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of Seller, in such individual's
capacity as an officer of Seller and not as an individual, to the effect that
the conditions specified in Sections 6.1(a) and (b) have been satisfied and (ii)
a certificate, dated as of the Closing Date, from the Secretary or Assistant
Secretary (in such capacity) of Seller certifying as to the accuracy and
completeness of the attached Governing Documents of Seller, and resolutions,
consents and authorizations of or regarding Seller and Selling Fund with respect
to the execution and delivery of this Agreement and the transactions
contemplated hereby.
(d) Unless the Shell Fund provides an opinion of counsel that the
Reorganization qualifies as a "reorganization" under Section 368(a)(1)(F) of the
Code, the Selling Fund shall have declared and paid a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to its shareholders all of the Selling Fund's investment company
taxable income (computed without regard to any deduction for dividends paid), if
any, plus the excess, if any, of its interest income excludible from gross
income under Section 103(a) of the Code over its deductions disallowed under
Sections 265 and 171(a)(2) of the Code, in each case for all taxable periods or
years ending on or before the Closing Date, and all of its net capital gains
realized (after reduction for any capital loss carry forward), if any, in all
taxable periods or years ending on or before the Closing Date.
(e) Buyer shall have received from Seller (1) the instructions,
information and documentation described in Section 2.6 of this Agreement, (2)
the Performance Calculation Information described in Section 3.19 of this
Agreement, (3) confirmations or other adequate evidence as to the tax basis and
holding periods of the Assets of Selling Fund transferred to Shell Fund in
accordance with the terms of this Agreement, (4) all FIN 48 work papers and
supporting statements pertaining to the Selling Fund and (5) the tax books and
records of the Selling Fund for purposes of preparing any tax returns required
by law to be filed after the Closing Date.
(f) Seller shall have delivered to Buyer, on behalf of Shell Fund,
Selling Fund's Statement of Assets and Liabilities, as of the Closing Date,
certified by the Treasurer of Seller.
(g) Xxxxx Xxx shall have terminated or waived, in either case in
writing, any rights to reimbursement from Selling Fund to which it is entitled
for fees and expenses absorbed by Xxxxx Xxx pursuant to voluntary and
contractual fee waiver or expense limitation commitments between Xxxxx Xxx and
Selling Fund.
20
(h) Buyer shall have received on the Closing Date an opinion of
Dechert LLP, counsel to Seller and Selling Fund, dated as of the Closing Date,
covering the following points:
(i) The Agreement has been duly authorized by Seller, on behalf of the
Selling Fund and, assuming due authorization, execution and delivery of the
Agreement by Buyer, Shell Fund, Invesco Aim and Xxxxx Xxx, is a valid and
binding obligation of Seller, on behalf of the Selling Fund enforceable
against it in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally and to general equity
principles.
SECTION 6.2. Mutual Conditions. The obligations of Seller and Buyer to
consummate the Reorganization are subject to the satisfaction, at or prior to
the Closing Date, of all of the following further conditions, any one or more of
which may be waived in writing by Seller and Buyer, but only if and to the
extent that such waiver is mutual.
(a) All filings required to be made prior to the Closing Date with,
and all consents, approvals, permits and authorizations required to be obtained
on or prior to the Closing Date from, Governmental Authorities in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein by Seller and Buyer shall have been made or
obtained, as the case may be; provided, however, that such consents, approvals,
permits and authorizations may be subject to conditions that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) This Agreement, the Reorganization of Selling Fund and related
matters shall have been approved and adopted at the Shareholders Meeting by the
shareholders of Selling Fund on the record date by the Required Shareholder
Vote.
(c) The Assets of Selling Fund to be acquired by Shell Fund shall
constitute at least 90% of the fair market value of the net assets and at least
70% of the fair market value of the gross assets held by Selling Fund
immediately prior to the Reorganization. For purposes of this Section 6.2(c),
assets used by Selling Fund to pay the expenses it incurs in connection with
this Agreement and the Reorganization and to effect all shareholder redemptions
and distributions (other than regular, normal dividends and regular, normal
redemptions pursuant to the Investment Company Act, and not in excess of the
requirements of Section 852 of the Code, occurring in the ordinary course of
Selling Fund's business as a series of an open-end management investment
company) after the date of this Agreement shall be included as Assets of Selling
Fund held immediately prior to the Reorganization.
(d) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Governmental Authority preventing the
consummation of the Reorganization on the Closing Date shall be in effect;
provided, however, that the party or parties invoking this condition shall use
reasonable efforts to have any such order or injunction vacated.
(e) The Registration Statement on Form N-14 filed by Buyer with
respect to Shell Fund Shares to be issued to Selling Fund Shareholders in
connection with the
21
Reorganization shall have become effective under the Securities Act and shall
include an undertaking therein to file the opinion referenced in Section 6.2(f)
as a post-effective amendment to such Registration Statement after the Closing
Date, and no stop order suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the Securities Act.
(f) Seller and Buyer shall have received on or before the Closing Date
an opinion of Buyer Counsel in form and substance reasonably acceptable to
Seller and Buyer, as to the matters set forth on Schedule 6.2(f). In rendering
such opinion, Buyer Counsel may request and rely upon representations contained
in certificates of officers of Seller, Buyer and others, and the officers of
Seller and Buyer shall use their best efforts to make available such truthful
certificates.
(g) Selling Fund and Shell Fund shall have agreed on the number of
full and fractional Shell Fund Shares to be issued in connection with the
Reorganization after such number has been calculated in accordance with Sections
2.1 and 2.2.
SECTION 6.3. Conditions Precedent of Seller. The obligation of Seller to
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by Seller.
(a) The representations and warranties of Buyer on behalf of Shell
Fund set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date with the
same effect as though all such representations and warranties had been made as
of the Closing Date.
(b) Buyer shall have complied with and satisfied in all material
respects all agreements and conditions relating to Shell Fund set forth herein
on its part to be performed or satisfied at or prior to the Closing Date.
(c) Seller shall have received on the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of Buyer, in such individual's
capacity as an officer of Buyer and not as an individual, to the effect that the
conditions specified in Sections 6.3(a) and (b) have been satisfied and (ii) a
certificate, dated as of the Closing Date, from the Secretary or Assistant
Secretary of Buyer (in such capacity) certifying as to the accuracy and
completeness of the attached Governing Documents of Buyer and resolutions,
consents and authorizations of or regarding Buyer with respect to the execution
and delivery of this Agreement and the transactions contemplated hereby.
(d) Seller shall have received on the Closing Date an opinion of
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, counsel to Buyer and the Shell Fund, dated
as of the Closing Date, covering the following points:
(i) The Shell Fund shares to be issued to the Selling Fund
Shareholders as provided by this Agreement are duly authorized, upon such
delivery will
22
be validly issued and outstanding, and will be fully paid and
non-assessable by the Buyer; and
(ii) The Agreement has been duly authorized by Buyer, on behalf
of the Shell Fund and, assuming due authorization, execution and delivery
of the Agreement by Seller, Selling Fund, Invesco Aim and Xxxxx Xxx, is a
valid and binding obligation of Buyer, on behalf of the Shell Fund
enforceable against it in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and to
general equity principles.
Article 7
TERMINATION OF AGREEMENT
SECTION 7.1. Termination. This Agreement may be terminated on or prior to
the Closing Date as follows:
(a) by mutual written consent of Seller and Buyer; or
(b) at the election of Seller or Buyer, to be effectuated by the
delivery by the terminating party to the other party of a written notice of such
termination:
(i) if the Closing Date shall not be on or before the Termination
Date, unless the failure to consummate the Reorganization is the result of
a willful and material breach of this Agreement by the party seeking to
terminate this Agreement;
(ii) if, upon a vote at the Shareholders Meeting or any final
adjournment thereof, the Required Shareholder Vote shall not have been
obtained as contemplated by Section 6.2(b); or
(iii) if any Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Reorganization and such order,
decree, ruling or other action shall have become final and nonappealable.
SECTION 7.2. Survival After Termination. If this Agreement is terminated in
accordance with Section 7.1 hereof and the Reorganization of Selling Fund is not
consummated, this Agreement shall become void and of no further force and effect
with respect to the Reorganization and Selling Fund, except for the provisions
of Section 5.3.
23
Article 8
MISCELLANEOUS
SECTION 8.1. Survival of Representations, Warranties and Covenants. The
representations and warranties in this Agreement, and the covenants in this
Agreement that are required to be performed at or prior to the Closing Date,
shall terminate two (2) years following the Closing Date. The covenants in this
Agreement that are required to be performed in whole or in part subsequent to
the Closing Date shall survive the consummation of the transactions contemplated
hereunder for a period of two (2) years following the Closing Date.
SECTION 8.2. Governing Law. This Agreement shall be construed and
interpreted according to the laws of the State of Delaware applicable to
contracts made and to be performed wholly within such state.
SECTION 8.3. Binding Effect, Persons Benefiting, No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns of the parties and such Persons.
Nothing in this Agreement is intended or shall be construed to confer upon any
entity or Person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. Without the prior written consent of the parties
hereto, this Agreement may not be assigned by any of the parties hereto.
SECTION 8.4. Obligations of Buyer and Seller.
(a) Seller and Buyer hereby acknowledge and agree that Shell Fund is a
separate investment portfolio of Buyer, that Buyer is executing this Agreement
on behalf of Shell 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 Shell 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 Shell Fund
pursuant to this Agreement shall be enforceable against the assets of Shell 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
24
against the assets of Selling Fund only and not against the assets of Seller
generally or assets belonging to any other series of Seller.
SECTION 8.5. Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by Seller and Buyer, provided
that, Invesco Aim and/or Xxxxx Xxx must also execute such written instrument
with respect to any amendment, alteration or modification that affects the
representations or obligations of Invesco Aim and/or Xxxxx Xxx under this
Agreement.
SECTION 8.6. Enforcement. The parties agree irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 8.7. Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or a Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Each representation and warranty contained in Article 3 or 4 that
relates to a general category of a subject matter shall be deemed superseded by
a specific representation and warranty relating to a subcategory thereof to the
extent of such specific representation or warranty.
SECTION 8.8. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and each of which shall constitute one
and the same instrument.
SECTION 8.9. Entire Agreement; Exhibits and Schedules. This Agreement,
including the Exhibits, Schedules, certificates and lists referred to herein,
and any documents executed by the parties simultaneously herewith or pursuant
thereto, constitute the entire understanding and agreement of the parties hereto
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, written or oral, between the parties with respect
to such subject matter.
SECTION 8.10. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or when sent by telecopier
(with receipt confirmed), provided, in the case of a telecopied notice, a copy
is also sent by registered mail, return receipt requested, or by courier,
addressed as follows (or to such other address as a party may designate by
notice to the other):
(a) If to Seller:
25
Atlantic Whitehall Funds Trust
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxx, Secretary
with a copy to:
Atlantic Trust Private Wealth Management
Xxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx XxXxxx, General Counsel
and to:
Dechert LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx X. X'Xxxxxx
(b) If to Buyer:
AIM Equity Funds
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 8.11. Representations by Investment Adviser.
(a) In its capacity as investment adviser to Seller, Xxxxx Xxx
represents to Buyer that to the best of its knowledge the representations and
warranties of Seller and Selling Fund contained in this Agreement are true and
correct as of the date of this Agreement. For purposes of this Section 8.11(a),
the best knowledge standard shall be deemed to mean that the officers of Xxxxx
Xxx 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, Invesco Aim
represents to Seller that to the best of its knowledge the representations and
warranties of Buyer and Shell Fund contained in this Agreement are true and
correct as of the date of this Agreement. For purposes of this Section 8.11(b),
the best knowledge standard shall be deemed to mean that the
26
officers of Invesco Aim who have substantive responsibility for the provision of
investment advisory services to Buyer do not have actual knowledge to the
contrary after due inquiry.
SECTION 8.12. Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of Seller, on behalf of Selling Fund, and
Buyer, on behalf of Shell Fund, Invesco Aim and Xxxxx Xxx, and their respective
successors and permitted assigns. The parties hereto expressly acknowledge and
agree that this Agreement shall be binding upon and inure to the benefit of
Buyer, Seller, Invesco Aim and Xxxxx Xxx.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ATLANTIC WHITEHALL FUNDS TRUST, acting
on behalf of ATLANTIC WHITEHALL EQUITY
INCOME FUND
By: /s/ Xxxxxxx X .Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
AIM EQUITY FUNDS, acting on behalf of
AIM DISCIPLINED EQUITY FUND
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
INVESCO AIM ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
XXXXX XXX INVESTMENT COUNSEL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Administrative Officer
28
EXHIBIT A
LIABILITIES OF SELLING FUND
[To be completed, if applicable]
SCHEDULE 6.2(F)
TAX OPINIONS
(i) The transfer of the assets of Selling Fund to Shell Fund in exchange
solely for Shell Fund Shares distributed directly to Selling Fund Shareholders
and Shell Fund's assumption of the Liabilities, as provided in the Agreement,
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code and Selling Fund and Shell Fund will be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
(ii) In accordance with Section 361(a) and Section 361(c)(1) of the Code,
no gain or loss will be recognized by Selling Fund on the transfer of its assets
to Shell Fund solely in exchange for Shell Fund Shares and Shell Fund's
assumption of the Liabilities or on the distribution of Shell Fund Shares to
Selling Fund Shareholders.
(iii) In accordance with Section 1032 of the Code, no gain or loss will be
recognized by Shell Fund upon the receipt of assets of Selling Fund in exchange
for Shell Fund Shares issued directly to Selling Fund Shareholders.
(iv) In accordance with Section 354(a)(1) of the Code, no gain or loss will
be recognized by Selling Fund Shareholders on the receipt of Shell Fund Shares
in exchange for Selling Fund Shares.
(v) In accordance with Section 362(b) of the Code, the basis to Shell Fund
of the assets of Selling Fund will be the same as the basis of such assets in
the hands of Selling Fund immediately prior to the Reorganization.
(vi) In accordance with Section 358(a) of the Code, a Selling Fund
Shareholder's basis for Shell Fund Shares received by the Selling Fund
Shareholder will be the same as his or her basis for Selling Fund Shares
exchanged therefor.
(vii) In accordance with Section 1223(1) of the Code, a Selling Fund
Shareholder's holding period for Shell Fund Shares will be determined by
including such Selling Fund Shareholder's holding period for Selling Fund Shares
exchanged therefor, provided that such Selling Fund Shareholder held such
Selling Fund Shares as a capital asset.
1
(viii) In accordance with Section 1223(2) of the Code, the holding period
with respect to the assets of Selling Fund transferred to Shell Fund in the
Reorganization will include the holding period for such assets in the hands of
Selling Fund.
(ix) In accordance with Section 381(a) of the Code, Shell Fund will succeed
to and take into account, as of the date of the transfer (as defined in Section
1.381(b)-1(b) of the Treasury Regulations), the items of Selling Fund described
in Section 381(c) of the Code, subject to the conditions and limitations
specified in Sections 381(b) and (c) of the Code and the Treasury Regulations
thereunder.
2
