FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____day of February, 2000, by and between STI Classic Funds, a
Massachusetts business trust, with its principal place of business at 0 Xxxxxx
Xxxxxx, Xxxxxx, XX 00000 (the "Trust"), with respect to its Small Cap Growth
Stock Fund, International Equity Fund, Growth and Income Fund and High Income
Fund, each a separate investment portfolio of the Trust (each an "Acquiring
Fund" and, together, the "Acquiring Funds"), and ESC Strategic Funds, Inc., a
Maryland corporation, with its principal place of business at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, XX 00000 ("ESC Strategic Funds"), with respect to its Small Cap Fund,
Small Cap II Fund, International Equity Fund, Appreciation Fund and Income Fund,
each a separate investment portfolio of ESC Strategic Funds (each a "Selling
Fund" and, together the "Selling Funds" and, collectively with the Acquiring
Funds, the "Funds").
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will
consist of: (i) the transfer of all of the assets of each Selling Fund in
exchange for, as applicable, Investor Shares and Flex Shares of beneficial
interest, no par value per share, of its respective Acquiring Fund ("Acquiring
Fund Shares") as set forth on Schedule A attached hereto; (ii) the assumption by
each Acquiring Fund of the identified liabilities of each Selling Fund; and
(iii) the distribution, after the Closing Dates hereinafter referred to, of the
Acquiring Fund Shares to the shareholders of each Selling Fund and the
liquidation of each Selling Fund as provided herein, all upon the terms and
conditions set forth in this Agreement (the "Reorganization").
WHEREAS, each Acquiring Fund and each Selling Fund is a separate
investment series of the Trust and ESC Strategic Funds, respectively, and the
Trust and ESC Strategic Funds are open-end, registered management investment
companies and each Selling Fund owns securities that generally are assets of the
character in which its respective Acquiring Fund is permitted to invest;
WHEREAS, each Fund is authorized to issue its shares of beneficial
interest or shares of common stock, as the case may be;
WHEREAS, the Trustees of the Trust have determined that the
Reorganization, with respect to each Acquiring Fund, is in the best interests of
each Acquiring Fund's shareholders and that the interests of the existing
shareholders of the Acquiring Fund will not be diluted as a result of the
Reorganization;
WHEREAS, the Directors of ESC Strategic Funds have determined that the
Reorganization, with respect to each Selling Fund, is in the best interests of
the Selling Fund's shareholders and that the interests of the existing
shareholders of the Selling Fund will not be diluted as a result of the
Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows;
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUNDS IN EXCHANGE FOR ACQUIRING
FUND SHARES AND THE ASSUMPTION OF SELLING FUNDS' LIABILITIES AND
LIQUIDATION OF THE SELLING FUNDS
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein
and on the basis of the representations and warranties contained herein, each
Selling Fund agrees to transfer all of its assets and stated liabilities, as set
forth in paragraph 1.2, to its respective Acquiring Fund. In exchange, each
Acquiring Fund agrees: (i) to deliver to its respective Selling Fund the number
of full and fractional shares of the Acquiring Fund Shares, determined by (a)
multiplying the shares outstanding of each class of the Selling Fund by (b) the
ratio computed by dividing (x) the net asset value per share of each such class
of the Selling Fund by (y) the net asset value per share of the corresponding
class of Acquiring Fund Shares computed in the manner and as of the time and
date set forth in paragraph 2.2; and (ii) to assume the identified liabilities
of the Selling Fund, as set forth in paragraph 1.3. Such transactions shall take
place at the closing provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of each Selling Fund to be
acquired by its respective Acquiring Fund shall consist of all property,
including, without limitation, all cash, securities, commodities, interests in
futures and dividends or interest receivables, owned by the Selling Fund and any
deferred or prepaid expenses shown as an asset on the books of such Selling Fund
on its respective Closing Date.
Each Selling Fund has provided its respective Acquiring Fund with its
most recent audited financial statements, which contain a list of all of the
Selling Fund's assets as of the date of such statements. Each Selling Fund
hereby represents that as of the date of the execution of this Agreement, there
have been no changes in its financial position as reflected in such financial
statements other than those occurring in the ordinary course of business in
connection with the purchase and sale of securities and the payment of normal
operating expenses and the payment of dividends, capital gains distributions and
redemption proceeds to shareholders.
Each Selling Fund will, within a reasonable period of time prior to its
respective Closing Date, furnish each Acquiring Fund with a list of the Selling
Fund's portfolio securities and other investments. Each Acquiring Fund will,
within a reasonable time prior to its respective Closing Date, furnish its
respective Selling Fund with a list of the securities, if any, on the Selling
Fund's list referred to above that do not conform to the Acquiring Fund's
investment objectives,
policies, and restrictions. A Selling Fund, if requested by its Acquiring Funds,
will dispose of securities on the Acquiring Fund's list prior to its respective
Closing Date. In addition, if it is determined that the portfolios of a Selling
Fund and its Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the Acquiring Fund with
respect to such investments, the Selling Fund, if requested by the Acquiring
Fund, will dispose of a sufficient amount of such investments as may be
necessary to avoid violating such limitations as of its respective Closing Date.
Notwithstanding the foregoing, nothing herein will require a Selling Fund to
dispose of any investments or securities if, in the reasonable judgment of the
Selling Fund's directors or adviser, such disposition would adversely affect the
tax-free nature of the Reorganization or would violate their fiduciary duties to
the Selling Fund's shareholders.
1.3 LIABILITIES TO BE ASSUMED. Each Selling Fund will endeavor to
discharge all of its known liabilities and obligations to the extent possible
prior to its respective Closing Date. Each Acquiring Fund shall assume only
those liabilities, expenses, costs, charges and reserves reflected on a
Statement of Assets and Liabilities of its respective Selling Fund prepared
on behalf of the Selling Fund, as of the Valuation Date (as defined in
paragraph 2.1), in accordance with generally accepted accounting principles
consistently applied from the prior audited period. Each Acquiring Fund shall
assume only those liabilities of its respective Selling Fund reflected in its
Statement of Assets and Liabilities and shall not assume any other
liabilities, whether absolute or contingent, known or unknown, accrued or
unaccrued, all of which shall remain the obligation of the Selling Fund.
In addition, upon completion of the Reorganization, for purposes of
calculating the maximum amount of sales charges (including asset based sales
charges) permitted to be imposed by an Acquiring Fund under the National
Association of Securities Dealers, Inc. ("NASD") Conduct Rule 2830 (the
"Maximum Amount"), each Acquiring Fund will add to the Maximum Amount
immediately prior to the Reorganization, the Maximum Amount of each Selling
Fund immediately prior to the Reorganization, calculated in accordance with
NASD Conduct Rule 2830.
1.4 Prior to each Closing Date, the Trust and ESC Strategic Funds
shall file appropriate Articles of Transfer pursuant to the laws of the State of
Maryland, effective as of each respective Closing Date.
1.5 LIQUIDATION AND DISTRIBUTION. On or as soon after its Closing Date
as is conveniently practicable (the "Liquidation Date"): (a) each Selling Fund
will distribute in complete liquidation of the Selling Fund, pro rata to its
shareholders of record, determined as of the close of business on the Valuation
Date (the "Selling Fund Shareholders"), all of the Acquiring Fund Shares
received by the Selling Fund pursuant to paragraph 1.1; and (b) the Selling Fund
will thereupon proceed to dissolve and terminate as set forth in paragraph 1.9
below. Such distribution will be accomplished by the transfer of Acquiring Fund
Shares credited to the account of the Selling Fund on the books of the Acquiring
Fund to open accounts on the
share records of the Acquiring Fund in the name of the Selling Fund
Shareholders, and representing the respective PRO RATA number of Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Selling
Fund will simultaneously be canceled on the books of the Selling Fund. The
Acquiring Fund shall not issue certificates representing Acquiring Fund Shares
in connection with such transfer. Each Selling Fund Shareholder shall have the
right to receive any unpaid dividends or other distributions that were declared
by the Selling Fund before the Effective Time with respect to Selling Fund
shares that are held of record by a Selling Fund Shareholder at the Effective
Time on its respective Closing Date.
1.6 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of each Acquiring Fund's transfer agent. Shares of each
Acquiring Fund will be issued simultaneously to its corresponding Selling Fund,
in an amount equal in value to the net asset value of each Selling Fund's
shares, to be distributed to shareholders of each Selling Fund.
1.7 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.8 REPORTING RESPONSIBILITY. Any reporting responsibility of each
Selling Fund is and shall remain the responsibility of the Selling Fund, up to
and including its respective Closing Date, and such later date on which the
Selling Fund is terminated.
1.9 TERMINATION. Each Selling Fund shall be terminated promptly
following its respective Closing Date and the making of all distributions
pursuant to paragraph 1.5.
1.10 Subject to the conditions set forth in this Agreement, the failure
of one of the Selling Funds to consummate the transactions contemplated hereby
shall not affect the consummation or validity of the Reorganization with respect
to any other Selling Fund, and the provisions of this Agreement shall be
construed to effect this intent, including, without limitation, as the context
requires, construing the terms "Acquiring Fund" and "Selling Fund" as meaning
only those series of the Trust and ESC Strategic Funds, respectively, which are
involved in the Reorganization as of the Closing Dates.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of a Selling Fund's assets to be
acquired by its respective Acquiring Fund hereunder shall be the value of such
assets computed as of the close of regular trading on the New York Stock
Exchange ("NYSE") on the business day immediately prior to each respective
Closing Date (such time and date being hereinafter called a "Valuation Date"),
using the valuation procedures set forth in the Trust's Declaration of Trust and
each Acquiring Fund's then current prospectuses and statements of additional
information or such other valuation procedures as shall be mutually agreed upon
by the parties. Each Acquiring Fund and Selling Fund agrees, however, to use all
commercially reasonable efforts to resolve any material pricing differences
between the prices of portfolio securities determined in accordance with the
pricing policies and procedures of a Selling Fund and those determined in
accordance with the pricing policies and procedures of its respective Acquiring
Fund.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring
Fund Shares shall be the net asset value per share computed as of the close of
normal trading on the NYSE on the Valuation Date, using the valuation procedures
set forth in the Trust's Declaration of Trust and each Acquiring Fund's then
current prospectuses and statements of additional information.
2.3 SHARES TO BE ISSUED. The number of each Acquiring Fund's shares of
each class to be issued (including fractional shares, if any) in exchange for
its respective Selling Fund's assets, shall be determined by (a) multiplying the
shares outstanding of each class of the Selling Fund by (b) the ratio computed
by (x) dividing the net asset value per share of the Selling Fund of each of its
classes by (y) the net asset value per share of the corresponding classes of the
Acquiring Fund determined in accordance with paragraph 2.2 [(a) x (b), where
(b)=(x)/(y)]. Holders of Class A shares of the Selling Funds, with the exception
of the ESC Strategic Income Fund, will receive Investor Shares of the
corresponding Acquiring Funds. Holders of Class D shares of the Selling Funds
and holders of Class A shares of the ESC Strategic Income Fund will receive Flex
Shares of the corresponding Acquiring Funds. Holders of Class A shares and Class
D shares, respectively, of the ESC Strategic Small Cap Fund and the ESC
Strategic Small Cap II Fund will receive Investor Shares and Flex Shares,
respectively, of the STI Classic Small Cap Growth Stock Fund.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
SunTrust Bank, Atlanta in accordance with its regular practice in pricing the
shares and assets of each Acquiring Fund.
ARTICLE III
CLOSINGS AND CLOSING DATES
3.1 CLOSING DATES. The closing (each a "Closing" and collectively, the
"Closings") shall occur in two steps. There will be a separate closing on or
about March 27, 2000 for the ESC Strategic Funds' Small Cap Fund, Small Cap II
Fund, International Equity Fund and Appreciation Fund and a separate closing on
March 28, 2000 for the ESC Income Fund or such other date(s) as the parties may
agree to in writing (each a "Closing Date" and collectively, the "Closing
Dates"). All acts taking place at the Closings shall be deemed to take place
immediately prior to the Closing Dates unless otherwise provided. The Closings
shall be held as of 9:00 a.m.
(the "Effective Time") at the offices of the SEI Investments, Xxx Xxxxxxx Xxxxxx
Xxxxx, Xxxx, XX 00000, or at such other time and/or place as the parties may
agree.
3.2 CUSTODIAN'S CERTIFICATE. Union Bank of California, as custodian
for each Selling Fund (the "Custodian"), shall deliver at the Closing a
certificate of an authorized officer stating that: (a) each Selling Fund's
portfolio securities, cash, and any other assets shall have been delivered in
proper form to its respective Acquiring Fund on the Closing Dates; and (b) all
necessary taxes including all applicable federal and state stock transfer
stamps, if any, shall have been paid, or provision for payment shall have been
made, in conjunction with the delivery of portfolio securities by the Selling
Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the
Valuation Date, either: (a) the NYSE or another primary exchange on which the
portfolio securities of an Acquiring Fund or a Selling Fund are purchased or
sold, shall be closed to trading or trading on such exchange shall be
restricted; or (b) trading or the reporting of trading on the NYSE or elsewhere
shall be disrupted so that accurate appraisal of the value of the net assets of
an Acquiring Fund or a Selling Fund is impracticable, the Valuation Date shall
be postponed until the first business day after the day when trading is fully
resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. BISYS Fund Services, Inc, as
transfer agent for each Selling Fund as of the Closing Dates, shall deliver at
the Closings a certificate of an authorized officer stating that its records
contain the names and addresses of Selling Fund Shareholders, and the number and
percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closings. Each Acquiring Fund shall issue and deliver
or cause Federated Services Company, its transfer agent, to issue and deliver a
confirmation evidencing Acquiring Fund Shares to be credited on the Closing
Dates to the Secretary of ESC Strategic Funds or provide evidence satisfactory
to the Selling Fund that such Acquiring Fund Shares have been credited to the
Selling Fund's account on the books of the Acquiring Fund. At the Closings, each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, receipts and other documents, if any, as such other party or its
counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUNDS. Each Selling Fund represents
and warrants to its respective Acquiring Fund as follows:
(a) The Selling Fund is a separate investment series of a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Maryland.
(b) The Selling Fund is a separate investment series of a
Maryland corporation
that is registered as an open-end management investment company, and its
registration with the Securities and Exchange Commission (the "Commission") as
an investment company under the Investment Company Act of 1940 (the "1940 Act"),
is in full force and effect.
(c) The current prospectus and statement of additional
information of the Selling Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933 (the "1933 Act") and
the 1940 Act, and the rules and regulations thereunder, and do not include
any untrue statement of a material fact or omit to state any material fact
required to be stated or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(d) The Selling Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result
in the violation of any provision of ESC Strategic Funds' Articles of
Incorporation or By-Laws or of any material agreement, indenture, instrument,
contract, lease, or other undertaking to which the Selling Fund is a party or by
which it is bound.
(e) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it prior to the Closing Date, except for liabilities, if any, to be
discharged or reflected in the Statement of Assets and Liabilities as provided
in paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted by
the Acquiring Fund, no litigation, administrative proceeding, or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Selling Fund or any of its properties or
assets, which, if adversely determined, would materially and adversely affect
its financial condition, the conduct of its business, or the ability of the
Selling Fund to carry out the transactions contemplated by this Agreement. The
Selling Fund knows of no facts that might form the basis for the institution of
such proceedings and are 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 the Selling Fund's business or its ability to consummate the
transactions contemplated herein.
(g) The financial statements of the Selling Fund are in
accordance with generally accepted accounting principles, and such statements
(copies of which have been furnished to the Acquiring Funds) fairly reflect
the financial condition of the Selling Fund as of September 30, 1999, and
there are no known contingent liabilities of the Selling Fund as of that date
not disclosed in such statements.
(h) Since September 30, 1999, there have been no material
adverse changes in the Selling Fund's financial condition, assets,
liabilities for business (other than changes occurring in the ordinary course
of business), or any incurrence by the Selling Fund of indebtedness maturing
more than one year from the date such indebtedness was incurred, except
as otherwise disclosed to and accepted by the Acquiring Fund. For the purposes
of this subparagraph (h), a decline in the net asset value of the Selling Fund
shall not constitute a material adverse change.
(i) At the Closing Date, all federal and other tax returns and
reports of the Selling Fund required by law to be filed by such date, shall have
been filed, and all federal and other taxes shown due on such returns and
reports shall have been paid, or provision shall have been made for the payment
thereof. To the best of the Selling Fund's knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such
returns.
(j) All issued and outstanding shares of the Selling Fund are,
and at the Closing Date, will be duly and validly issued and outstanding, fully
paid and non-assessable by the Selling Fund. All of the issued and outstanding
shares of the Selling Fund will, at the time of the Closing Date, be held by the
persons and in the amounts set forth in the records of the Selling Fund's
transfer agent as provided in paragraph 3.4. The Selling Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any of the
Selling Fund shares, and has no outstanding securities convertible into any of
the Selling Fund shares.
(k) At the Closing Date, the Selling Fund will have good and
marketable title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2, and full right, power, and authority to sell,
assign, transfer, and deliver such assets hereunder, and, upon delivery and
payment for such assets, and the filing of Articles of Transfer pursuant to the
laws of the State of Maryland, the Acquiring Fund will acquire good and
marketable title, subject to no restrictions on the full transfer of such
assets, including such restrictions as might arise under the 1933 Act, other
than as disclosed to and accepted by the Acquiring Fund.
(l) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Selling
Fund. Subject to approval by the Selling Fund Shareholders, this Agreement
constitutes a valid and binding obligation of the Selling 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.
(m) The information to be furnished by the Selling Fund for use
in no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated herein shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations.
(n) From the effective date of the Registration Statement (as
defined in paragraph 5.7), through the time of the meeting of the Selling Fund
Shareholders and on the Closing Date, any written information furnished by the
Selling Fund with respect to the Selling Fund for use in the Prospectus/Proxy
Statement (as defined in paragraph 5.7), the Registration
Statement or any other materials provided in connection with the Reorganization,
does not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated or necessary to make the statements,
in light of the circumstances under which such statements were made, not
misleading.
(o) The Selling Fund has elected to qualify and has qualified
as a "regulated investment company" under the Code (a "RIC"), as of and since
its first taxable year; has been a RIC under the Code at all times since the end
of its first taxable year when it so qualified; and qualifies and shall continue
to qualify as a RIC under the Code for its taxable year ending upon its
liquidation.
(p) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the Securities Exchange Act of 1934
(the "1934 Act"), the 1940 Act or Maryland law for the execution of this
Agreement by ESC Strategic Funds, for itself and on behalf of each Selling Fund,
except for the effectiveness of the Registration Statement, the necessary
exemptive relief requested from the Commission or its staff with respect to
Sections 17(a) and 17(b) of the 1940 Act, and the filing of Articles of Transfer
pursuant to Maryland law, and except for such other consents, approvals,
authorizations and filings as have been made or received, and such consents,
approvals, authorizations and filings as may be required subsequent to the
Closing Date, it being understood, however, that this Agreement and the
transactions contemplated herein must be approved by the shareholders of the
Selling Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUNDS. Each Acquiring Fund
represents and warrants to its respective Selling Fund as follows:
(a) The Acquiring Fund is a separate investment series of a
Massachusetts business trust, duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts.
(b) The Acquiring Fund is a separate investment series of a
Massachusetts business trust that is registered as open-end management
investment company, and its registration with the Commission as an investment
company under the 1940 Act is in full force and effect.
(c) The current prospectuses and statements of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations thereunder, and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated or necessary to
make such statements therein, in light of the circumstances under which they
were made, not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of
this Agreement will not result, in a violation of the Trust's Declaration of
Trust or By-Laws or of any material agreement, indenture, instrument, contract,
lease, or other undertaking to which the Acquiring Fund is a party or by which
it is bound.
(e) Except as otherwise disclosed in writing to the Selling
Fund and accepted by the Selling Fund, no litigation, administrative proceeding
or investigation of or before any court or governmental body is presently
pending, or to its knowledge, threatened against the Acquiring Fund or any of
its properties or assets, which, if adversely determined, would materially and
adversely affect its financial condition and the conduct of its business or the
ability of the Acquiring Fund to carry out the transactions contemplated by this
Agreement. The Acquiring Fund knows of no facts that might form the basis for
the institution of such proceedings and it 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 transaction contemplated herein.
(f) The financial statements of the Acquiring Fund are in
accordance with generally accepted accounting principles, and such statements
(copies of which have been furnished to the Selling Funds) fairly reflect the
financial condition of the Acquiring Fund as of _____________, and there are no
known contingent liabilities of the Acquiring Fund as of such date which are not
disclosed in such statements.
(g) Since ________________, there have been no material adverse
changes 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 such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Selling Fund. For the purposes of this subparagraph (g), a
decline in the net asset value of the Acquiring Fund shall not constitute a
material adverse change.
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law to be filed by such date shall
have been filed. All federal and other taxes shown due on such returns and
reports shall have been paid or provision shall have been made for their
payment. 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.
(i) All issued and outstanding Acquiring Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Acquiring Fund. The Acquiring Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any Acquiring
Fund Shares, and there are no outstanding securities convertible into any
Acquiring Fund Shares.
(j) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes 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.
(k) Acquiring Fund Shares to be issued and delivered to the
Selling Fund for the account of the Selling Fund Shareholders pursuant to the
terms of this Agreement will, at the Closing Date, have been duly authorized.
When so issued and delivered, such shares will be duly and validly issued
Acquiring Fund Shares, and will be fully paid and non-assessable.
(l) The information to be furnished by the Acquiring Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions contemplated herein shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations.
(m) From the effective date of the Registration Statement (as
defined in paragraph 5.7), through the time of the meeting of the Selling Fund
shareholders and on the Closing Date, any written information furnished by the
Trust with respect to the Acquiring Fund for use in the Prospectus/Proxy
Statement (as defined paragraph 5.7), the Registration Statement or any other
materials provided in connection with the Reorganization, does not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not misleading.
(n) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act,
and any state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
(o) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the 1934 Act, the 1940 Act or
Massachusetts law for the execution of this Agreement by the Trust, for itself
and on behalf of the Acquiring Fund, or the performance of the Agreement by the
Trust, for itself and on behalf of the Acquiring Fund, except for the
effectiveness of the Registration Statement, the necessary exemptive relief
requested from the Commission or its staff with respect to Sections 17(a) and
17(b) of the 1940 Act, and such other consents, approvals, authorizations and
filings as have been made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the Closing Date.
(p) The Acquiring Fund intends to qualify as a RIC under the
Code, and with respect to each Acquiring Fund that has conducted material
investment operations prior to the Closing Date, the Acquiring Fund has elected
to qualify and has qualified as a RIC under the Code as of and since its first
taxable year; has been a RIC under the Code at all times since the end of its
first taxable year when it so qualified; and qualifies and shall continue to
qualify as a RIC under the Code for its current taxable year.
ARTICLE V
COVENANTS OF EACH ACQUIRING FUND AND EACH SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. Subject to paragraph 8.5 each
Acquiring Fund and Selling Fund will operate its respective business in the
ordinary course between the date of this Agreement and the respective Closing
Date, it being understood that such ordinary course of business will include
customary dividends and distributions and shareholder redemptions.
5.2 APPROVAL OF SHAREHOLDERS. ESC Strategic Funds will call meetings
of Selling Fund Shareholders to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions contemplated
herein.
5.3 INVESTMENT REPRESENTATION. Each Selling Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. Each Selling Fund will assist its
respective Acquiring Fund in obtaining such information as the Acquiring Fund
reasonably requests concerning the beneficial ownership of the Selling Fund's
shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, each
Acquiring Fund and its respective Selling Fund will each take or cause to be
taken, all action, and do or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including any actions required to be taken after
the applicable Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within sixty days after the applicable Closing Date, each Selling
Fund shall furnish its respective Acquiring Fund, in such form as is reasonably
satisfactory to the Acquiring Fund, a statement of the earnings and profits of
the Selling Fund for federal income tax purposes that will be carried over by
the Acquiring Fund as a result of Section 381 of the Code, and which will be
reviewed by PricewaterhouseCoopers LLP and certified by ESC Strategic Funds'
Treasurer.
5.7 PREPARATION OF FORM N-14 REGISTRATION STATEMENT. The Trust will
prepare and file with the Commission a registration statement on Form N-14 under
the 1933 Act (the "Registration Statement"), relating to the Acquiring Fund
Shares, which, without limitation, shall include a proxy statement of each
Selling Fund and the prospectus of each Acquiring Fund relating to the
transaction contemplated by this Agreement (the "Prospectus/Proxy Statement").
The Registration Statement shall be in compliance with the 1933 Act, the 1934
Act and the 1940 Act. Each Selling Fund will provide its respective Acquiring
Funds with the materials and information necessary to prepare the
Prospectus/Proxy Statement for inclusion in the Registration Statement, in
connection with the meetings of the Selling Funds Shareholders to consider the
approval of this Agreement and the transactions contemplated herein.
5.8 INDEMNIFICATION OF DIRECTORS. The Trust will assume certain
liabilities and obligations of ESC Strategic Funds relating to any obligation of
ESC Strategic Funds to indemnify its current and former Directors and officers,
acting in their capacities as such, to the fullest extent permitted by law and
the ESC Strategic Funds' Articles of Incorporation, as in effect as of the date
of this Agreement. Without limiting the foregoing, the Trust agrees that all
rights to indemnification and all limitations of liability existing in favor of
the current and former Directors and officers, acting in their capacities as
such, under the ESC Strategic Funds' Articles of Incorporation as in effect as
of the date of this Agreement shall survive the Reorganization and shall
continue in full force and effect, without any amendment thereto, and shall
constitute rights which may be asserted against the Trust, its successors or
assigns.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH SELLING FUND
The obligations of each Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by its
respective Acquiring Fund of all the obligations to be performed by it pursuant
to this Agreement on or before the applicable Closing Date, and, in addition
subject to the following conditions:
6.1 All representations, covenants, and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct as of the date hereof
and as of the Closing Date, with the same force and effect as if made on and as
of that Closing Date. Each Acquiring Fund shall have delivered to its respective
Selling Fund a certificate executed in the Acquiring Fund's name by the Trust's
President or Vice President and its Treasurer or Assistant Treasurer, in form
and substance satisfactory to the Selling Fund and dated as of the Closing Date,
to such effect and as to such other matters as the Selling Fund shall reasonably
request.
6.2 The Selling Funds shall have received on the Closing Date an
opinion from Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel to the Trust, dated as of such
Closing Date, in a form reasonably satisfactory to the Selling Fund, covering
the following points:
(a) Each Acquiring Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts, and has the power
to own all of its properties and assets and to carry on its business as
presently conducted.
(b) Each Acquiring Fund is a separate investment series of a
Massachusetts business trust registered as an investment company under the 1940
Act, and, to such counsel's knowledge, such registration with the Commission is
in full force and effect.
(c) This Agreement has been duly authorized, executed, and
delivered by the
Trust on behalf of each Acquiring Fund and, assuming due authorization,
execution and delivery of this Agreement by the Selling Funds, is a valid and
binding obligation of the Acquiring Funds enforceable against each Acquiring
Funds in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and to general equity principles.
(d) Assuming that a consideration of not less than the net
asset value of Acquiring Fund Shares has been paid, Acquiring Fund Shares to be
issued and delivered to each Selling Fund on behalf of the Selling Fund
Shareholders, as provided by this Agreement, are duly authorized and upon such
delivery will be legally issued and outstanding and fully paid and
non-assessable, and no shareholder of an Acquiring Fund has any preemptive
rights with respect to Acquiring Fund Shares.
(e) The Registration Statement, has been declared effective by
the Commission and to such counsel's knowledge, no stop order under the 1933 Act
pertaining thereto has been issued, and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or the Commonwealth of Massachusetts is required for
consummation by the Acquiring Funds of the transactions contemplated herein,
except as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act,
and as may be required under state securities laws.
(f) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated herein will not result in a
violation of the Trust's Declaration of Trust or By-Laws or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which an Acquiring Fund is a party or by
which an Acquiring Fund or any of its properties may be bound or, to the
knowledge of such counsel, result in the acceleration of any obligation or the
imposition of any penalty, under any agreement, judgment, or decree to which an
Acquiring Fund is a party or by which it is bound.
(g) The descriptions in the Prospectus/Proxy Statement of
statutes, legal and governmental proceedings and material contracts, if any
(only insofar as they relate to an Acquiring Fund), are accurate and fairly
present the information required to be shown.
(h) Such counsel does not know of any legal or governmental
proceedings (only insofar as they relate to an Acquiring Fund) existing on or
before the effective date of the Registration Statement or the Closing Date
which are required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement which are not described or filed as
required.
(i) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to an Acquiring Fund or
any of its properties or assets. The Acquiring Funds are
not 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 the
Acquiring Funds' business, other than as previously disclosed in the
Registration Statement.
Such counsel shall also state that they have participated in conferences
with officers and other representatives of each Acquiring Fund at which the
contents of the Prospectus/Proxy Statement and related matters were discussed.
Although such counsel are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Prospectus/Proxy Statement (except to the extent indicated in their opinion in
paragraph (g), above), on the basis of the foregoing (relying as to materiality
to a large extent upon the opinions of the Trust's officers and other
representatives of each Acquiring Fund), no facts have come to their attention
that lead them to believe that the Prospectus/Proxy Statement as of its date, as
of the date of each Selling Fund Shareholders' meeting, and as of the Closing
Date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated regarding an Acquiring Fund or necessary, in
the light of the circumstances under which they were made, to make the such
statements regarding an Acquiring Fund not misleading. Such opinion may state
that such counsel does not express any opinion or belief as to the financial
statements or any financial or statistical data, or as to the information
relating to each Selling Fund, contained in the Prospectus/Proxy Statement or
the Registration Statement, and that such opinion is solely for the benefit of
ESC Strategic Funds and each Selling Fund. Such opinion shall contain such other
assumptions and limitations as shall be in the opinion of Xxxxxx, Xxxxx &
Bockius LLP appropriate to render the opinions expressed therein.
In this paragraph 6.2, references to the Prospectus/Proxy Statement
include and relate to only the text of such Prospectus/Proxy Statement and not
to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
6.3 As of the Closing Date with respect to the Reorganization of the
Selling Fund, there shall have been no material change in the investment
objective, policies and restrictions nor any material change in the investment
management fees, fee levels payable pursuant to the 12b-1 plan of distribution,
other fees payable for services provided to each Acquiring Fund, fee waiver or
expense reimbursement undertakings, or sales loads of the Acquiring Funds from
those fee amounts, undertakings and sales load amounts of the Acquiring Fund
described in the Prospectus/Proxy Statement.
6.4 For the period beginning at the Closing Date and ending not less
than six years thereafter, the Trust, its successor or assigns shall provide, or
cause to be provided, liability coverage at least as comparable to the liability
coverage currently applicable to both former and current Directors and officers
of ESC Strategic Funds, covering the actions of such Directors and officers of
ESC Strategic Funds for the period they served as such.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND
The obligations of each Acquiring Fund to consummate the transactions
provided for herein shall be subject, at their election, to the performance by
each cooresponding Selling Fund of all the obligations to be performed by the
Selling Fund pursuant to this Agreement, on or before the applicable Closing
Date and, in addition, shall be subject to the following conditions:
7.1 All representations, covenants, and warranties of a Selling Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the Closing Date, with the same force and effect as if made on and as of
such Closing Date. Each Selling Fund shall have delivered to its respective
Acquiring Funds on such Closing Date a certificate executed in the Selling
Fund's name by ESC Strategic Funds' President or Vice President and the
Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.
7.2 The Selling Fund shall have delivered to its respective Acquiring
Fund a statement of the Selling Fund's assets and liabilities, together with a
list of the selling Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Dates, certified by the Treasurer of ESC Strategic Funds.
7.3 The Acquiring Fund shall have received on the applicable Closing
Date an opinion of Dechert Price & Xxxxxx, counsel to each Selling Fund, dated
as of such Closing Date in a form satisfactory to the Acquiring Fund covering
the following points:
(a) The Selling Fund is a separate investment series of a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland and each has the power to own all of its properties and
assets and to carry on its business as presently conducted.
(b) The Selling Fund is a separate investment series of a
Maryland corporation registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission is in
full force and effect.
(c) This Agreement has been duly authorized, executed and
delivered by ESC Strategic Funds on behalf of each Selling Fund and, assuming
due authorization, execution and delivery of this Agreement by the Trust on
behalf of each Acquiring Fund is a valid and binding obligation of the Selling
Fund enforceable against the Selling Fund in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and to general
equity principles.
(d) To the knowledge of such counsel, except for the filing of
Articles of Transfer pursuant to Maryland law, no consent, approval,
authorization or order of any court or
governmental authority of the United States or the State of Maryland is required
for consummation by a Selling Fund of the transactions contemplated herein,
except as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act,
and as may be required under state securities laws.
(e) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not result in a
violation of ESC Strategic Funds' Articles of Incorporation or By-laws, or any
provision of any material agreement, indenture, instrument, contract, lease or
other undertaking (in each case known to such counsel) to which a Selling Fund
is a party or by which it or any of its properties may be bound or, to the
knowledge of such counsel, result in the acceleration of any obligation or the
imposition of any penalty, under any agreement, judgment, or decree to which the
Selling Fund is a party or by which it is bound.
(f) The descriptions in the Prospectus/Proxy Statement of
statutes, legal and government proceedings and material contracts, if any (only
insofar as they relate to a Selling Fund), are accurate and fairly present the
information required to be shown.
(g) Such counsel does not know of any legal or governmental
proceedings (insofar as they relate to a Selling Fund) existing on or before the
date of mailing of the Prospectus/Proxy Statement and the Closing Date, which
are required to be described in the Prospectus/Proxy Statement or to be filed as
an exhibit to the Registration Statement which are not described or filed as
required.
(h) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to a Selling Fund or any
of its respective properties or assets. To the knowledge of such counsel, no
Selling 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 the Selling Fund's business other than as previously disclosed in the
Prospectus/Proxy Statement.
(i) Assuming that a consideration of not less than the net
asset value of Selling Fund Shares has been paid, and assuming that such shares
were issued in accordance with the terms of each Selling Fund's registration
statement, or any amendment thereto, in effect at the time of such issuance, all
issued and outstanding shares of the Selling Fund are legally issued and fully
paid and non-assessable.
Such counsel shall also state that they have participated in conferences
with officers and other representatives of each Selling Fund at which the
contents of the Prospectus/Proxy Statement and related matters were discussed.
Although such counsel are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Prospectus/Proxy Statement (except to the extent indicated in their opinion at
paragraph (f), above), on the basis of the foregoing (relying as to materiality
to a large extent
upon the opinions of ESC Strategic Funds' officers and other representatives of
each Selling Fund), no facts have come to their attention that lead them to
believe that the Prospectus/Proxy Statement as of its date, as of the date of
each Selling Fund Shareholders' meeting, and as of the Closing Date, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein regarding a Selling Fund or necessary, in the
light of the circumstances under which they were made, to make the statements
therein regarding the Selling Fund not misleading. Such opinion may state that
such counsel do not express any opinion or belief as to the financial statements
or any financial or statistical data, or as to the information relating to each
Acquiring Fund contained in the Prospectus/Proxy Statement or Registration
Statement, and that such opinion is solely for the benefit of the Trust and each
Acquiring Fund. Such opinion shall contain such other assumptions and
limitations as shall be in the opinion of Dechert Price & Xxxxxx appropriate to
render the opinions expressed therein, and shall indicate, with respect to
matters of Maryland law, that such opinions are based either upon the review of
published statutes, cases and rules and regulations of the State of Maryland or
upon an opinion of Maryland counsel.
In this paragraph 7.3, references to the Prospectus/Proxy Statement
include and relate to only the text of such Prospectus/Proxy Statement and not
to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH
ACQUIRING FUND AND SELLING FUND
If any of the conditions set forth below do not exist on or before the
applicable Closing Date with respect to each Selling Fund or its respective
Acquiring Fund, the other party to this Agreement shall, at its option, not be
required to consummate the transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with
respect to each Selling Fund, shall have been approved by the requisite vote of
the holders of the outstanding shares of the respective Selling Fund in
accordance with Maryland law and the provisions of ESC Strategic Funds' Articles
of Incorporation and By-Laws. Certified copies of the resolutions evidencing
such approval shall have been delivered to the respective Acquiring Fund.
Notwithstanding anything herein to the contrary, neither an Acquiring Fund nor a
Selling Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On each Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall 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.
8.3 All required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of State Blue Sky securities authorities,
including any necessary "no-action" positions and exemptive orders from such
federal and state authorities) to permit consummation of the transactions
contemplated herein 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 an Acquiring Fund or a Selling Fund,
provided that either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the
1933 Act, and no stop orders suspending the effectiveness thereof shall have
been issued. To the best knowledge of the parties to this Agreement, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
8.5 Each Selling Fund shall have declared and paid a dividend or
dividends which, together with all previous such dividends, shall have the
effect of distributing to its shareholders all of the Selling Fund's net
investment company taxable income for all taxable periods ending on or prior to
the applicable Closing Dates (computed without regard to any deduction for
dividends paid) and all of its net capital gains realized in all taxable periods
ending on or prior to such Closing Dates (after reduction for any capital loss
carry forward).
8.6 The parties shall have received a favorable opinion of Xxxxxx,
Xxxxx & Bockius LLP addressed to each Acquiring Fund and Selling Fund
substantially to the effect that for federal income tax purposes with respect to
each Selling Fund:
(a) The transfer of all of the Selling Fund's assets in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of
the identified liabilities of the Selling Fund (followed by the distribution of
Acquiring Fund Shares to the Selling Fund shareholders in dissolution and
liquidation of the Selling Fund) will constitute a "reorganization" within the
meaning of Section 368(a) of the Code and the Acquiring Fund and the Selling
Fund will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code.
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange for
Acquiring Funds Share and the assumption by the Acquiring Fund of the identified
liabilities of the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund upon
the transfer of the Selling Fund's assets to the Acquiring Fund in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of the identified
liabilities of the Selling Fund or upon the distribution (whether actual or
constructive) of Acquiring Fund Shares to Selling Fund Shareholders in exchange
for such shareholders' shares of the Selling Fund.
(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for Acquiring Fund
Shares in the Reorganization.
(e) The aggregate tax basis for Acquiring Fund Shares received
by each Selling Fund Shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Selling Fund shares exchanged therefor by such
shareholder. The holding period of Acquiring Funds Share to be received by each
Selling Fund Shareholder will include the period during which the Selling Fund
shares exchanged therefore were held by such shareholder, provided the Selling
Fund shares are held as capital assets at the time of the Reorganization.
(f) The tax basis of the Selling Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately prior to the Reorganization. The holding period of the assets
of the Selling Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Selling Fund.
Such opinion shall be based on customary assumptions and such
representations as Xxxxxx, Xxxxx & Xxxxxxx LLP may reasonably request, and each
Selling Fund and Acquiring Fund will cooperate to make and certify the accuracy
of such representations. Notwithstanding anything herein to the contrary,
neither an Acquiring Fund nor a Selling Fund may waive the conditions set forth
in this paragraph 8.6.
ARTICLE IX
EXPENSES
9.1 Except as otherwise provided for herein, expenses related to the
Reorganization that are incurred by the Selling Funds will be paid as follows:
The Selling Funds will pay a portion of the Reorganization expenses up to the
amount each Selling Fund would have paid during the fiscal year ending March 31,
2000 under the expense caps that are currently in place for each Selling Fund.
All remaining expenses will be borne by the investment adviser to the Selling
Funds, SunTrust Equitable Securities, a wholly-owned subsidiary of SunTrust
Banks, Inc. ("SunTrust") and/or SunTrust. Reorganization expenses include,
without limitation: (a) expenses associated with the preparation and filing of
the Registration Statement/Proxy Statement on Form N-14 under the 1933 Act
covering Acquiring Fund Shares to be issued pursuant to the provisions of this
Agreement; (b) postage; (c) printing; (d) accounting fees; (e) legal fees
incurred by each Selling Funds; and (f) solicitation costs of the transaction.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust on behalf of each Acquiring Fund and ESC Strategic Funds
on behalf of each Selling Fund agrees that neither party has made to the other
party any representation,
warranty and/or covenant not set forth herein, and that this Agreement
constitutes the entire agreement between the parties.
10.2 Except as specified in the next sentence set forth in this section
10.2, the representation, warranties, and covenants contained in this Agreement
or in any document delivered pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after each Closing Date, and the obligations of
each of the Acquiring Funds in sections 5.9 and 6.4, shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Trust and ESC Strategic Funds. In addition, either the Trust or ESC Strategic
Funds may at their option terminate this Agreement at or prior to either Closing
Date due to:
(a) a breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to each Closing Date, if
not cured within 30 days;
(b) a condition herein expressed to be precedent to the
obligations of the terminating party that has not been met and it reasonably
appears that it will not or cannot be met; or
(c) a determination by the parties' Board of Directors or Board
of Trustees, as appropriate, determine that the consummation of the transactions
contemplated herein are not in the best interest of ESC Strategic Funds or the
Trust, respectively, and give notice to the other party hereto.
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either an
Acquiring Fund, a Selling Fund, the Trust, ESC Strategic Funds, the respective
Trustees, Directors or officers, to the other party or its Trustees, Directors
or officers, but each shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement as provided in paragraph 9.1.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
each Selling Funds and the Acquiring Fund; provided, however, that following the
meetings of the Selling Fund
Shareholders called by a Selling Fund pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of Acquiring Fund Shares to be issued to the Selling Fund
Shareholders under this Agreement to the detriment of such shareholders without
their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, without giving effect to the
conflicts of laws provisions thereof; provided, however, that the due
authorization, execution and delivery of this Agreement, in the case of each
Selling Fund, shall be governed and construed in accordance with the laws of the
State of Maryland, without giving effect to the conflicts of laws provisions
thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
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.
13.5 It is expressly agreed that the obligations of each Acquiring Fund
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Trust personally, but shall bind only the
trust property of the Acquiring Fund, as provided in the Declaration of Trust of
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees of the Trust on behalf of each Acquiring Fund and signed by
authorized officers of the Trust, acting as such. Such authorization by such
Trustees nor such execution and delivery by such officers shall not be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of each Acquiring Fund
as provided in the Trust's Declaration of Trust.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
STI CLASSIC FUNDS
By: /s/
------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
ESC STRATEGIC FUNDS, INC.
By: /s/
------------------
Name: R. Xxxxxxx Xxxxx
Title: Vice President
