EXHIBIT A
AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of the 22nd day of November, 1996, by and among the
CORNERCAP BALANCED FUND (the "Acquiring Fund"), a series of The
CornerCap Group of Funds (the "CornerCap Funds"), a Massachusetts
business trust with its principal place of business at 000
Xxxxxxxxxx, Xxxxx 000, 0000 Xxxxxxxxx Xxxxxxx, X.X., Xxxxxxx,
Xxxxxxx 00000, and THE ATLANTA GROWTH FUND, INC. (the "Acquired
Fund"), a Georgia corporation with its principal place of
business at 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx,
Xxxxxxx 00000.
PREAMBLE
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section
368(a) of the United States Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization (the "Reorganization")
will consist of the transfer of all or substantially all of the
assets of the Acquired Fund to the Acquiring Fund in exchange
solely for shares of common stock, $0.01 par value per share, of
the Acquiring Fund (the "Acquiring Fund Shares"), the assumption
by the Acquiring Fund of certain identified liabilities of the
Acquired Fund, and the distribution of the Acquiring Fund Shares
to the shareholders of the Acquired Fund in complete liquidation
of the Acquired Fund as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement.
WITNESSETH
WHEREAS, the CornerCap Funds is an open-end, registered
investment company of the management type; and
WHEREAS, the CornerCap Funds is authorized to issue its
shares of common stock in separate series, including the
Acquiring Fund, each of which series maintains a separate and
distinct portfolio of assets; and
WHEREAS, the Acquiring Fund is a new series of the CornerCap
Funds organized for the purpose of consummating the
Reorganization; and
WHEREAS, the Board of Trustees of the CornerCap Funds, on
behalf of and the Acquiring Fund, has determined that the
exchange of all or substantially all of the assets of the
Acquired Fund for Acquiring Fund Shares, the assumption of
certain identified liabilities of the Acquired Fund by the
Acquiring Fund and the consummation of the Reorganization
pursuant to this Agreement is in the best interests of the
Acquiring Fund; and
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WHEREAS, the Board of Directors of the Acquired Fund has
determined that the exchange of all or substantially all of the
assets of the Acquired Fund for Acquiring Fund Shares, the
assumption of certain identified liabilities of the Acquired Fund
by the Acquiring Fund and the consummation of the Reorganization
pursuant to this Agreement is in the best interests of the
Acquired Fund and its shareholders;
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS IN EXCHANGE FOR SHARES, THE ASSUMPTION OF
CERTAIN LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED
FUND.
1.1 TRANSFER OF ASSETS; DELIVERY OF ACQUIRING FUND SHARES.
Subject to the terms and conditions set forth herein and on the
basis of the representations and warranties contained herein, the
Acquired Fund agrees to transfer all of the Acquired Fund's
assets, as set forth in Section 1.2, to the Acquiring Fund, the
Acquiring Fund agrees in exchange therefor (i) to deliver to the
Acquired Fund the number of Acquiring Fund Shares, including
fractional Acquiring Fund Shares, determined by dividing the
value of the Acquired Fund's net assets computed in the manner
and as of the time and date set forth in Section 2.1 by the net
asset value of one Acquiring Fund Share computed in the manner
and as of the time and date set forth in Section 2.2; and (ii) to
assume certain identified liabilities of the Acquired Fund, as
set forth in Section 1.3. Such transactions shall take place at
the closing provided for in Section 3 (the "Closing").
1.2 ASSETS OF ACQUIRED FUND. The assets of the Acquired
Fund to be acquired by the Acquiring Fund consist of all
property, including, without limitation, all cash, cash
equivalents, securities, commodities and futures interests and
dividends or interest receivables, claims and rights of action,
rights to register shares under applicable securities laws, and
books and records, which are owned by the Acquired Fund and any
deferred or prepaid expenses shown as assets on the books of the
Acquired Fund on the Closing Date (as defined in Section 3).
1.3 DISCHARGE OR ASSUMPTION OF LIABILITIES. Acquired Fund
will continue to discharge all of its known liabilities and
obligations in the ordinary course of business consistent with
past payment practices prior to the Closing Date, including,
without limitation, all liabilities, expenses, costs, charges and
reserves (expected to include expenses incurred in the ordinary
course of the Acquired Fund's operations such as accounts payable
relating to custodian and transfer agency fees, legal and audit
fees, and expenses of state securities registration of the
Acquired Fund's shares. An unaudited statement of assets and
liabilities of the Acquired Fund shall be prepared by the
Acquired Fund's administrator, PFPC, Inc. Coopers & Xxxxxxx,
L.L.P. will perform certain agreed upon procedures on the
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unaudited financial statements as of the Valuation Date to assist
management of the Acquired Fund in determining the reasonableness
of final expense accruals and distributions, as of the Valuation
Date (as defined in Section 2.1). The unaudited statements of
assets and liabilities of the Acquired Fund shall also be
reviewed by the Acquiring Fund's auditors and be reasonably
satisfactory to them. The Acquiring Fund shall assume only those
liabilities of the Acquired Fund reflected on that unaudited
statement of assets and liabilities and shall not assume any
other liabilities except as otherwise provided herein.
1.4 DISTRIBUTION OF ACQUIRING FUND SHARES; LIQUIDATION OF
ACQUIRED FUND. Immediately after the transfer of assets provided
for in Section 1.1, the Acquired Fund will distribute pro rata to
the Acquired Fund's shareholders of record, determined as of
immediately after the close of business on the Closing Date (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares received
by the Acquired Fund pursuant to Section 1.1 and will completely
liquidate. Acquired Fund shall take any further actions in
connection with its liquidation as required by applicable law.
Such distribution and liquidation will be accomplished by the
transfer of the Acquiring Fund Shares then credited to the
account of the Acquired Fund on the books of the Acquiring Fund
to open accounts on the share records of the Acquiring Fund in
the names of the Acquired Fund Shareholders. The aggregate net
asset value of Acquiring Fund Shares to be so credited to
Acquired Fund Shareholders shall be equal to the aggregate net
asset value of the Acquired Fund shares owned by such
shareholders as of immediately after the close of business on the
Valuation Date. All issued and outstanding shares of the
Acquired Fund will simultaneously be canceled on the books of the
Acquired Fund, although share certificates representing interests
in the Acquired Fund will represent a number of Acquiring Fund
Shares after the Closing Date as determined in accordance with
Section 2.3. The Acquiring Fund will not issue certificates
representing the Acquiring Fund Shares in connection with such
exchange except upon request by a shareholder of the Acquired
Fund.
1.5 SHARE TRANSFER RECORDS. Ownership of Acquiring Fund
Shares will be shown on the share transfer books of the Acquiring
Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and
statement of additional information.
2. VALUATION.
2.1 METHOD OF VALUATION. The value of the Acquired Fund's
assets to be acquired by the Acquiring Fund hereunder will be the
value of such assets computed as of the normal close of business
of the New York Stock Exchange on the day of the meeting of
Acquired Fund Shareholders held for the purpose of voting on the
Reorganization (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures set forth in
the Acquiring Fund's then-current prospectus or statement of
additional information. If, immediately before the Valuation
Date, (a) the NYSE is closed to trading or trading thereon is
restricted or (b) trading or the reporting of trading on the NYSE
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or elsewhere is disrupted, so that accurate appraisal of the net
asset value of Acquired Fund and the net asset value per
Acquiring Fund Share is impracticable, the Valuation Date will be
postponed until the first business day after the day when such
trading has been fully resumed and such reporting has been
restored.
2.2 NET ASSET VALUE PER SHARE. The net asset value of an
Acquiring Fund Share will be the net asset value per share of the
Acquiring Fund computed immediately after the close of business
of the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Acquiring Fund's then-
current prospectus or statement of additional information.
2.3 ISSUANCE OF ACQUIRING FUND SHARES. The number of the
Acquiring Fund Shares to be issued (including fractional shares,
if any) in exchange for the Acquired Fund's assets will be
determined by dividing the value of the net assets of the
Acquired Fund determined using the same valuation procedures
referred to in Section 2.1 by the net asset value of an Acquiring
Fund Share determined in accordance with Section 2.2.
2.4 VALUATION. All computations of value with respect to
the Acquiring Fund will be made by such pricing and accounting
services agent as the Acquiring Fund may designate in its
reasonable discretion, subject to the Acquired Fund's right to
review such calculations to ensure their accuracy.
3. CLOSING.
The Closing of the transactions will occur three days after
the Valuation Date or such later date as the parties may agree in
writing (the "Closing Date"). All acts taking place at the
Closing will be deemed to take place simultaneously immediately
before the start of business on the Closing Date unless otherwise
agreed to by the parties in writing. The start of business on
the Closing Date will be as of 9:00 a.m., New York time. The
Closing will be held at the offices of Xxxxxxxxxx & Cody, L.L.P.,
0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx or at such other place
and time as the parties shall mutually agree.
4. ADDITIONAL AGREEMENTS.
4.1 CERTIFICATE OF CUSTODIAN. Wachovia Bank of North
Carolina, as custodian for the Acquiring Fund (the "Custodian")
will deliver at the Closing a certificate of an authorized
officer stating that: (a) the Acquired Fund's portfolio
securities, cash, and any other assets have been delivered in
proper form to the Acquiring Fund; and (b) all necessary taxes
including, without limitation all applicable federal and state
stock transfer stamps, if any, have been paid, or provision for
payment has been made, in conjunction with the delivery of
portfolio securities.
4.2 DELIVERY OF SHARE TRANSFER RECORDS. Provident
Financial Processing Corporation (the "Transfer Agent"), on
behalf of the Acquired Fund will deliver at the Closing a
certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund Shareholders
and the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the Closing.
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4.3 CONFIRMATION OF ACQUIRING FUND. The Acquiring Fund
shall issue and deliver a confirmation evidencing the Acquiring
Fund Shares to be credited on the Closing Date to the Acquired
Fund or provide evidence satisfactory to the Acquired Fund that
such Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of the Acquiring Fund.
4.4 ADDITIONAL DOCUMENTS. Each party shall deliver to the
other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other
party or its counsel may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED FUND.
To induce the CornerCap Funds and the Acquiring Fund to
enter into this Agreement, the Acquired Fund represents and
warrants to the Acquiring Fund as follows:
5.1 ORGANIZATION. The Acquired Fund is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Georgia.
5.2 REGISTRATIONS. The Acquired Fund is an open-end, non-
diversified investment company duly registered under the
Investment Company Act of 1940 (the "1940 Act") and, with respect
to its shares, under the Securities Act of 1933, (the "1933 Act")
and such registrations are in full force and effect.
5.3 NO INCONSISTENT OBLIGATIONS. The Acquired Fund is not,
and the execution, delivery and performance of this Agreement
will not result, in a material violation of its Articles of
Incorporation or By-laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the
Acquired Fund is a party or by which it is bound.
5.4 MATERIAL CONTRACTS. The Acquired Fund has no material
contracts or other commitments (other than this Agreement) which
will be terminated with liability to it prior or subsequent to
the Closing Date.
5.5 LITIGATION; CONTINGENCIES. No material litigation or
administrative proceeding or, to the knowledge of the Acquired
Fund, investigation of or before any court or governmental body
is presently pending or, to its knowledge threatened, against the
Acquired Fund or any properties or assets held by it. The
Acquired Fund knows of no facts which might form the basis for
the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any
court or governmental body that materially and adversely affects
its business or its ability to consummate the transactions
contemplated herein.
5.6 STATEMENT OF ASSETS AND LIABILITIES. The Statement of
Assets and Liabilities of the Acquired Fund at May 31, 1996, has
been audited by Coopers & Xxxxxxx, L.L.P., independent certified
public accountants, and is in accordance with generally accepted
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accounting principles consistently applied. A copy of such
statement has been furnished to the CornerCap Funds and the
Acquiring Fund.
5.7 NO ADVERSE CHANGES. Since May 31, 1996, there has not
been any material adverse change in the Acquired Fund's financial
condition, assets, liabilities or business other than changes
occurring in the ordinary course of business, or any incurrence
by the Acquired Fund of indebtedness maturing more than one year
from the date that such indebtedness was incurred, except as
otherwise disclosed to and accepted by the CornerCap Funds and
the Acquiring Fund. For the purposes of this Section 5.7, a
decline in net asset value per share of the Acquired Fund, the
discharge of Acquired Fund liabilities, or the redemption of
Acquired Fund shares by Acquired Fund Shareholders do not
constitute a material adverse change.
5.8 TAXES. At the Closing Date, all material Federal and
other tax returns and reports of the Acquired Fund required by
law to have been filed by such date will have been filed and are
or will be correct, and all Federal and other taxes shown as due
or required to be shown as due on said returns and reports will
have been paid or provision will have been made for the payment
thereof, and, to the best of the Acquired Fund's knowledge, no
such return is currently under audit and no assessment has been
asserted with respect to such returns. For each taxable year of
its operation, the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
5.9 CAPITALIZATION. The authorized capital stock of the
Acquired Fund consists of 500,000,000 shares of common stock, no
par value per share, of which 384,505.803 shares are issued
and outstanding as of the date of this Agreement. All issued and
outstanding shares of the Acquired Fund are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. All of the issued and outstanding shares of
the Acquired Fund will, at the time of Closing, be held by the
persons and in the amounts set forth in the records of the
Transfer Agent, as provided in Section 4.2. The Acquired Fund
does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of the Acquired Fund shares, nor
is there outstanding any security convertible into any of the
Acquired Fund shares.
5.10 TITLE TO ASSETS. At the Closing Date, the Acquired Fund
will have good and marketable title to the Acquired Fund's assets
to be transferred to the Acquiring Fund pursuant to Section 1.2,
subject to the shareholder approval referred to in Section 10.1,
and full right, power, and authority to sell, assign, transfer
and deliver such assets under this Agreement, and upon delivery
and payment for such assets, the Acquiring Fund will acquire good
and marketable title thereto, subject to no restrictions on the
full transfer thereof, other than as disclosed to the Acquiring
Fund.
5.11 AUTHORITY. The execution, delivery and performance of
this Agreement has been duly authorized prior to the Closing Date
by all necessary action on the part of the Acquired Fund's Board
of Directors, and, subject to the approval of the Acquired Fund's
Shareholders, this Agreement will constitute a valid and binding
6
obligation of the Acquired Fund, enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles.
5.12 COMPLIANCE WITH SECURITIES LAWS. The information to be
furnished by the Acquired Fund for use in registration
statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby
will be accurate and complete in all material respects and will
comply in all material respects with Federal securities and other
laws and regulations thereunder applicable thereto. The proxy
statement of the Acquired Fund (the "Proxy Statement") to be
included in the Registration Statement referred to in Section 7.6
will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which such statements are made, not
materially misleading, provided that no representation or
warranty is made with respect to information that is supplied by
the Acquiring Fund.
6. REPRESENTATIONS AND WARRANTIES OF THE CORNERCAP FUNDS AND
THE ACQUIRING FUND.
To induce the Acquired fund to enter into and perform this
Agreement, the CornerCap Funds, on behalf of Acquiring Fund,
represents and warrants to the Acquired Fund as follows:
6.1 ORGANIZATION. The CornerCap Funds is a business trust
duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts.
6.2 REGISTRATIONS. The CornerCap Funds is a
registered open-end investment company and its registration with
the Securities and Exchange Commission (the "Commission") as an
investment company with respect to each series of shares it
currently offers under the 1940 Act, and the registration of such
shares under the 1933 Act, are in full force and effect. A post-
effective amendment to the CornerCap Funds' Registration
Statement on Form N-1A was filed on September 13, 1996 adding the
Acquired Fund to the CornerCap Funds' Registration Statement on
Form N-1A. Such post-effective amendment is expected to be
declared effective on or before the effective date of the
Registration Statement on Form N-14 referred to in Section 7.6
hereof.
6.3 PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION.
The current prospectus and statement of additional information of
the CornerCap Funds conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the
rules and regulations of the Securities and Exchange Commission
(the "Commission") thereunder and do not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not materially misleading.
6.4 TITLE TO ASSETS. At the Closing Date, the Acquiring
Fund will have good and marketable title to the Acquiring Fund's
assets.
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6.5 NO INCONSISTENT OBLIGATIONS. The Acquiring Fund is
not, and the execution, delivery and performance of this
Agreement will not result, in a material violation of the
Declaration of Trust or By-laws of the CornerCap Funds or the
Acquiring Fund or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring Fund
or the CornerCap Funds is a party or by which either is bound.
6.6 LITIGATION; CONTINGENCIES. No material litigation or
administrative proceeding or investigation of or before any court
or governmental body is presently pending or threatened against
the CornerCap Funds, the Acquiring Fund or any of its properties
or assets. Neither the CornerCap Funds nor the Acquiring Fund
knows of any facts which might form the basis for the institution
of such proceedings against the CornerCap Funds or the Acquiring
Fund, and neither the CornerCap Funds nor the Acquiring Fund is a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects its business or its ability to consummate the
transactions herein contemplated.
6.7 CAPITALIZATION. (a) The authorized capital stock of
the Acquiring Fund consists of an unlimited number of shares of
beneficial interest, $0.01 par value per share, of which none are
issued and outstanding as of the date of this Agreement. The
Acquiring Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any Acquiring Fund
Shares, except as provided for in this Agreement, nor is there
outstanding any security convertible into any Acquiring Fund
Shares.
(b) The Acquiring Fund Shares to be issued and delivered to
the Acquired Fund, for the account of the Acquired Fund
Shareholders, pursuant to the terms of this Agreement will, at
the Closing Date, have been duly authorized and, when so issued
and delivered, will be duly and validly issued Acquiring Fund
Shares, and will be fully paid and non-assessable.
6.8 AUTHORITY. The execution, delivery and performance of
this Agreement has been duly authorized prior to the Closing Date
by all necessary action, if any, on the part of the Trustees of
the CornerCap Funds, as issuer of the Acquiring Fund, and this
Agreement will constitute a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors'
rights and to general equity principles.
6.9 NO ADVERSE CHANGES. Since March 31, 1996, there has
not been any material adverse change in the Acquiring Fund's
financial condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more
than one year from the date that such indebtedness was incurred.
For the purposes of this Section 6.9, a decline in net asset
value per share of the Acquiring Fund, the discharge of Acquiring
Fund liabilities, or the redemption of Acquiring Fund shares by
Acquiring Fund Shareholders do not constitute a material adverse
change.
6.10 TAXES. At the Closing Date, all material Federal and
other tax returns and reports of the Acquiring Fund required by
8
law to have been filed by such date will have been filed and are
or will be correct, and all Federal and other taxes shown as due
or required to be shown as due on said returns and reports will
have been paid or provision will have been made for the payment
thereof, and, to the best of the Acquiring Fund's knowledge, no
such return is currently under audit and no assessment has been
asserted with respect to such returns. For each taxable year of
its operation, the Acquiring Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
6.11 COMPLIANCE WITH SECURITIES LAWS. The information to be
furnished by the CornerCap Funds and the Acquiring Fund for use
in registration statements, proxy materials and other documents
which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with
Federal securities and other laws and regulations applicable
thereto. The Registration Statement, insofar as it relates to
the Acquiring Fund, will, on the effective date of the
Registration Statement and on the Closing Date, not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
such statements were made, not materially misleading, provided
that no representation or warranty is made with respect to
information about the Acquired Fund included in such Registration
Statement or information supplied by the Acquired Fund.
7. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
7.1 BUSINESS IN ORDINARY COURSE. The Acquiring Fund and
the Acquired Fund each will operate its business in the ordinary
course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions,
and any other distributions that may be advisable.
7.2 ACQUIRED FUND SHAREHOLDERS' MEETING. The Acquired Fund
will call a meeting of the Acquired Fund Shareholders to consider
and act upon this Agreement and to take all other action
reasonably necessary to obtain approval of the transactions
contemplated herein.
7.3 NO DISTRIBUTION OF ACQUIRING FUND SHARES. The Acquired
Fund covenants that the Acquiring Fund Shares to be issued
hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of
this Agreement.
7.4 BENEFICIAL OWNERSHIP OF ACQUIRED FUND SHARES. The
Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Acquired Fund Shares.
7.5 EFFORTS TO CONSUMMATE. Subject to the provisions of
this Agreement, the Acquiring Fund and the Acquired Fund will
each take, or cause to be taken, all actions, and do or cause to
be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by
this Agreement.
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7.6 COOPERATION. The Acquired Fund will provide the
Acquiring Fund with information necessary for the preparation of
a prospectus (the "Prospectus") which will include the Proxy
Statement, referred to in Section 5.12, all to be included in a
Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the
Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act
in connection with the meeting of the Acquired Fund Shareholders
to consider approval of this Agreement and the transactions
contemplated herein.
7.7 APPROVALS AND AUTHORIZATION. The Acquiring Fund will
use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in
order to continue its operations after the Closing Date.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the
transactions provided for herein are subject, at its election, to
the performance by the Acquiring Fund of all the obligations to
be performed by it hereunder on or before the Closing Date, and,
in addition thereto, the following further conditions.
8.1 REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the CornerCap Funds, on behalf of the Acquiring
Fund, contained in this Agreement will be true and correct in all
material respects as of the date hereof and, except as they may
be affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
8.2 OFFICERS' CERTIFICATE. The Acquiring Fund will have
delivered to the Acquired Fund a certificate executed in its name
by its President and Treasurer in a form reasonably satisfactory
to the Acquired Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Acquiring
Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions
contemplated by this Agreement and as to such other matters as
the Acquired Fund shall reasonably request.
8.3 LEGAL OPINION. The Acquired Fund will have received on
the Closing Date the opinion of Xxxxxxxxxx & Cody, L.L.P.,
counsel to the Acquiring Fund, in a form reasonably satisfactory
to the Acquired Fund, and dated as of the Closing Date,
concerning the following matters:
(a) The CornerCap Funds has been duly formed as a business
trust and is validly existing and in good standing under the laws
of the Commonwealth of Massachusetts; (b) the Acquiring Fund has
the power to carry on its business as presently conducted; (c)
this Agreement has been duly authorized, executed and delivered
by the CornerCap Funds and the Acquiring Fund and constitutes a
valid and legally binding obligation of the CornerCap Funds and
of the Acquiring Fund enforceable against the CornerCap Funds and
the Acquiring Fund in accordance with its terms, subject to
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bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity principles; (d)
the execution and delivery of the Agreement did not, and the
exchange of the Acquired Fund's assets for shares of the
Acquiring Fund pursuant to the Agreement will not, violate the
Declaration of Trust or By-laws of the CornerCap Funds or result
in a default under or breach of any of the agreements filed as
exhibits to (or incorporated by reference in) the CornerCap
Funds' most recent post-effective amendment of its registration
statement on Form N-1A; (e) to the knowledge of such counsel, all
regulatory consents, authorizations, approvals or filings
required to be obtained or made by the CornerCap Funds or the
Acquiring Fund under the Federal laws of the United States, the
State of Georgia or the Commonwealth of Massachusetts for the
exchange of the Acquired Fund's assets for shares of the
Acquiring Fund, pursuant to the Agreement have been obtained or
made; and (f) the shares of the Acquiring Fund to be distributed
to Acquired Fund stockholders under this Agreement, assuming due
authorization and delivery as contemplated by this Agreement,
will be validly issued and outstanding and fully paid and non-
assessable.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CORNERCAP FUNDS
AND THE ACQUIRING FUND.
The obligations of the CornerCap Funds and the Acquiring
Fund to complete the transactions provided for herein are
subject, at their election, to the performance by the Acquired
Fund of all of the obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the
following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the Acquired Fund contained in this Agreement
will be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date.
9.2 STATEMENT OF ASSETS AND LIABILITIES. The Acquired Fund
shall have delivered to the Acquiring Fund a statement of the
Acquired Fund's assets and liabilities, as of the Valuation Date,
certified by the President of the Acquired Fund.
9.3 OFFICERS' CERTIFICATE. The Acquired Fund shall have
delivered to the Acquiring Fund on the Closing Date a certificate
executed in its name by its President, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing
Date, to the effect that the representations and warranties of
the Acquired Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other
matters as the Acquiring Fund shall reasonably request.
9.4 LEGAL OPINION. The Acquiring Fund shall have received
on the Closing Date the opinion of Powell, Goldstein, Xxxxxx &
Xxxxxx, counsel to the Acquired Fund, dated as of the Closing
Date, concerning the following matters:
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(a) The Acquired Fund has been duly formed and is validly
existing and in good standing under the laws of the State of
Georgia; (b) The Acquired Fund has the power to carry on its
business as presently conducted; (c) this Agreement has been duly
authorized, executed and delivered by the Acquired Fund and
constitutes a valid and legally binding obligation of the
Acquired Fund enforceable against the Acquired Fund in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the
Agreement did not, and the exchange of the Acquired Fund's assets
for shares of the Acquiring Fund pursuant to the Agreement will
not, violate Acquired Fund's Articles of Incorporation or By-laws
or result in a default under or breach of any of the agreements
filed as exhibits to (or incorporated by reference in) the
Acquired Fund's most recent post-effective amendment of its
registration statement on Form N-1A; and (e) to the knowledge of
such counsel, all regulatory consents, authorizations, approvals
or filings required to be obtained or made by the Acquired Fund
under the Federal laws of the United States or the State of
Georgia for the exchange of the Acquired Fund's assets for shares
of the Acquiring Fund, pursuant to the Agreement have been
obtained or made.
10. FURTHER CONDITIONS PRECEDENT.
If any of the conditions set forth below do not exist on or
before the Closing Date, any party to this Agreement, at its
option, will not be required to consummate the transactions
contemplated by this Agreement.
10.1 APPROVAL OF ACQUIRING FUND'S SHAREHOLDERS. The
Agreement and the transactions contemplated herein will have been
approved by the requisite vote of the holders of the outstanding
shares of the Acquired Fund in accordance with the provisions of
the 1940 Act and the Acquired Fund's Articles of Incorporation
and By-laws, and certified copies of the resolutions evidencing
such approval will have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set
forth in this Section 10.1.
10.2 NO INCONSISTENT REQUIREMENTS. On the Closing Date, no
action, suit or other proceeding will be threatened or pending
before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated
herein.
10.3 CONSENTS. All consents of other parties and all other
consents, orders and permits of Federal, state and local
regulatory authorities deemed necessary by the Acquiring Fund or
the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect
on the assets or properties of the Acquiring Fund or the Acquired
Fund, provided that either party hereto may for itself waive any
of such conditions.
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10.4 EFFECTIVENESS OF REGISTRATION STATEMENT. The
Registration Statement will have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof will
have been issued and, to the best knowledge of the parties
hereto, no investigation or proceeding for that purpose shall
have been instituted or be pending, threatened or contemplated
under the 1933 Act.
10.5 TAX OPINION. The parties shall have received the
opinion of Xxxxxxxxxx & Cody, L.L.P., substantially to the effect
that the transaction contemplated by this Agreement constitutes a
tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by
Xxxxxxxxxx & Xxxx, L.L.P. of representations it requests of the
parties. Notwithstanding anything herein to the contrary,
neither the Acquiring Fund nor the Acquired Fund may waive the
condition set forth in this Section 10.5.
11. TERMINATION.
This Agreement and the transaction contemplated hereby may
be terminated and abandoned by either party, by mutual agreement
at any time prior to the Closing Date. In the event of
termination under this Section 11, there shall be no liability
for damages on the part of any party, its officers, Directors, or
Trustees, except as provided in Section 12.2.
12. MISCELLANEOUS.
12.1 ABSENCE OF BROKERS. The CornerCap Funds, the Acquiring
Fund and the Acquired Fund each represent and warrant to the
other that it has no obligations to pay any brokers or finders
fees in connection with the transactions provided for herein.
12.2 PAYMENT OF EXPENSES. (a) Subject to paragraphs (b) and
(c) below, the Acquired Fund will pay all fees and expenses
incurred in connection with the preparation, filing and
distribution of the Proxy Statement and Registration Statement,
including but not limited to (i) all applicable filing fees, (ii)
printing and mailing expenses, (iii) accountants' and auditors'
fees and expenses, (iv) the reasonable expenses of the CornerCap
Funds and the Acquiring Fund related specifically to this
Agreement and the Reorganization, including, without limitation,
the fees and expenses of their legal counsel, Xxxxxxxxxx & Cody,
all on a current basis as billed or incurred.
(b) If the Acquired Fund terminates this Agreement
prior to February 28, 1996 or fails to distribute the Proxy
Statement and Registration Statement required to be distributed
hereunder (assuming such Proxy Statement and Registration
Statement are in material compliance with Federal securities laws
and are delivered to the Acquired Fund in a timely manner) or
takes or fails to take any other action which causes or results
in the failure of the transaction contemplated hereunder to
close, the Acquired Fund will be solely responsible for all such
fees and expenses.
(c) If for any other reason the transaction
contemplated herein does not become effective, the Acquired Fund
13
shall be responsible for 50% of all such fees and expenses and
the Acquiring Fund, on the one hand, and Pryor, McClendon, Counts
& Co., Inc., on the other hand, shall each be responsible for 25%
of all such fees and expenses; provided, however, that the
Acquiring Fund will be responsible for all such fees and expenses
if the transaction contemplated by this Agreement does not become
effective as a result of a material breach of this Agreement by
the Acquiring Fund.
12.3 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements among the parties with respect to the
subject matter hereof. The CornerCap Funds, the Acquiring Fund
and the Acquired Fund agree that neither party has made any
representation, warranty or covenant not set forth herein and
that this Agreement constitutes the entire agreement between the
parties.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this Agreement or in
any document delivered pursuant hereto or in connection herewith
will survive the consummation of the transactions contemplated
hereunder.
12.5 AMENDMENTS. This Agreement may be amended, modified or
supplemented in such manner as may be mutually agreed upon in
writing by the authorized officers of the CornerCap Funds, the
Acquired Fund and the Acquiring Fund; provided, however, that
following the meeting of the Acquired Fund Shareholders called by
the Acquired Fund pursuant to Section 10.1 of this Agreement, no
such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued
to the Acquired Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
12.6 INDEMNIFICATION. (a) Acquired Fund (the "Indemnifying
Party") covenants and agrees to indemnify, defend and hold the
CornerCap Funds and the Acquiring Fund and their respective
affiliates, Directors, Trustees, officers, employees, and agents
(collectively, the "Indemnified Parties") harmless from and
against and in respect of all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties and reasonable
attorneys' fees, that they shall incur or suffer which arise out
of or relate to (i) any material breach of or failure by Acquired
Fund to perform any of its covenants or agreements in this
Agreement; (ii) any false statement contained in the
representations and warranties of Acquired Fund in this
Agreement; and (iii) any claims, suits, obligations or
liabilities associated with the operations of the Acquired Fund
prior to the Closing.
(b) Wedgewood Equities Inc. ("Wedgewood Equities") and
Pryor, McClendon, Counts & Co., Inc. ("PMC") (collectively, the
"Indemnifying Parties"), jointly and severally covenant and agree
to indemnify, defend and hold the CornerCap Funds and the
Acquiring Fund and their respective affiliates, Directors,
Trustees, officers, employees, and agents (collectively, the
"Indemnified Parties") harmless from and against and in respect
of all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries, and deficiencies, including
interest, penalties and reasonable attorneys' fees, that they
shall incur or suffer which arise out of or relate to (i) any
14
material breach of or failure by them to perform their respective
covenants or agreements in Section 12.2 of this Agreement; (ii)
any false statement contained in the representations and
warranties of Acquired Fund in this Agreement if such statement
was made in reliance upon and in conformity with information
furnished to the Acquired Fund by either of them; and (iii) any
claims, suits, obligations or liabilities associated with the
operations of the Acquired Fund prior to the Closing.
(c) Acquiring Fund (the "Indemnifying Party")
covenants and agrees to indemnify, defend and hold the Acquired
Fund, Wedgewood Equities and PMC and their respective affiliates,
Directors, officers, employees, and agents (collectively, the
"Indemnified Parties") harmless from and against and in respect
of all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries, and deficiencies, including
interest, penalties and reasonable attorneys' fees, that they
shall incur or suffer which arise out of or relate to (i) any
material breach of or failure by Acquiring Fund to perform any of
its covenants or agreements in this Agreement; (ii) any false
statement contained in the representations and warranties of
Acquiring Fund in this Agreement; and (iii) any claims, suits,
obligations or liabilities associated with the operations of the
Acquiring Fund or any of its predecessors in interest subsequent
to the Closing.
(d) In order for an Indemnified Party to be entitled
to any indemnification provided for under this Agreement in
respect of, arising out of or involving a claim or demand made by
any person, firm, governmental authority or corporation against
the Indemnified Party (a "Third Party Claim"), the Indemnified
Party must notify one or more Indemnifying Party in writing of
the Third Party Claim within 10 business days after receipt by
such Indemnified Party of written notice of the Third Party
Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to
the extent that the Indemnifying Party shall have been actually
and materially prejudiced as a result of such failure.
Thereafter, the Indemnified Party shall deliver to such
Indemnifying Party, within 5 business days after the Indemnified
Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party
relating to the Third Party Claim.
(e) If a Third Party Claim is made against an
Indemnified Party, the Indemnifying Party may, at the option of
the Indemnified Party, be allowed to participate in the defense
thereof and to assume the defense thereof with counsel selected
by the Indemnifying Party and reasonably acceptable to the
Indemnified Party; provided, however, that the Indemnifying Party
shall not admit any liability with respect to, or discharge,
compromise or settle any Third Party Claim on behalf of or for
the account and risk of the Indemnified Party without the express
written consent of the Indemnified Party. If the Indemnifying
Party assumes such defense, the Indemnified Party shall have the
right to participate in, but not control, the defense thereof and
to employ counsel separate from the counsel employed by the
Indemnifying Party. Whether or not the Indemnifying Party
chooses or is permitted to defend or prosecute any Third Party
Claim, all of the parties hereto shall cooperate in the defense
or prosecution thereof. Such cooperation shall include the
retention and (upon the Indemnifying Party's written request) the
provision to the Indemnifying Party of copies of records and
15
information which are reasonably relevant to such Third Party
Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any
material provided hereunder. Whether or not the Indemnifying
Party shall have assumed, or been permitted to assume, the
defense of a Third Party Claim, the Indemnified Party shall not
admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim involving relief in the form of
money damages without the Indemnifying Party's prior written
consent, which consent shall not be unreasonably delayed or
withheld.
12.7 NOTICES. All notices or other communications required
or permitted to be given or made hereunder shall be in writing
and delivered personally or sent by pre-paid, first class
certified or registered mail, return receipt requested, or by
facsimile transmission, to the intended recipient thereof at its
address or facsimile number set out below. Any such notice or
communication shall be deemed to have been duly given immediately
(if given or made in person or by facsimile confirmed by mailing
a copy thereof to the recipient in accordance with this Section
12.6 on the date of such facsimile), or five days after mailing
(if given or made by mail), and in proving same it shall be
sufficient to show that the envelope containing the same was
delivered to the delivery service and duly addressed, or that
receipt of a facsimile was confirmed by the recipient as provided
above. The addresses and facsimile numbers of the parties for
purposes of this Agreement are set forth on the signature page
hereto below their respective signatures. Either party may
change the address to which notices or other communications to
such party shall be delivered or mailed by giving notice thereof
to the other party hereto in the manner provided herein.
12.8 HEADINGS. The headings contained in this Agreement are
for reference purposes only and may not affect in any way the
meaning or interpretation of this Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original.
12.10 ASSIGNMENT. No assignment or transfer hereof or
of any rights or obligations hereunder may be made by any party
without the written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer
upon or give any person, firm or corporation, other than the
parties hereto and their respective successors and assigns, any
rights or remedies under or by reason of this Agreement.
12.11 BINDING NATURE. (a) This Agreement will bind and
inure to the benefit of the parties hereto and their respective
successors and assigns.
(b) It is expressly agreed that the obligations of the
Acquiring Fund hereunder will not be binding upon any of the
Directors, Trustees, shareholders, nominees, officers, agents, or
employees of the CornerCap Funds personally, but shall bind only
the property of the Acquiring Fund. The execution and delivery
of this Agreement have been authorized by the Trustees of the
CornerCap Funds and signed by authorized officers of the
16
CornerCap Funds acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind
only the property of the Acquiring Fund.
12.12 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Georgia; provided that, in the case of any conflict between such
laws and the federal securities laws, the latter shall govern.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by a duly authorized officer and
its seal to be affixed thereto.
THE CORNERCAP BALANCED FUND OF
THE CORNERCAP GROUP OF FUNDS
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
President
000 Xxxxx Xxxxx
Xxxxx 000
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THE ATLANTA GROWTH FUND, INC.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
President
Suite 1661
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The undersigned hereby consent to and agree to be bound by
the provisions of Section 12.6 above.
WEDGEWOOD EQUITIES INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
Xxxxxxx X. XxXxxxxxx
Vice Chairman and Chief Operating
Officer
Suite 166
1100 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
17
The undersigned hereby consents to and agrees to be bound by
the provisions of Sections 12.2(c) and 12.6 above.
PRYOR, MCCLENDON, COUNTS & CO., INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
Xxxxxxx X. XxXxxxxxx
Vice Chairman and Chief Operating
Officer
Suite 166
1100 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
18
