Exhibit (h)(14)
AGREEMENT AND PLAN OF
REORGANIZATION, CONVERSION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, CONVERSION AND TERMINATION is
made as of the 8th day of February, 2000, by and between Northern Funds, a
Massachusetts business trust (the "Registrant"), on behalf of each of its series
(each a "Fund" and collectively the "Funds"), and Northern Funds (the "Trust"),
a Delaware business trust.
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended (the "Code"), and is intended to effect the reorganization (a
"Reorganization") of each Fund as a new series of the Trust (each a "Successor
Fund" and collectively the "Successor Funds"). Each Reorganization will include
the transfer of all of the assets of a Fund to a corresponding Successor Fund of
the Trust solely in exchange for (1) the assumption by the Successor Fund of all
liabilities of the Fund and (2) the issuance by the Trust to the Fund of shares
of beneficial interest (herein referred to as "Shares") of the Successor Fund.
The aggregate number of Shares of each subseries (hereafter "class") of the
Successor Fund (the "Successor Fund Shares") issued to the Fund will be equal to
the number of shares of beneficial interest ("Shares") of the corresponding Fund
class outstanding immediately before the Reorganization. These transactions
will be promptly followed by a pro rata distribution by each Fund of the
Successor Fund Shares it receives in the exchange described above to the holders
of corresponding Fund Shares in exchange for those Fund Shares, in liquidation
of each Fund, all upon the terms and conditions hereinafter set forth in this
Agreement.
In consideration of the promises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows.
1. Transfer of Assets of the Funds in Exchange for Assumption of Liabilities
and Issuance of Successor Fund Shares
1.1 Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, each Fund agrees to
transfer all of its assets (as described in paragraph 1.2) and to assign and
transfer all of its liabilities to a corresponding Successor Fund organized
solely for the purpose of acquiring all of the assets and assuming all of the
liabilities of that Fund. The Trust, on behalf of each Successor Fund, agrees
that in exchange for all of the assets of the corresponding Fund: (1) the
Successor Fund shall assume all of the liabilities of such Fund, whether
contingent or otherwise, then existing including, without limitation, all fees
and expenses incurred in connection with the transactions contemplated hereby
and (2) the Trust shall issue Successor Fund Shares to the Fund. The number of
Successor Fund Shares of each class to be issued by the Trust on behalf of each
Successor Fund will be identical to the number of Shares of the corresponding
class and Fund outstanding on the Closing Date provided for in paragraph 3.1.
Such transactions shall take place at the Closing provided for in paragraph 3.1.
1.2 The assets of each Fund to be acquired by the corresponding Successor
Fund shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), any tax operating
losses, any claims or rights of action or rights to register Shares under
applicable securities laws, any books or records of the Fund and other property
owned by the Fund and any deferred or prepaid expenses shown as assets on the
books of the Fund on the Closing Date provided for in paragraph 3.1.
1.3 Immediately after delivery to each Fund of corresponding Successor
Fund Shares, a duly authorized officer of Registrant shall cause each Fund, as
the sole Shareholder of the corresponding Successor Fund, to (i) elect the
Trustees of the Trust; (ii) ratify the selection of the Trust's independent
auditors; (iii) approve an investment advisory agreement for the Successor Fund
in substantially the same form as the investment advisory agreement in effect
with respect to the Fund immediately prior to the Closing of the Reorganization,
and (iv) adopt investment objectives, investment policies and investment
restrictions which are substantially identical to those of the Fund immediately
prior to the Closing of the Reorganization, including any changes thereto
approved by the Shareholders of the Fund at the meeting of Shareholders
scheduled for March 21, 2000 (the "Shareholder Meeting").
1.4 On the Closing Date each Fund will distribute in liquidation the
Successor Fund Shares of each class to each Shareholder of record, determined as
of the close of business on the Closing Date, of the corresponding class of the
Fund pro rata in proportion to such Shareholder's beneficial interest in that
class and in exchange for that Shareholder's Shares. Such distribution will be
accomplished by the transfer of the Successor Fund Shares then credited to the
account of each Fund on the Share records of the Trust to open accounts on those
records in the names of such Fund Shareholders and representing the respective
pro rata number of each class of the Successor Fund Shares received from the
Successor Funds which is due to such Fund Shareholders. Fractional Successor
Fund Shares shall be rounded to the third place after the decimal point.
1.5 Ownership of the Successor Fund Shares by each Successor Fund
Shareholder shall be recorded separately on the books of The Northern Trust
Company ("Northern Trust"), as the Trust's transfer agent.
1.6 Any transfer taxes payable upon the issuance of Successor Fund Shares
in a name other than the registered holder of the Fund Shares on the books of
any Fund shall be paid by the person to whom such Successor Fund Shares are to
be distributed as a condition of such transfer.
1.7 The legal existence of each Fund and the Registrant shall be
terminated as promptly as reasonably practicable after the Closing Date. After
the Closing Date, each Fund and the Registrant shall not conduct any business
except in connection with its liquidation and termination.
2. Valuation
2.1 The value of each Fund's assets to be acquired by the Trust on behalf
of the corresponding Successor Fund hereunder shall be the net asset value
computed as of the
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valuation time provided in the Fund's prospectus(es) on the Closing Date using
the valuation procedures set forth in the Fund's current prospectus(es) and
statement of additional information.
2.2 The value of full and fractional Successor Fund Shares of each class
to be issued in exchange for each Fund's assets shall be equal to the value of
the net assets of the corresponding class of such Fund on the Closing Date, and
the number of such Successor Fund Shares of each class shall equal the number of
full and fractional Fund Shares outstanding on the Closing Date.
2.3 All computations of value shall be made by Northern Trust (the
"Custodian"), as custodian for the Funds and the Trust.
3. Closing and Closing Date
3.1 The transfer of each Fund's assets in exchange for the assumption by
the corresponding Successor Fund of the Fund's liabilities and the issuance of
Successor Fund Shares to the Fund, as described above, together with related
acts necessary to consummate such acts (the "Closing"), shall occur at such
place or on such date ("Closing Date") as the parties may agree in writing.
3.2 At the Closing each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.
4. Representations and Warranties
4.1 Registrant represents and warrants, on behalf of itself and each Fund,
as follows:
4.1A. At the Closing Date, Registrant, on behalf of the Funds, will
have good and marketable title to the assets to be transferred to the
Trust, on behalf of the Successor Funds, pursuant to paragraph 1.1, and
will have full right, power and authority to sell, assign, transfer and
deliver such assets hereunder. Upon delivery and in payment for such
assets, the Trust on behalf of the Successor Funds will acquire good and
marketable title thereto subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the Securities
Act of 1933, as amended (the "1933 Act");
4.1B. The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of Registrant. This Agreement constitutes a valid and binding
obligation of Registrant and each Fund enforceable in accordance with its
terms, subject to the approval of each Fund's Shareholders;
4.1C. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Registrant,
on behalf of the Funds, of the transactions contemplated herein, except
such as shall have been obtained prior to the Closing Date; and
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4.1D. The Registrant will file with the Securities and Exchange
Commission ("SEC") proxy materials (the "Proxy Statement") complying in all
material respects with the requirements of the Securities Exchange Act of
1934, as amended, the 1940 Act, and applicable rules and regulations
thereunder, relating to a meeting of its Shareholders to be called to
consider and act upon the transactions contemplated herein.
4.2 The Trust represents and warrants, on behalf of itself and each
Successor Fund, as follows:
4.2A. Successor Fund Shares issued in connection with the
transactions contemplated herein will be duly and validly issued and
outstanding and fully paid and non-assessable by the Trust;
4.2B. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the Trust, and
this Agreement constitutes a valid and binding obligation of the Trust and
each Successor Fund enforceable against the Trust and each Successor Fund
in accordance with its terms;
4.2C. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Trust or the
Successor Funds of the transactions contemplated herein, except such as
shall have been obtained prior to the Closing Date; and
4.2D. The Trust, on behalf of the Successor Funds, shall use all
reasonable efforts to obtain the approvals and authorizations required by
the 1933 Act, the 1940 Act and such state securities laws as it may deem
appropriate in order to operate after the Closing Date.
5. Conditions Precedent to Obligations of Registrant, the Funds, the Trust and
the Successor Funds
The obligations of Registrant, the Funds, the Trust and the Successor Funds
are each subject to the conditions that on or before the Closing Date:
5.1 This Agreement and the transactions contemplated herein shall have
been approved by the Trustees of the Registrant and the Trust and by the
requisite vote of the Registrant's Shareholders;
5.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the SEC and of state securities authorities) deemed necessary by the Trust or
Registrant to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Trust, Funds, Registrant or Successor
Funds, provided that either party hereto may waive any of such conditions for
itself or its respective series;
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5.3 The Registrant and the Trust shall have received on or before the
Closing Date an opinion of Drinker Xxxxxx & Xxxxx LLP satisfactory to them,
substantially to the effect that for federal income tax purposes:
5.3A. The transfer of all of the assets and liabilities of each Fund
to its corresponding Successor Fund solely in exchange for the issuance of
Successor Fund Shares to the Fund, followed by the distribution in
liquidation by the Fund of such Successor Fund Shares to the Fund
Shareholders in exchange for their Fund Shares and the termination of the
Fund, will constitute a reorganization within the meaning of Section
368(a)(1)(F) of the Code, and the Fund and the Successor Fund will each be
"a party to a reorganization" within the meaning of Section 368(b) of the
Code;
5.3B. No gain or loss will be recognized by any Fund upon (i) the
transfer of all of its assets to its corresponding Successor Fund solely in
exchange for the issuance of Successor Fund Shares to the Fund and the
assumption by the Successor Fund of the Fund's liabilities and (ii) the
distribution by the Fund of such Successor Fund Shares to the Fund
Shareholders;
5.3C. No gain or loss will be recognized by any Successor Fund upon
its receipt of all of the corresponding Fund's assets solely in exchange
for the issuance of the Successor Fund Shares to the Fund and the
assumption by the Successor Fund of all of the liabilities of the Fund;
5.3D. The tax basis of the assets acquired by a Successor Fund from
its corresponding Fund will be, in each instance, the same as the tax basis
of those assets in the Fund's hands immediately prior to the transfer;
5.3E. The tax holding period of the assets of each Fund in the hands
of its corresponding Successor Fund will, in each instance, include the
Fund's tax holding period for those assets;
5.3F. Each Fund's Shareholders will not recognize gain or loss upon
the exchange of all of their Shares of the Fund solely for Successor Fund
Shares as part of the transaction;
5.3G. The tax basis of the Successor Fund Shares received by Fund
Shareholders in the transaction will be, for each Shareholder, the same as
the tax basis of the Fund Shares surrendered in exchange therefor; and
5.3H. The tax holding period of the Successor Fund Shares received by
Fund Shareholders will include, for each Shareholder, the tax holding
period for the Fund Shares surrendered in exchange therefor, provided that
such Fund Shares were held as capital assets on the date of the exchange.
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The Registrant and the Trust each agree to make and provide representations
with respect to the Funds and the Successor Funds, respectively, that are
reasonably necessary to enable Drinker Xxxxxx & Xxxxx LLP to deliver an opinion
substantially as set forth in this paragraph 5.3, which opinion may address such
other federal income tax consequences, if any, that Drinker Xxxxxx & Xxxxx LLP
believes to be material to the Reorganization.
6. Brokerage Fees
The Trust, on behalf of the Successor Funds, and Registrant, on behalf of
the Funds, each represent and warrant to the other that there are no broker's or
finder's fees payable in connection with the transactions contemplated hereby.
7. Termination
This Agreement may be terminated by the mutual agreement of the Trust and
Registrant and the parties may abandon the reorganization contemplated hereby,
notwithstanding approval thereof by the Shareholders of the Registrant, at any
time prior to Closing, if circumstances should develop that, in the parties
judgment, make proceeding with the Agreement inadvisable.
8. Amendment
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties; provided, however, that
following the approval of this Agreement by any Fund's Shareholders, no such
amendment may have the effect of changing the provisions for determining the
number of Successor Fund Shares to be paid to that Fund's Shareholders under
this Agreement to the detriment of such Fund Shareholders without their further
approval. Without limiting the foregoing, in the event Shareholder approval of
this Agreement and the transactions contemplated herein is obtained with respect
to one or more Funds but not with respect to other Funds, with the result that
the transactions contemplated by this Agreement may be consummated with respect
to one or more, but not all, of the Funds, the Board of Trustees of the
Registrant may, in the exercise of its sole and unilateral discretion, determine
to either abandon this Agreement with respect to all of the Funds or direct that
the transactions described herein be consummated to the degree the Board deems
advisable and to the degree such transactions may be lawfully effected.
9. Headings; Counterparts; Governing Law; Assignment; Survival; Waiver
9.1 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.
9.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
9.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
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9.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. 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.
9.5 All persons dealing with the Trust, the Funds, Registrant or the
Successor Funds must look solely to the property of the Trust, the Funds,
Registrant or the Successor Funds, respectively, for the enforcement of any
claims against the Trust, the Funds, Registrant or the Successor Funds, as
neither the Trustees, officers, agents nor Shareholders of the Trust or
Registrant assume any personal liability for obligations entered into on behalf
of the Trust or Registrant, respectively. No series of Registrant or the Trust
shall be responsible for any obligations assumed by or on behalf of any other
series of Registrant or the Trust under this Agreement.
9.6 The representations, warranties, covenants and agreements of the
parties contained herein shall not survive the Closing Date, except for the
provisions of Section 1.7.
9.7 The Trust or the Registrant, after consultation with their respective
counsel and by consent of their respective Boards of Trustees, Executive
Committees or any officer, may waive any condition to their respective
obligations hereunder if, in their or such officer's judgment, such waiver will
not have a material adverse effect on the interests of the Shareholders of the
Trust and the Registrant.
10. Notices
Any notice, report statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Registrant or the Trust,
each at 00 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Secretary.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer.
NORTHERN FUNDS, a Massachusetts NORTHERN FUNDS, a Delaware
business trust business trust
By: /s/ Jylanne X. Xxxxx By: /s/ Jylanne X. Xxxxx
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