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EXHIBIT (4) (c)
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AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
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Agreement and Plan of Reorganization and Liquidation ("Agreement") dated as
of December 1, 1995, by and between The Cardinal Group, an Ohio business trust
("TCG"), and Cardinal Government Securities Trust, a Pennsylvania business
trust ("CGST").
WHEREAS, TCG is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end investment company of the management type
and has, or before the Exchange Date (as defined below) is expected to have,
issued and outstanding one class of shares of beneficial interest, without par
value ("Shares"), for each of six series, one such series being Cardinal
Government Securities Money Market Fund (hereinafter sometimes referred to as
the "Cardinal Government Securities Money Market Fund" or the "Acquiring
Series"); and
WHEREAS, CGST is registered under the 1940 Act as an open-end investment
company of the management type and currently has issued and outstanding one
class of shares of beneficial interest, par value $.01 per share; and
WHEREAS, CGST plans to transfer all of its assets, and to assign all of its
liabilities, to the Acquiring Series, in exchange for Shares of the Acquiring
Series (the "Acquiring Series Shares"), followed by the distribution of the
Acquiring Series Shares by CGST to its shareholders, and followed by the
dissolution of CGST, all upon the terms and provisions of this Agreement (the
"Reorganization"); and
WHEREAS, 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"); and
WHEREAS, the trustees of TCG have determined that the Reorganization is in
the best interests of TCG, and that the interests of its shareholders will not
be diluted as a result thereof; and
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WHEREAS, the trustees of CGST have determined that the Reorganization is in
the best interests of CGST and that the interests of its shareholders will not
be diluted as a result thereof;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto covenant and agree as follows:
1. PLAN OF REORGANIZATION AND LIQUIDATION.
(a) SALE OF ASSETS, ASSUMPTION OF LIABILITIES. Subject to the prior
approval of shareholders of CGST and to the other terms and conditions
contained herein (including the obligation of CGST to distribute to its
shareholders all of its investment company taxable income and net capital
gain as described in Section 8(i) herein), CGST agrees to sell, assign,
convey, transfer and deliver to the Acquiring Series, and the Acquiring
Series agrees to acquire from CGST on the Exchange Date (as defined below),
all of the Investments (as defined below), cash and other assets of CGST in
exchange for that number of full and fractional Acquiring Series Shares of
the Acquiring Series having an aggregate net asset value equal to the value
of all assets of CGST transferred to the Acquiring Series, as provided in
Section 4, less the liabilities of CGST assumed by the Acquiring Series.
(b) ASSETS ACQUIRED. The assets to be acquired by the Acquiring Series from
CGST shall consist of all of CGST's property, including, without limitation,
all Investments, cash and dividends or interest receivables which are owned
by CGST and any deferred or prepaid expenses shown as an asset on the books
of CGST as of the Valuation Time described in Section 4.
(c) LIABILITIES ASSUMED. Prior to the Exchange Date CGST will endeavor to
discharge or cause to be discharged, or make provision for the payment of,
all of its known liabilities and obligations. The Acquiring Series shall
assume all liabilities, expenses, costs, charges and reserves of CGST,
contingent or otherwise, including liabilities reflected in the unaudited
statement of assets and liabilities of CGST as of the Valuation Time,
prepared by or on behalf of CGST in accordance with generally accepted
accounting principles consistently applied from and after September 30, 1995.
(d) LIQUIDATION AND DISSOLUTION. Upon consummation of the transactions
described in Section 1(a), 1(b) and 1(c) above, CGST shall distribute in
complete liquidation to its shareholders of record as of the Exchange Date
the Acquiring Series Shares received by it, each CGST shareholder of record
being entitled to receive that number of Acquiring Series Shares equal to the
proportion which the number of shares of
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beneficial interest, par value $.01 per share, of CGST held by such
shareholder bears to the total number of such shares of CGST outstanding on
such date, and shall take such further action as may be required, necessary
or appropriate under CGST's Amended Declaration of Trust, Pennsylvania law
and the Code to effect the complete liquidation and dissolution of CGST.
CGST will fulfill all reporting requirements under the 1940 Act, both before
and after the Reorganization.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF CGST. CGST represents and
warrants to and agrees with TCG and the Acquiring Series that:
(a) CGST is a business trust validly existing under the laws of the
Commonwealth of Pennsylvania and has power to own all of its properties and
assets and to carry out its obligations under this Agreement. CGST has
qualified as a foreign business trust in each jurisdiction where the
ownership of its property and the conduct of its business require
qualification. CGST has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to fulfill
the terms of this Agreement, except as set forth in Section 2(1).
(b) CGST is registered under the 1940 Act as an open-end investment
company of the management type, and such registration has not been revoked or
rescinded and is in full force and effect. CGST has elected to qualify and
has qualified as a regulated investment company under Part I of Subchapter M
of the Code as of and since its first taxable year, and qualifies and intends
to continue to qualify as a regulated investment company for its taxable year
ending upon its liquidation. CGST has been a regulated investment company
under such sections of the Code at all times since its inception.
(c) The statement of assets and liabilities, including the statement of
investments as of September 30, 1995, and the related statement of operations
for the year then ended, and statements of changes in net assets for each of
the two years in the period then ended, for CGST, such statements having been
audited by KPMG Peat Marwick LLP, independent auditors of CGST, have been
furnished to TCG. Such statement of assets and liabilities fairly present
the financial position of CGST of such date and such statements of operations
and changes in net assets fairly reflect the results of operations and
changes in net assets for the periods covered thereby in conformity with
generally accepted accounting principles, and there are no known material
liabilities of CGST as of such dates which are not disclosed therein.
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(d) The Prospectus of CGST dated February 1, 1995 (the "CGST Prospectus")
and the related Statement of Additional Information for CGST dated February
1, 1995, in the forms filed with the Securities and Exchange Commission and
previously furnished to TCG, did not as of their date and do not as of the
date hereof 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.
(e) Except as may have been previously disclosed to TCG, there are no
material legal, administrative or other proceedings pending or, to the
knowledge of CGST, threatened against CGST.
(f) There are no material contracts outstanding to which CGST is a party,
other than as disclosed in the CGST Prospectus and its corresponding
Statement of Additional Information, and there are no such contracts or
commitments (other than this Agreement) which will be terminated with
liability to CGST on or prior to the Exchange Date.
(g) CGST has no known liabilities of a material nature, contingent or
otherwise, other than those shown as belonging to it on its statement of
assets and liabilities as of September 30, 1995 and those incurred in the
ordinary course of CGST's business as an investment company since that date.
Prior to the Exchange Date, CGST will advise TCG of all known material
liabilities, contingent or otherwise, incurred by it subsequent to September
30, 1995, whether or not incurred in the ordinary course of business.
(h) As used in this Agreement, the term "Investments" shall mean CGST's
investments shown on the statement of assets and liabilities as of September
30, 1995 referred to in Section 2(c) hereof, as supplemented with such
changes as CGST shall make after September 30, 1995 and prior to the date of
this Agreement, which changes have been disclosed to TCG, and changes made on
and after the date of this Agreement after advising CGST of such changes, and
changes resulting from stock dividends stock split-ups, mergers and similar
corporate actions.
(i) CGST has filed or will file all federal and state tax returns which, to
the knowledge of CGST's officers, are required to be filed by CGST and has
paid or will pay all federal and state taxes shown to be due on said returns
or on any assessments received by CGST. All tax liabilities of CGST have
been adequately provided for on its books, and no tax deficiency or liability
of CGST has been asserted, and no
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question with respect thereto has been raised, by the Internal Revenue
Service or by any state or local tax authority for taxes in excess of those
already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval and otherwise as described in Section 2(1), CGST will
have full right, power and authority to sell, assign, transfer and deliver
the Investments and any other of its assets and liabilities to be transferred
to TCG and the Acquiring Series pursuant to this Agreement. At the Exchange
Date, subject only to the delivery of the Investments and any such other
assets and liabilities as contemplated by this Agreement, TCG and the
Acquiring Series will acquire the Investments and any such other assets
subject to no encumbrances, liens or security interests in favor of any third
party creditor of CGST and, except as described in Section 2(k), without any
restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as amended (the "1933
Act"), of any of the Investments would be required if they were, as of the
time of such transfer, the subject of a public distribution by either of CGST
or TCG, except as previously disclosed to TCG by CGST in writing prior to the
date hereof.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by CGST of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, Securities Exchange Act of 1934, as amended (the "1934
Act"), 1940 Act, state securities or blue sky laws (which term as used herein
shall include the laws of the District of Columbia and of Puerto Rico) or the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 (the "H-S-R Act").
(m) The registration statement (the "Registration Statement") to be filed
with the Securities and Exchange Commission (the "Commission") by TCG on Form
N-14 relating to the Acquiring Series Shares issuable hereunder, and the
proxy statement of CGST included therein (the "Proxy Statement"), on the
effective date of the Registration Statement and insofar as they relate to
CGST, (i) will comply in all material respects with the provisions of the
1933 Act, 1934 Act and 1940 Act and the rules and regulations thereunder and
(ii) will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time of the shareholders'
meeting referred to in Section 7 below and on the Exchange Date, the
prospectus
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contained in the Registration Statement of which the Proxy Statement is a
part (the "Prospectus"), as amended or supplemented by any amendments or
supplements filed with the Commission by TCG, insofar as it relates to CGST,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the
representations and warranties in this Section 2(m) shall apply only to
statements of fact relating to CGST contained in the Registration Statement,
the Prospectus or the Proxy Statement, or omissions to state in any thereof a
material fact relating to CGST, as such Registration Statement, Prospectus
and Proxy Statement shall be furnished to CGST in definitive form as soon as
practicable following effectiveness of the Registration Statement and before
any public distribution of the Prospectus or Proxy Statement.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF TCG. TCG represents and
warrants to and agrees with CGST that:
(a) TCG is a business trust validly existing under the laws of the State of
Ohio and has power to carry on its business as it is now being conducted and
to carry out its obligations under this Agreement. TCG has qualified as a
foreign business trust in each jurisdiction where the ownership of its
property and the conduct of its business require qualification. TCG and the
Acquiring Series each has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted and to fulfill the terms of this Agreement,
except as set forth in Section 3(i).
(b) TCG is registered under the 1940 Act as an open-end investment company
of the management type, and such registration has not been revoked or
rescinded and is in full force and effect. The Acquiring Series expects to
qualify as a regulated investment company under Part I of Subchapter M of the
Code.
(c) The Acquiring Series will have no financial statements as of the
Valuation Time.
(d) The prospectus of TCG and the Acquiring Series, expected to be dated in
January, 1966 (the "Acquiring Series Prospectus"), and the related Statement
of Additional Information for the Acquiring Series to be dated such date, in
the forms to be filed with the Securities and Exchange Commission, will be
furnished to CGST promptly upon the completion thereof and will not as of
their date contain any
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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.
(e) Except as may have been previously disclosed to CGST, there are no
material legal, administrative or other proceedings pending or, to the
knowledge of TCG or its Acquiring Series, threatened against TCG or the
Acquiring Series, which assert liability on the part of TCG or the Acquiring
Series.
(f) There are no material contracts outstanding to which TCG or the
Acquiring Series is a party, other than material contracts disclosed in the
Acquiring Series Prospectus and the corresponding Statement of Additional
Information.
(g) The Acquiring Series will have no assets or liabilities as of the
Valuation Time.
(h) TCG and the Acquiring Series will file all federal and state tax
returns which, to the knowledge of TCG's officers, are required to be filed
by TCG and the Acquiring Series and will pay all federal and state taxes
shown to be due on such returns or on any assessments received by TCG or the
Acquiring Series. All tax liabilities of TCG and the Acquiring Series have
been adequately provided for on its books, and no tax deficiency or liability
of TCG or the Acquiring Series has been asserted, and no question with
respect thereto has been raised, by the Internal Revenue Service or by any
state or local tax authority for taxes in excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by TCG or the Acquiring Series of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, 1934 Act, 1940 Act, state securities or Blue Sky
Laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise as
described in Section 3(i), TCG and the Acquiring Series will have full right,
power and authority to purchase the Investments and any other assets and
assume the liabilities of CGST to be transferred to the Acquiring Series
pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement, on
the effective date of the Registration Statement and insofar as they relate
to TCG and the Acquiring Series: (i) will comply in all material respects
with the
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provisions of the 1933 Act, 1934 Act and 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and at the time
of the shareholders' meeting referred to in Section 7 and at the Exchange
Date, the Prospectus, as amended or supplemented by any amendments or
supplements filed with the Commission by TCG, will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the Registration
Statement, the Prospectus or the Proxy Statement made in reliance upon and in
conformity with information furnished by CGST for use in the Registration
Statement, the Prospectus or the Proxy Statement.
(l) The Acquiring Series Shares to be issued by TCG have been duly
authorized and when issued and delivered by TCG to CGST pursuant to this
Agreement and the Prospectus will be legally and validly issued by TCG and
will be fully paid and nonassessable, and no shareholder of TCG will have any
preemptive right of subscription or purchase in respect thereof.
(m) The issuance of Acquiring Series Shares pursuant to this Agreement will
be in compliance with all applicable federal and state securities laws.
(n) Cardinal Government Securities Money Market Fund, upon filing of its
first income tax return at the completion of its first taxable year will
elect to be a regulated investment company and until such time will take all
steps necessary to ensure qualification as a regulated investment company.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, TCG will deliver to
CGST a number of Acquiring Series Shares having an aggregate net asset value
equal to the value of the assets of CGST acquired by the Acquiring Series, less
the value of the liabilities of CGST assumed, determined as hereafter provided
in this Section 4.
(a) The net asset value of CGST will be computed as of the Valuation Time,
using the valuation procedures set forth in the current prospectus of CGST.
(b) The net asset value of each of the Acquiring Series Shares will be
determined to the nearest full cent as of the
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Valuation Time, and shall be set at the net asset value per share of CGST as
of the Valuation Time.
(c) The Valuation Time shall be 4:00 P.M., Eastern Standard Time, on March
30, 1996, or such earlier or later day as may be mutually agreed upon in
writing by the parties hereto (the "Valuation Time").
(d) The Acquiring Series shall issue its Acquiring Series Shares to CGST on
one share deposit receipt registered in the name of CGST. CGST shall
distribute in liquidation the Acquiring Series Shares received by it
hereunder PRO RATA to its shareholders by redelivering such share deposit
receipt to TCG's transfer agent, which will as soon as practicable set up
open accounts for each CGST shareholder in accordance with written
instructions furnished by CGST.
(e) The Acquiring Series shall assume all liabilities of CGST, whether
accrued or contingent, described in subsection 1(c) hereof in connection with
the acquisition of assets and subsequent dissolution of CGST or otherwise,
except that recourse for assumed liabilities relating to CGST will be limited
to the Acquiring Series.
5. EXPENSES, FEES, ETC.
(a) Subject to the further provisions of this Section 5, TOC shall be
responsible for the fees and expenses of the Reorganization. The Acquiring
Series will be responsible for its organization costs. CGST will be
responsible for proxy solicitation and other costs associated with its annual
meeting (or special meeting in lieu thereof) to the extent such costs are
comparable to those incurred for annual meetings in recent prior years. TOC
has undertaken to absorb all other costs of the Reorganization.
(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of CGST's being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any
condition to CGST's obligations referred to in Section 7(a) or Section 9),
CGST shall pay directly all reasonable fees and expenses incurred by TCG in
connection with such transactions, including, without limitation, legal,
accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of TCG's being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
TCG's
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obligations referred to in Section 7(a) or Section 8), TCG shall pay directly
all of the reasonable fees and expenses incurred by CGST in connection with
such transactions, including, without limitation, legal, accounting and
filing fees.
(d) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated,
no party shall be liable to the other party for any damages resulting
therefrom, including, without limitation, consequential damages, except as
specifically set forth above.
6. EXCHANGE DATE. Delivery of the assets of CGST to be transferred, assumption
of the liabilities of CGST to be assumed, and the delivery of Acquiring Series
Shares to be issued shall be made at the offices of The Ohio Company, 000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxx, Xxxx at 9:00 A.M. on March 31, 1996, or at such other
time and date agreed to by TCG and CGST, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date."
7. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION.
(a) CGST agrees to call a special meeting of its shareholders as soon as
is practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of CGST to and the
assumption of all of the liabilities of CGST by the Acquiring Series as
herein provided, authorizing and approving this Agreement, and authorizing
and approving the liquidation and dissolution of CGST, and it shall be a
condition to the obligations of each of the parties hereto that the holders
of shares of beneficial interest, par value $.01 per share, of CGST shall
have approved this Agreement, and the transactions contemplated herein,
including the liquidation and dissolution of CGST, in the manner required by
law and CGST'S Amended Declaration of Trust at such a meeting on or before
the Valuation Time.
(b) CGST agrees that the liquidation and dissolution of CGST will be
effected in the manner provided in CGST's Amended Declaration of Trust and in
accordance with applicable law, and that it will not make any distributions
of any Acquiring Series Shares to the shareholders of CGST without first
paying or adequately providing for the payment of all of CGST's known debts,
obligations and liabilities.
(c) Each of TCG and CGST will cooperate with the other, and each will
furnish to the other the information relating to
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itself required by the 1933 Act, 1934 Act and 1940 Act and the rules and
regulations thereunder to be set forth in the Registration Statement,
including the Prospectus and the Proxy Statement.
8. CONDITIONS TO TCG'S OBLIGATIONS. The obligations of TCG and the Acquiring
Series hereunder shall be subject to the following conditions:
(a) That this Agreement shall have been authorized and the transactions
contemplated hereby, including the liquidation and dissolution of CGST, shall
have been approved by the trustees and shareholders of CGST in the manner
required by law.
(b) CGST shall have furnished to TCG a statement of CGST's assets and
liabilities, with values determined as provided in Section 4 of this
Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on CGST's behalf by its
President (or any Vice President) and Treasurer (or other financial officer),
and a certificate of both such officers, dated the Exchange Date, to the
effect that as of the Valuation Time and as of the Exchange Date there has
been no material adverse change in the financial position of CGST since
September 30, 1995, other than changes in the Investments since that date or
changes in the market value of the Investments, or changes due to net
redemptions of shares of CGST, dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of CGST made in this Agreement are true and
correct in all material respects as if made at and as of such dates, CGST has
complied with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to each of such dates, and CGST
shall have furnished to TCG a statement, dated the Exchange Date, signed by
CGST's President (or any Vice President) and Treasurer (or other financial
officer) certifying those facts as of such dates.
(d) There shall not be any material litigation pending or overtly
threatened with respect to the matters contemplated by this Agreement.
(e) TCG shall have received an opinion of Xxxxx & Xxxxxxxxx, in form
reasonably satisfactory to TCG and dated the Exchange Date, to the effect
that (i) CGST is a business trust validly existing under the laws of the
Commonwealth of Pennsylvania, and is, to the knowledge of such counsel,
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qualified to do business as a foreign business trust in each jurisdiction
where the ownership of its property and the conduct of its business require
qualification, (ii) this Agreement has been duly authorized, executed and
delivered by CGST and, assuming that the Registration Statement, the
Prospectus and the Proxy Statement comply with the 1933 Act, 1934 Act and
1940 Act and assuming due authorization, execution and delivery of this
Agreement by TCG, is a valid and binding obligation of CGST, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles, (iii) CGST has
power to sell, assign, convey, transfer and deliver the Investments and other
assets contemplated hereby and, upon consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement, CGST will
have duly sold, assigned, conveyed, transferred and delivered such
Investments and other assets to TCG, (iv) the execution and delivery of this
Agreement did not and the consummation of the transactions contemplated
hereby will not, violate CGST's Amended Declaration of Trust or its By-Laws,
as amended, or any provision of any agreement known to such counsel to which
CGST is a party or by which it is bound, it being understood that with
respect to any investment restrictions as contained in CGST's Amended
Declaration of Trust or By-Laws, or then current prospectus or statement of
additional information, such counsel may rely upon a certificate of an
officer of CGST, whose responsibility it is to advise CGST with respect to
such matters and (v) to the knowledge of such counsel no consent, approval,
authorization or order of any court or governmental authority is required for
the consummation by CGST of the transactions contemplated hereby, except such
as have been obtained under the 1933 Act, 1934 Act and 1940 Act and such as
may be required under state securities or blue sky laws and the H-S-R Act.
In rendering such opinion, Xxxxx & Xxxxxxxxx may rely upon certain reasonable
and customary assumptions and certifications of fact received from TCG, CGST,
and certain of its shareholders.
(f) TCG shall have received an opinion of Xxxxx & Xxxxxxxxx, addressed to
TCG, the Acquiring Series and CGST, in form reasonably satisfactory to TCG
and dated the Exchange Date, to the effect that for Federal income tax
purposes (i) the transfer of all or substantially all of CGST's assets in
exchange for the Acquiring Series Shares and the assumption by the Acquiring
Series of liabilities of CGST will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and each of the Acquiring Series and
CGST is a "party to a reorganization" within the meaning of Section 368(b) of
the Code; (ii) no gain or loss will be recognized by CGST upon the
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transfer of the assets of the Acquiring Series in exchange for Acquiring
Series Shares and the assumption by the Acquiring Series of the liabilities
of CGST or upon the distribution of Acquiring Series Shares by CGST to its
shareholders in liquidation; (iii) no gain or loss will be recognized by the
shareholders of CGST upon the exchange of their shares for Acquiring Series
Shares, (iv) the basis of the Acquiring Series Shares a CGST shareholder
receives in connection with the Reorganization will be the same as the basis
of his or her shares exchanged therefor; (v) a CGST shareholder's holding
period for his or her Acquiring Series Shares will be determined by including
the period for which he or she held CGST shares exchanged therefor, provided
that he or she held such shares as capital assets; (vi) no gain or loss will
be recognized by the Acquiring Series upon the receipt of the assets of CGST
in exchange for Acquiring Series Shares and the assumption by the Acquiring
Series of the liabilities of CGST; (vii) the basis in the hands of the
Acquiring Series the assets of CGST transferred to the Acquiring Series will
be the same as the basis of the assets in the hands of CGST immediately prior
to the transfer; and (viii) the Acquiring Series' holding periods of the
assets of CGST will include the period for which such assets were held by
CGST. In rendering such opinion, Xxxxx & Xxxxxxxxx may rely upon certain
reasonable and customary assumptions and certifications of fact received from
TCG, CGST, and certain of its shareholders.
(g) The Registration Statement shall have become effective under the 1933
Act and applicable Blue Sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of TCG,
contemplated by the Commission or any state regulatory authority.
(h) All necessary proceedings taken by CGST in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to TCG and
Xxxxx & Xxxxxxxxx.
(i) Prior to the Exchange Date, CGST shall have declared a dividend or
dividends which, together with all previous such dividends, shall have the
effect of distributing to its shareholders all of its investment company
taxable income for its taxable year ended September 30, 1995 and the short
taxable year beginning on October 1, 1995 and ending on the Valuation Date
(computed without regard to any deduction for dividends paid), and all of its
net capital gain realized in its taxable year ended September 30, 1995 and
the short taxable year beginning on October 1, 1995 and ending on the
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Valuation Date (after reduction for any capital loss carryover).
(j) CGST shall have furnished to TCG a certificate, signed by the President
(or any Vice President) and the Treasurer (or other financial officer) of
CGST, as to the tax cost to TCG of the securities delivered to TCG pursuant
to this Agreement, together with any such evidence as to such tax cost as TCG
reasonably may request.
(k) CGST's custodian shall have delivered to CGST a certificate identifying
all of the assets of CGST held by such custodian as of the Valuation Time.
(l) CGST's transfer agent shall have provided to TCG (i) the originals or
true copies of all of the records of CGST in the possession of such transfer
agent as of the Exchange Date, (ii) a certificate setting forth the number of
shares of CGST outstanding as of the Valuation Time and (iii) the name and
address of each holder of record of any such shares of CGST and the number of
shares held of record by each such shareholder.
(m) CGST shall have duly executed and delivered to TCG a xxxx of sale,
assignment, certificate and other instruments of transfer ("Transfer
Documents") as TCG may deem necessary or desirable to transfer all of CGST's
entire right, title and interest in and to the Investments and all other
assets of CGST to the Acquiring Series.
(n) TCG and CGST shall have received from the Commission, if necessary, a
written order of exemption, satisfactory in form and substance to TCG and
CGST, exempting the Reorganization from the provisions of Section 17(a) of
the 1940 Act.
9. CONDITIONS OF CGST'S OBLIGATIONS. The obligations of CGST hereunder shall
be subject to the following conditions:
(a) This Agreement shall have been authorized and the transactions
contemplated hereby, including the liquidation and dissolution of CGST, shall
have been approved by the trustees and shareholders of CGST in the manner
required by law.
(b) TCG shall have executed and delivered to CGST an Assumption of
Liabilities dated as of the Exchange Date pursuant to which the Acquiring
Series will assume all of the liabilities, expenses, costs, charges and
reserves of CGST, contingent or otherwise, including liabilities existing at
the
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Valuation Time and described in Section 1(c) hereof in connection with the
transactions contemplated by this Agreement.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of TCG made in this Agreement are true and
correct in all material respects as if made at and as of such dates, TCG and
the Acquiring Series have complied with all of the agreements and satisfied
all of the conditions on their part to be performed or satisfied at or prior
to each of such dates, and TCG shall have furnished to CGST a statement,
dated the Exchange Date, signed by TCG's President (or any Vice President)
and Treasurer (or other financial officer) certifying those facts as of such
dates.
(d) There shall not be any material litigation pending or overtly
threatened with respect to the matters contemplated by this Agreement.
(e) CGST shall have received an opinion of Xxxxx & Xxxxxxxxx, in form
reasonably satisfactory to CGST and dated the Exchange Date, to the effect
that (i) TCG is a business trust validly existing under the laws of the State
of Ohio and is, to the knowledge of such counsel, qualified to do business as
a foreign business trust in each jurisdiction where the ownership of its
property and the conduct of its business requires qualification, (ii) the
Acquiring Series Shares to be delivered to CGST as provided for by this
Agreement are duly authorized and upon such delivery will be validly issued
and will be fully paid and nonassessable by TCG and no shareholder of TCG has
any preemptive right to subscription or purchase in respect thereof, (iii)
this Agreement has been duly authorized, executed and delivered by TCG and
assuming that the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1933 Act, 1934 Act and 1940 Act, and assuming due
authorization, execution and delivery of this Agreement by CGST, is a valid
and binding obligation of TCG, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and other equitable principles, (iv) the execution and delivery of
this Agreement did not, and the consummation of the transactions contemplated
hereby will not, violate TCG's Declaration of Trust or its By-Laws or any
provision of any agreement known to such counsel to which TCG or the
Acquiring Series is a party or by which it is bound, it being understood that
with respect to investment restrictions as contained in TCG's Declaration of
Trust, By-Laws or then current prospectus or statement of additional
information, such counsel may rely upon a certificate of an officer of TCG
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whose responsibility it is to advise TCG with respect to such matters, (v) to
the knowledge of such counsel no consent, approval, authorization or order of
any court or governmental authority is required for the consummation by TCG
or the Acquiring Series of the transactions contemplated herein, except such
as have been obtained under the 1933 Act, 1934 Act and 1940 Act and such as
may be required under state securities or blue sky laws and the H-S-R Act.
In rendering such opinion Xxxxx & Xxxxxxxxx may rely on certain reasonable
assumptions and certifications of fact received from CGST, TCG and certain of
its shareholders.
(f) CGST shall have received an opinion of Xxxxx & Xxxxxxxxx addressed to
CGST, TCG and the Acquiring Series and in a form reasonably satisfactory to
CGST dated the Exchange Date, with respect to the matters specified in
Section 8(f) of this Agreement. In rendering such opinion Xxxxx & Xxxxxxxxx
may rely on certain reasonable assumptions and certifications of fact
received from CGST, TCG and certain of its shareholders.
(g) All necessary proceedings taken by TCG in connection with the
transactions contemplated by this Agreement and all documents, incidental
thereto reasonably shall be satisfactory in form and substance to CGST and
Xxxxx & Xxxxxxxxx.
(h) The Registration Statement shall have become effective under the 1933
Act and applicable Blue Sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of CGST,
contemplated by the Commission or any state regulatory authority.
(i) TCG and CGST shall have received from the Commission, if necessary, a
written order of exemption, satisfactory in form and substance to TCG and
CGST, exempting the Reorganization from the provisions of Section 17(a) of
the 1940 Act.
10. TERMINATION. TCG and CGST may, by mutual consent of their respective
trustees, terminate this Agreement, and TCG or CGST, after consultation with
counsel and by consent of their respective trustees or an officer authorized by
such trustees, may, subject to Section 11 of this Agreement, waive any
condition to their respective obligations hereunder.
11. SOLE AGREEMENT; GOVERNING LAW; AMENDMENTS. This Agreement supersedes all
previous correspondence and oral communications between the parties regarding
the subject matter hereof, constitutes the only understanding with respect to
such subject
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matter and shall be construed in accordance with and governed by the laws of
the State of Ohio.
This Agreement may be amended, modified or supplemented in such manner as may
be mutually agreed upon in writing by the authorized officer of TCG and CGST;
provided, however, that following the meeting of CGST's shareholders called by
CGST pursuant to Section 7 of this Agreement, no such amendment may have the
effect of altering or changing the amount or kind of shares received by CGST,
or altering or changing to any material extent the amount or kind of
liabilities assumed by TCG and the Acquiring Series, or altering or changing
any other terms and conditions of the Reorganization if any of the alterations
or changes, alone or in the aggregate, would materially adversely affect CGST's
shareholders without their further approval.
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be deemed to be an original.
THE CARDINAL GROUP
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
CARDINAL GOVERNMENT SECURITIES TRUST
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
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