AGREEMENT AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION (this “Agreement”)
is
made as of this 26th of September, 2005, by The Purisima Funds
(“Purisima”),
a
Delaware statutory trust, for itself and on behalf of the Purisima Pure American
Fund, and the Purisima Pure Foreign Fund (together, the “Acquired
Funds”),
each
a series of Purisima, and by Purisima, for itself and on behalf of the Purisima
Total Return Fund (the “Acquiring
Fund”),
a
series of Purisima.
WHEREAS,
Purisima desires that all of the assets of the Acquired Funds be transferred
to
the Acquiring Fund, and that the Acquiring Fund assume the Stated Liabilities
(as defined in Section
1.3)
of the
Acquired Funds, in exchange for shares of the Acquiring Fund (collectively,
“Acquiring
Fund Shares”),
and
that these Acquiring Fund Shares be distributed immediately after the Closing
(as defined in Section
1.1),
by
each of the Acquired Funds to their shareholders in liquidation of the Acquired
Funds, all pursuant to the terms and conditions set forth in this
Agreement;
WHEREAS,
it is
intended that this Agreement be adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended (the “Code”).
NOW,
THEREFORE,
in
consideration for the promises and the covenants and agreements hereinafter
set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, it is hereby agreed as
follows:
1. REORGANIZATION
OF
ACQUIRED FUND
1.1
Transfer,
Payment and Distribution.
Subject
to the terms and conditions herein set forth, and on the basis of the
representations and warranties contained herein, the each of the Acquired
Funds
shall assign, deliver and otherwise transfer all of their assets as set forth
in
Section
1.2
(the
“Fund
Assets”)
to the
Acquiring Fund, and the Acquiring Fund shall assume the Stated Liabilities
(as
defined in Section
1.3)
and
deliver to each of the Acquired Funds that number of full and fractional
Acquiring Fund Shares determined by dividing (a) the net asset value of each
of
the Fund Assets net of the Stated Liabilities (“Net
Asset Value”),
computed in the manner and as of the time and date set forth in Section
2.1,
by (b)
the net asset value of one Acquiring Fund Share, computed in the manner and
as
of the time and date set forth in Section
2.2.
Such
transfer, assumption and delivery shall take place at the closing provided
for
in Section
3.1
(hereinafter sometimes referred to as the “Closing”).
Immediately following the Closing, the Acquired Funds shall distribute the
Acquiring Fund Shares to the shareholders of the Pure American Fund and the
Pure
Foreign Fund, respectively, in liquidation
of the Acquired Funds as provided in Section
1.4
hereof.
Such transactions are hereinafter sometimes collectively referred to as the
“Reorganization.”
1.2
Fund Assets.
(a)
With respect to the Acquired Funds, the Fund Assets shall consist of all
property and assets of any nature whatsoever, including, without limitation,
all
cash, cash equivalents, securities, instruments, claims and receivables
(including dividend and interest receivables) owned by the Acquired Funds,
and
any prepaid expenses shown as an asset on the Acquired Funds’ books on the
Closing Date (as defined in Section
3.1).
(b)
Before
the Closing Date, each of the Acquired Funds will provide the Acquiring
Fund
with a schedule of its assets and its known liabilities, and the Acquiring
Fund
will provide the Acquired Funds with a copy of the current investment objective
and policies applicable to the Acquiring Fund. The Acquired Funds reserve
the
right to sell or otherwise dispose of any of the securities or other assets
shown on the list of the Acquired Fund’s assets before the Closing Date but will
not, without the prior approval of the Acquiring Fund, acquire any additional
securities other than securities which the Acquiring Fund is permitted
to
purchase in accordance with its stated investment objective and policies.
Before
the Closing Date, the Acquiring Fund will advise the Acquired Funds of
any
investments of the Acquired Fund shown on such schedule which the Acquiring
Fund
would not be permitted to hold, pursuant to its stated investment objective
and
policies or otherwise. If either of the Acquired Funds holds any investments
that the Acquiring Fund would not be permitted to hold under its stated
investment objective or policies, the Acquired Fund holding the impermissible
investment, if requested by the Acquiring Fund, will dispose of those securities
prior to the Closing Date to the extent practicable. In addition, if it
is
determined that the portfolios of the Acquired Fund and the Acquiring Fund,
when
aggregated, would contain investments exceeding certain percentage limitations
to which the Acquiring Fund is or will be subject with respect to such
investments, the Acquired Fund, if requested by the Acquiring Fund, will
dispose
of and/or reinvest a sufficient amount of such investments as may be necessary
to avoid violating such limitations as of the Closing
Date.
1.3
Stated Liabilities.
Each of
the Acquired Funds will endeavor to discharge all of its known liabilities
and
obligations prior to the Closing Date. The Acquiring Fund will assume all
liabilities and obligations reflected on an unaudited statement of assets
and liabilities
of the each of the Acquired Funds prepared by the administrator of Purisima
as
of the Applicable Valuation Date (as defined in Section
2.1),
in
accordance with generally accepted accounting principles consistently applied
from the prior audited period (the “Stated
Liabilities”).
The
Acquiring Fund shall assume only the Stated Liabilities of the Acquired Funds,
and no other liabilities or obligations, whether absolute or contingent,
known
or unknown, accrued or unaccrued.
2
1.4
Distribution.
Immediately following the Closing, the Acquired Fund will distribute the
Acquiring Fund Shares received by the Acquired Fund pursuant to Section
1.1
pro rata
to its shareholders of record determined as of the close of business on
the
Closing Date (the “Acquired
Fund Investors”)
in
complete liquidation of the Acquired Fund. Such distribution will be
accomplished by an instruction, signed by an appropriate officer of Purisima,
to
transfer the Acquiring Fund Shares then credited to the each of the Acquired
Fund’s account on the books of the Acquiring Fund to open accounts on the books
of the Acquiring Fund established and maintained by the Acquiring Fund’s
transfer agent in the names of record of the Acquired Fund Investors and
representing the pro rata number of Acquiring Fund Shares due such Acquired
Fund
Investor based on the Net Asset Value per share of the Acquired Fund, computed
in the manner and as of the time and date set forth in Section
2.1.
All
issued and outstanding shares of each of the Acquired Funds will be cancelled
simultaneously therewith on the Acquired Fund’s books, and any outstanding share
certificates representing interests in the Acquired Fund will represent
only the
right to receive such number of Acquiring Fund Shares after the Closing
as
determined in accordance with Section
1.l.
1.5
Change
of Registration of Shares.
If any
request shall be made for a change of the registration of the Acquiring
Fund
Shares to another person from the account of the stockholder in which name
the
shares are registered in the records of either of the Acquired Funds, it
shall
be a condition of such registration of shares that there be furnished to
the
Acquiring Fund an instrument of transfer properly endorsed, accompanied
by
appropriate signature guarantees and otherwise in proper form for transfer
and
that the person requesting such registration shall pay to the Acquiring
Fund any
transfer or other taxes required by reason of such registration or establish
to
the reasonable satisfaction of the Acquiring Fund that such tax has been
paid or
is not applicable.
1.6
Termination
of Acquired Fund.
Following the transfer of the Fund Assets by each of the Acquired Funds
to the
Acquiring Fund, the assumption of the Stated Liabilities by the Acquiring
Fund,
and the distribution by each of the Acquired Funds of the Acquiring Fund
Shares
received by it pursuant to Section
1.4,
Purisima shall terminate the qualification, classification and registration
of
the Acquired Fund with all appropriate federal and state agencies. Any
reporting or other responsibility of Purisima is and shall remain the
responsibility of Purisima up to and including the date on which the Acquired
Fund is terminated and deregistered, subject to any reporting or other
obligations described in Section
4.7.
3
2. VALUATION
2.1
Net Asset Value of Fund Assets.
The Net
Asset Value of the Fund Assets shall be the value of those assets, net of
the
Stated Liabilities, computed pursuant to the valuation procedures set forth
in
the Acquiring Fund’s then-current Prospectus and Statement of Additional
Information on the business day immediately preceding the Closing Date, or
at
such time on such earlier or later date as may mutually be agreed upon in
writing among the parties hereto (such time and date being herein called
the
“Applicable
Valuation Date”).
2.2
Net Asset Value of Fund Assets.
The net
asset value of each Acquiring Fund Share shall be the net asset value per
share
computed on the Applicable Valuation Date, using the market valuation procedures
set forth in the Acquiring Fund’s then-current Prospectus and Statement of
Additional Information.
2.3
Valuations
by Administrator.
All
computations of value contemplated by this Article
2
shall be
made by the Acquiring Fund’s administrator in accordance with its regular
practice as pricing agent. The Acquiring Fund shall cause its administrator
to
deliver a copy of its valuation report to Purisima and to each of the Acquired
Funds at the Closing.
3. CLOSING(S)
AND CLOSING DATE
3.1
Closing
Date.
The
Closing for the Reorganization shall occur on November 18, 2005, and/or on
such
other date(s) as may be mutually agreed upon in writing by the parties hereto
(each, a “Closing
Date”).
The
Closing(s) shall be held at the offices of Paul, Hastings, Xxxxxxxx & Xxxxxx
LLP, 00 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 or at such other location
as is mutually agreeable to the parties hereto. All acts taking place at
the
Closing(s) shall be deemed to take place simultaneously as of 5 p.m., local
time
on the Closing Date unless otherwise provided.
3.2
Custodian
Certificate.
The
Acquiring Fund’s custodian shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Fund Assets of each of the Acquired
Funds have been delivered in proper form to the Acquiring Fund on the Closing
Date, and (b) all necessary taxes including
all applicable federal and state stock transfer stamps, if any, have been
paid,
or provision for payment shall have been made, by each of the Acquired Funds
in
conjunction with the delivery of portfolio securities.
3.3
Postponement
of Applicable Valuation Date.
Notwithstanding anything herein to the contrary, if on the Applicable Valuation
Date (a) the New York Stock Exchange shall be closed to trading or trading
thereon shall be restricted, or (b) trading or the reporting of trading on
such
exchange or elsewhere shall be disrupted so that, in the judgment of Purisima,
accurate appraisal of the value of the net assets of the Acquiring Fund or
the
Acquired Funds is impracticable, the Applicable Valuation Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed without restriction or disruption and reporting shall
have
been restored.
4
4. COVENANTS
WITH RESPECT TO THE ACQUIRING FUND AND THE ACQUIRED FUND
4.1
Shareholders Meeting.
With
respect to the Acquired Funds, Purisima has called or will call a meeting
of
shareholders of the Acquired Funds to consider and act upon this Agreement
and
to take all other actions reasonably necessary to obtain the approval of
the
transactions contemplated herein, including approval for each of the Acquired
Fund’s liquidating distribution of the Acquiring Fund Shares contemplated
hereby, and for Purisima to terminate each of the Acquired Fund’s qualification,
classification and registration if requisite approvals are obtained with
respect
to the Acquired Fund. Purisima, on behalf of the Acquired Funds, shall prepare
the notice of meeting, form of proxy and proxy statement (collectively, the
“Proxy
Materials”)
to be
used in connection with that meeting.
4.2
Access to Information.
Purisima, on behalf of the Acquired Funds, will assist the Acquiring Fund
in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of shares of the Acquired Funds.
4.3
Further
Assurances.
Subject
to the provisions hereof, Purisima, on its own behalf and on behalf of the
Acquired Funds, and Purisima, on its own behalf and on behalf of the Acquiring
Fund, will take, or cause to be taken, all actions, and do, or cause to be
done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated herein.
4.4
Statement
of Assets and Liabilities.
Purisima, on behalf of the Acquired Funds, shall furnish to the Acquiring
Fund
on the Closing Date, a final statement
of the total amount of each of the Acquired Fund’s assets and liabilities as of
the Closing Date.
4.5
Form
N-14.
Purisima, on behalf of the Acquiring Fund, has prepared and filed, or will
prepare and file, with the Securities and Exchange Commission (the “SEC”)
a
registration statement on Form N-14 under the Securities Act of 1933, as
amended
(the “1933
Act”),
relating to the Acquiring Fund Shares (the “Registration
Statement”).
Purisima, on behalf of the Acquired Funds, has provided or will provide the
Acquiring Fund with the Proxy Materials for inclusion in the Registration
Statement, prepared in accordance with Section
4.1,
and
with such other information and documents relating to the Acquired Funds
as are
requested by the Acquiring Fund and as are reasonably necessary for the
preparation of the Registration Statement.
5
4.6
Taxes.
As soon
after the Closing Date as is reasonably practicable, Purisima, on behalf
of the
Acquired Funds shall (a) prepare and file all federal and other tax returns
and
reports of each of the Acquired Funds required by law to be filed with respect
to all periods ending on/or before the Closing Date but not theretofore filed,
and (b) pay all federal and other taxes shown as due thereon and/or all federal
and other taxes that were unpaid as of the Closing Date.
4.7
Regulatory
Filings.
Following the transfer of Fund Assets by each of the Acquired Funds to the
Acquiring Fund and the assumption of the Stated Liabilities of each of the
Acquired Funds in exchange for Acquiring Fund Shares as contemplated herein,
Purisima will file any final regulatory reports, including but not limited
to
any Form N-SAR and Rule 24f-2 filings with respect to the Acquired Funds,
promptly after the Closing Date and also will take all other steps as are
necessary and proper to effect the termination of the Acquired Fund in
accordance with the laws of the State of Delaware and other applicable
requirements.
5. REPRESENTATIONS
AND
WARRANTIES ON
BEHALF
OF THE ACQUIRING FUND
Purisima,
on behalf of the Acquiring Fund, represents and warrants to the Acquired
Funds
as follows:
5.1
Due Organization of Purisima.
Purisima was duly created pursuant to its Agreement and Declaration of Trust
by
the Trustees for the purpose of acting as a management investment company
under
the Investment Company Act of 1940 (the “1940
Act”)
and is
validly existing under the laws of the State of Delaware, and the Declaration
of
Trust directs the Trustees to manage the affairs of Purisima and grants them
all
powers necessary or desirable to carry out such responsibility, including
administering Purisima
’s business as currently conducted by Purisima and as described in the current
prospectuses of Purisima. Purisima is registered as an investment company
classified as an open-end management company, under the 1940 Act and its
registration with the SEC as an investment company is in full force and
effect.
5.2
Registration
Statement.
The
Registration Statement, including the current prospectus and statement of
additional information of the Acquiring Fund, conforms or will conform, at
all
times up to and including the Closing Date, in all material respects to the
applicable requirements of the 1933 Act, the 1934 Act and the 1940 Act and
the
regulations thereunder and do not include or will not include any untrue
statement of a material fact or omit to state any material fact required
to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6
5.3
Not
Misleading.
On the
effective date of the Registration Statement, at the time of the meeting
of the
shareholders of the Acquired Funds and on the Closing Date, any written
information furnished by Purisima with respect to the Acquiring Fund for
use in
the Proxy Materials, 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 necessary to
make
the information provided not misleading.
5.4
No
Violation.
The
Acquiring Fund is not in violation of, and the execution, delivery and
performance of this Agreement by Purisima for itself and on behalf of the
Acquiring Fund does not and will not (a) violate Purisima’s Declaration of Trust
or By-Laws, or (b) result in a breach or violation of, or constitute a default
under, any material agreement or material instrument, to which Purisima is
a
party or by which its properties or assets are bound.
5.5
Due
Issuance.
All
issued and outstanding shares, including shares to be issued in connection
with
the Reorganization, of the Acquiring Fund will, as of the Closing Date, be
duly
authorized and validly issued and outstanding, fully paid and nonassessable.
The
shares the Acquiring Fund issued and outstanding before the Closing Date
were
offered and sold in compliance with the applicable registration requirements,
or
exemptions therefrom, of the 1933 Act, and all applicable state securities
laws,
and the regulations thereunder, and the Acquiring Fund does not have outstanding
any option, warrants or other rights to subscribe for or purchase any of
its
shares nor is there outstanding any security convertible into any of its
shares.
5.6
Due
Authorization; Enforceability.
The
execution, delivery and performance of this Agreement on behalf of the Acquiring
Fund will have been duly authorized prior to the Closing Date by all necessary
action on the part of Purisima, the Trustees and the Acquiring Fund, and
this
Agreement will constitute a valid and binding obligation of Purisima and
the
Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, arrangement, moratorium
and other similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles.
5.7
No
Litigation.
Except
as previously disclosed in writing to the Acquired Fund, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to Purisima’s knowledge, threatened
against Purisima or its business, the Acquiring Fund or any of its properties
or
assets, which, if adversely determined, would materially and adversely affect
Purisima or the Acquiring Fund’s financial condition or the conduct of their
business. Purisima knows of no facts that might form the basis for the
institution of any such proceeding or investigation, and the Acquiring Fund
is
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, or
is
reasonably likely to materially and adversely affect, its business or its
ability to consummate the transactions contemplated herein.
7
5.8
No
Consents.
No
governmental consents, approvals, authorizations or filings are required
under
the 1933 Act, the 1934 Act, the 1940 Act or Delaware law for the execution
of
this Agreement by Purisima, for itself and on behalf of the Acquiring Fund,
or
the performance of the Agreement by Purisima for itself and on behalf of
the
Acquiring Fund, except for such consents, approvals, authorizations and filings
as have been made or received, and except for such consents, approvals,
authorizations and filings as may be required after the Closing
Date.
5.9
Financial
Statements.
The
Statement of Assets and Liabilities, Statement of Operations and Statements
of
Changes in Net Assets of the Acquiring Fund as of and for the year ended
August
31, 2005 (copies of which have been or will be furnished to Purisima and
the
Acquired Funds) fairly present, in all material respects, the Acquiring Fund’s
financial condition as of such date and its results of operations for such
period in accordance with generally accepted accounting principles consistently
applied, and as of such dates there were no liabilities of the Acquiring
Fund
(contingent or otherwise) known to Purisima that were not disclosed therein
but
that would be required
to be disclosed therein in accordance with generally accepted accounting
principles.
5.10
No
Adverse Changes.
Since
the date of the most recent audited financial statements, there has not been
any
material adverse change in the Acquiring Fund’s financial condition, assets,
liabilities or business, other than changes occurring in the ordinary course
of
business; or any incurrence by the Acquiring Fund of indebtedness maturing
more
than one year from the date such indebtedness was incurred, except as otherwise
disclosed in writing to and accepted by the Acquired Funds, prior to the
Closing
Date (for the purposes of this Section, neither a decline in the Acquiring
Fund’s net asset value per share nor a decrease in the Acquiring Fund’s size due
to redemptions shall be deemed to constitute a material adverse
change).
5.11
Qualification.
For
each full and partial taxable year from its inception through the Closing
Date,
the Acquiring Fund has qualified as a separate regulated investment company
under the Code and has taken all necessary and required actions to maintain
such
status.
5.12
Taxes.
All
federal and other tax returns and reports of Purisima and the Acquiring Fund
required by law to be filed on or before the Closing Date shall have been
filed,
and all taxes owed by Purisima or the Acquiring Fund shall have been paid
so far
as due, and to the best of Purisima’s knowledge, no such return is currently
under audit and no assessment has been asserted with respect to any such
return.
8
6. REPRESENTATIONS
AND
WARRANTIES ON
BEHALF
OF THE ACQUIRED FUNDS
6.1
Purisima, on behalf of the Acquired Funds, represents and warrants to the
Acquiring Fund as follows:
6.2
Due
Organization of Purisima.
Purisima was duly created pursuant to its Agreement and Declaration of Trust
by
the Trustees for the purpose of acting as a management investment company
under
the 1940 Act and is validly existing under the laws of the State of Delaware,
and the Agreement and Declaration of Trust directs the Trustees to manage
the
affairs of Purisima and grants them all powers necessary or desirable to
carry
out such responsibility, including administering Purisima’s business as
currently conducted by Purisima and as described in the current prospectuses
of
Purisima. Purisima is registered as an investment company classified as an
open-end management company, under the 1940 Act and its registration with
the
SEC as an investment company is in full force and effect.
6.3
Proxy
Materials.
On the
effective date of the Registration Statement, at the time of the meeting
of the
shareholders of the Acquired Funds and on the Closing Date, the Proxy Materials
(exclusive of the portions of the Acquiring Fund’s Prospectus contained or
incorporated by reference therein, and exclusive of any written information
furnished by Purisima with respect to the Acquiring Fund), conforms or will
conform, in all material respects to the applicable requirements of the 1933
Act, the 1934 Act and the 1940 Act and the regulations thereunder and do
not
include or will not include any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading.
6.4
Not
Misleading.
On the
effective date of the Registration Statement, at the time of the meeting
of the
shareholders of the Acquired Funds and on the Closing Date, any written
information furnished by Purisima with respect to the Acquired Fund for use
in
the Proxy Materials (exclusive of the portions of the Acquiring Fund’s
Prospectus contained or incorporated by reference therein, and exclusive
of any
written information furnished by Purisima with respect to the Acquiring Fund),
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 necessary to make the information
provided not misleading.
9
6.5
No
Violation.
Each of
the Acquired Funds is not in violation of, and the execution, delivery and
performance of this Agreement by Purisima for itself and on behalf of the
Acquired Funds does not and will not (i) violate Purisima’s Agreement and
Declaration of Trust or By-Laws, or (ii) result in a breach or violation
of, or
constitute a default under, any material agreement or material instrument
to
which Purisima is a party or by its properties or assets are
bound.
6.6
Due
Issuance.
All of
the issued and outstanding shares of the Acquired Fund have been offered
and
sold in compliance in all material respects with applicable registration
or
notice requirements of the 1933 Act and state securities laws; all issued
and
outstanding shares of each of the Acquired Funds are, and on the Closing
Date
will be, duly authorized and validly issued and outstanding, and fully paid
and
non-assessable, and neither of the Acquired Funds has outstanding any options,
warrants or other rights to subscribe for or purchase any of its shares,
nor is
there outstanding any security convertible into any of its
shares.
6.7
Due
Authorization; Enforceability.
The
execution, delivery and performance of this Agreement on behalf of the Acquired
Funds will have been duly authorized prior to the Closing Date by all necessary
action on the part of Purisima, the Trustees and the Acquired Funds, and
this
Agreement will constitute a valid and binding obligation of Purisima and
the
Acquired Funds enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, arrangement, moratorium
and other similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles.
6.8
No Litigation.
Except
as previously disclosed in writing to the Acquiring Fund, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to Purisima’s knowledge, threatened
against either of the Acquired Funds or any of its properties or assets which,
if adversely determined, would materially and adversely affect such Acquired
Fund’s financial condition or the conduct of its business, Purisima knows of no
facts that might form the basis for the institution of any such proceeding
or
investigation, and neither of the Acquired Funds is 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, or is reasonably likely to materially
and
adversely affect, its business or its ability to consummate the transactions
contemplated herein.
6.9
No
Consents.
No
governmental consents, approvals, authorizations or filings are required
under
the 1933 Act, the 1934 Act, the 1940 Act or Delaware law for the execution
of
this Agreement by Purisima, for itself and on behalf of the Acquired Fund,
or
the performance of the Agreement by Purisima for itself and on behalf of
the
Acquired Fund, except for such 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.
10
6.10
Financial
Statements.
The
Statement of Assets and Liabilities, Statements of Operations and Statements
of
Changes in Net Assets of each of the Acquired Funds as of and for the year
ended
August 31, 2005 (copies of which have been or will be furnished to the Acquiring
Fund) fairly present, in all material respects, the Acquired Funds’ financial
condition as of such date and its results of operations for such period in
accordance with generally accepted accounting principles consistently applied,
and as of such date there were no liabilities of the Acquired Fund (contingent
or otherwise) known to Purisima that were not disclosed therein but that
would
be required to be disclosed therein in accordance with generally accepted
accounting principles.
6.11
No
Adverse Changes.
Since
the date of the most recent audited financial statements, there has not been
any
material adverse change in the Acquired Funds’ financial condition, assets,
liabilities or business, other than changes occurring in the ordinary course
of
business, or any incurrence by either of the Acquired Funds of indebtedness
maturing more than one year from the date such indebtedness was incurred,
except
as otherwise disclosed in writing to and accepted by the Acquiring Fund,
prior
to the Closing Date (for the purposes of this Section, neither a decline
in the
Acquired Funds’ net asset value per share nor a decrease in the Acquired Funds’
size due to redemptions shall be deemed to constitute a material adverse
change).
6.12
Qualification.
For
each full and partial taxable year from its inception through the Closing
Date,
each of the Acquired Funds has qualified as a separate regulated investment
company under the Code and has taken all necessary and required actions to
maintain such status.
6.13
Taxes.
All
federal and other tax returns and reports of Purisima and the Acquired Fund
required by law to be filed on or before the Closing Date shall have been
filed,
and all taxes owed by Purisima or the Acquired Funds shall have been paid
so far
as due, and to the best of Purisima’s knowledge, no such return is currently
under audit and no assessment has been asserted with respect to any such
return.
6.14
Fund
Assets.
At the
Closing Date, each of the Acquired Funds will have good and marketable title
to
its Fund Assets and full right, power and authority to assign, deliver and
otherwise transfer such Fund Assets hereunder, and upon delivery and payment
for
such Fund Assets as contemplated herein, the Acquiring Fund will acquire
good
and marketable title thereto, subject to no restrictions on the ownership
or
transfer thereof other than such restrictions as might arise under the 1933
Act.
11
6.15
No
Purpose of Distribution.
The
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof, other than in accordance with
the
terms of this Agreement.
7. CONDITIONS
PRECEDENT TO OBLIGATIONS OF ACQUIRED FUNDS
The
obligations of Purisima to consummate the Reorganization with respect to
the
Acquired Funds shall be subject to the performance by Purisima, for itself
and
on behalf of the Acquiring Fund, of all the obligations to be performed by
it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions with respect to the Acquiring Fund:
7.1
Representations and Warranties.
All
representations and warranties of Purisima with respect to the Acquiring
Fund
contained herein shall be true and correct in all material respects as of
the
date hereof and, except as they may be affected by the transactions contemplated
herein, as of the Closing Date with the same force and effect as if made
on and
as of the Closing Date.
7.2
Closing
Certificate.
Purisima, on behalf of the Acquiring Fund, shall have delivered to the Acquired
Fund at the Closing a certificate executed on behalf of the Acquiring Fund
by
Purisima’s [Chairmain] in a form reasonably satisfactory to the Acquired Funds
and dated as of the Closing Date, to the effect that the representations
and
warranties of Purisima with respect to the Acquiring Fund made herein are
true
and correct at and as of the Closing Date, except as they may be affected
by the
transactions contemplated herein, and as to such other matters as the Acquired
Fund shall reasonably request.
7.3
No
Material Changes.
As of
the Closing Date, 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 any 12b-1 plan of distribution,
other fees payable for services provided to the Acquiring Fund, fee waiver
or
expense reimbursement undertakings, or sales loads of the Acquiring Fund
from
those fee amounts, undertakings and sales load amounts described in the
prospectus of the Acquiring Fund delivered to the Acquired Funds pursuant
to
Section
4.1
and in
the Proxy Materials.
7.4
Best
Interests.
With
respect to the Acquiring Fund, the Board of Trustees of Purisima shall have
determined that the Reorganization is in the best interests of the Acquiring
Fund and that the interests of the existing shareholders of the Acquiring
Fund
would not be diluted as a result of the Reorganization.
12
8. CONDITIONS
PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND
The
obligations of Purisima to consummate the Reorganization with respect to
the
Acquiring Fund shall be subject to the performance by Purisima of all the
obligations to be performed by it hereunder, with respect to the Acquired
Funds,
on or before the Closing Date and, in addition thereto, the following
conditions:
8.1
Representations and Warranties.
All
representations and warranties of Purisima with respect to the Acquired Funds
contained herein shall be true
and
correct in all material respects as of the date hereof and, except as they
may
be affected by the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and as of the
Closing
Date.
8.2
Closing
Certificate.
Purisima, on behalf of the Acquired Funds, shall have delivered to the Acquiring
Fund at the Closing a certificate executed on behalf of each of the Acquired
Funds, by Purisima’s [Chairman], in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of Purisima with respect to the Acquired Funds
made herein are true and correct at and as of the Closing Date, except as
they
may be affected by the transactions contemplated herein and as to such other
matters as the Acquiring Fund shall reasonably request.
8.3
Best
Interests.
With
respect to the Acquired Funds, the Board of Trustees of Purisima shall have
determined that the Reorganization is in the best interests of the Acquired
Funds.
9. FURTHER
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE ACQUIRED
FUNDS
The
obligations of the Acquiring Fund and of the Acquired Funds herein are each
subject to the further conditions that on or before the Closing Date with
respect to the Acquiring Fund and the Acquired Funds:
9.1
Shareholder Approval.
This
Agreement and the transactions contemplated herein shall have been approved
by
the requisite vote of the holders of the outstanding shares of the Acquired
Funds in accordance with the provisions of Purisima’s Agreement and Declaration
of Trust and the requirements of the 1940 Act, and certified copies of the
resolutions evidencing such approval shall have been delivered to the Acquiring
Fund.
9.2
No
Litigation.
On the
Closing Date, no action, suit or other proceeding shall be 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 any
of the
transactions contemplated herein.
13
9.3
Consents.
All
consents of other parties and all other consents, orders, approvals and permits
of federal, state and local regulatory authorities (including, without
limitation, those of the SEC and of state securities authorities) deemed
necessary by Purisima, on behalf of the Acquired
Funds, and by Purisima, on behalf of the Acquiring Fund, to permit consummation,
in all material respects, of the transactions contemplated herein shall have
been obtained, except where failure to obtain any such consent, order or
permit
would not, in the opinion of the party asserting that the condition to closing
has not been satisfied, involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired
Funds.
9.4
Registration
Statement.
The
Registration Statement shall have become effective under the 1933 Act, no
stop
orders suspending the effectiveness thereof shall have been issued and, to
the
best knowledge of the parties hereto, no investigation or proceeding for
that
purpose shall have been instituted or be pending, threatened or contemplated
under the 0000 Xxx.
9.5
Dividends.
Unless
waived by the Acquiring Fund, each of the Acquired Funds shall have declared
and
paid a dividend or dividends which, together with all previous such dividends,
shall have the effect of distributing to each of the Acquired Fund’s
shareholders substantially all of the Acquired Fund’s investment company taxable
income for all taxable years ending on or prior to the Closing Date (computed
without regard to any deduction for dividends paid) and substantially all
of its
net capital gain realized in all taxable years ending on or prior to the
Closing
Date (after reduction for any capital loss carryover).
9.6
Tax
Opinion.
Purisima and Purisima shall have received the opinion of Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP addressed to both the Acquiring Fund and the Acquired
Fund (and based on customary representation certificates from Purisima,
Purisima, the Acquiring Fund and the Acquired Funds) substantially to the
effect
that, for federal income tax purposes:
(a)
The
transfer by each of the Acquired Funds of the Fund Assets in exchange for
the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated
Liabilities will constitute a “reorganization” within the meaning of Section
368(a)(1) of the Code and the Acquiring Fund and the Acquired Fund each are
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
Fund
Assets solely in exchange for the Acquiring Fund Shares and the assumption
by
the Acquiring Fund of the Stated Liabilities;
(c)
No
gain
or loss will be recognized by the Acquired Funds upon the transfer of the
Fund
Assets to the Acquiring Fund and the assumption by the Acquiring Fund of
the
Stated Liabilities in exchange for the Acquiring Fund Shares or upon the
distribution (whether actual or constructive) of the Acquiring Fund Shares
to
investors of each of the Acquired Funds in exchange for their shares of the
Acquired Fund;
14
(d)
No
gain
or loss will be recognized by the investors of either of the Acquired Funds
upon
the exchange of their Acquired Fund Shares for the Acquiring Fund Shares;
(e)
The
aggregate tax basis for the Acquiring Fund Shares received by each of the
Acquired Fund Investors pursuant to the Reorganization will be the same as
the
aggregate tax basis of the Acquired Fund shares held by such shareholder
immediately prior to the Reorganization, and the holding period of the Acquiring
Fund Shares to be received by each Acquired Fund Investor will include the
period during which the Acquired Fund shares exchanged therefor were held
by
such shareholder (provided the Acquired Fund shares were held as capital
assets
on the date of the Reorganization); and
(f)
The
tax
basis of the Fund Assets of each of the Acquired Funds acquired by the Acquiring
Fund will be same as the tax basis of such assets to each of the Acquired
Funds
immediately prior to the Reorganization, and the holding period of the assets
of
each of the Acquired Funds in the hands of the Acquiring Fund will include
the
period during which those assets were held by the Acquired
Fund.
Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Acquired
Funds may waive the condition set forth in this Section
9.6.
10. EXPENSES
10.1
Liability for Expenses.
Except
as may be otherwise provided in Section
10.3,
each of
the Acquired Funds and the Acquiring Fund shall be liable for its respective
expenses incurred in connection with entering into and carrying out the
provisions of this Agreement, whether or not the transactions contemplated
hereby are consummated.
10.2
Types
of Expenses.
The
expenses payable by each of the Acquired Fund hereunder shall include (a)
fees
and expenses of its counsel and independent auditors incurred in connection
with
the Reorganization; (b) expenses associated with printing and mailing
the Prospectus/Proxy
Statement and soliciting proxies in connection with the meeting of shareholders
of the Acquired Funds referred to in Section
4.1
hereof;
(c) all fees and expenses related to the liquidation of the Acquired Funds;
(d)
fees and expenses of the Acquired Funds’ custodian and transfer agent(s)
incurred in connection with the Reorganization; and (e) any special pricing
fees
associated with the valuation of the Acquired Funds’ portfolio on the Applicable
Valuation Date. The expenses payable by the Acquiring Fund hereunder shall
include (v) fees and expenses of its counsel and independent auditors incurred
in connection with the Reorganization; (w) expenses associated with preparing
this Agreement and preparing and filing the Registration Statement under
the
1933 Act covering the Acquiring Fund Shares to be issued in the Reorganization;
(x) registration or qualification fees and expenses of preparing and filing
such
forms, if any, as are necessary under applicable state securities laws to
qualify the Acquiring Fund Shares to be issued in connection with the
Reorganization; (y) any fees and expenses of the Acquiring Fund’s custodian and
transfer agent(s) incurred in connection with the Reorganization; and (z)
any
special pricing fees associated with the valuation of the Acquiring Fund’s
portfolio on the Applicable Valuation Date.
15
10.3
Reimbursement
for Expenses.
Xxxxxx
Asset Management, LLC, has agreed to reimburse the Acquired Fund for the
expenses listed in items (a), (b), (c) (d) and (e) above and to reimburse
the
Acquiring Fund for the expenses listed in items (v), (w), (x), (y) and (z)
above.
11. GENERAL
11.1
Entire Agreement.
This
Agreement constitutes the entire agreement with respect to the parties and
the
subject matter hereof and supersedes any prior or contemporaneous understanding
or arrangement, written or oral.
11.2
Survival.
The
representations, warranties and covenants contained in this Agreement or
in any
document delivered pursuant hereto or in connection herewith shall survive
the
consummation of the transactions contemplated herein.
11.3
Termination.
This
Agreement may be terminated and the transactions contemplated hereby may
be
abandoned at any time before the Closing by the mutual written consent of
the
Acquiring Fund and the Acquired Fund.
11.4
Amendments.
This
Agreement may be amended, modified or supplemented in such manner as
may be
mutually agreed upon in writing by the authorized officers of Purisima, acting
on behalf of the Acquired Fund and by the authorized officers of Purisima,
acting on behalf of the Acquiring Fund; provided, however, that following
the
meeting of the shareholders of the Acquired Fund, no such amendment may have
the
effect of changing the provisions for determining the number of Acquiring
Fund
Shares to be issued to the Acquired Fund Investors under this Agreement to
the
detriment of such Acquired Fund Investors, or otherwise materially and adversely
affecting the Acquired Funds, without each of the Acquired Funds obtaining
the
Acquired Fund Investors’ further approval, except that nothing in this Section
11.4 shall be construed to prohibit the Acquiring Fund and the Acquired Fund
from amending this Agreement to change the Closing Date or Applicable Valuation
Date by mutual agreement.
16
11.5
Notices.
Any
notice, report, statement or demand required or permitted by any provision
of
this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy, certified mail or overnight express courier addressed
to:
For
Purisima, on behalf of itself and the Acquired Funds:
The
Purisima Funds
00000
Xxxxxxx Xxxx.
Xxxxxxxx,
Xxxxxxxxxx 00000-0000
Attention:
Xxxxxxx X. Xxxxxx
For
Purisima, on behalf of itself and the Acquiring Fund:
The
Purisima Funds
00000
Xxxxxxx Xxxx.
Xxxxxxxx,
Xxxxxxxxxx 00000-0000
Attention:
Xxxxxxx X. Xxxxxx
With
a
copy to:
Xxxxx
Hearth, Esq.
Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP
00
Xxxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
11.6
Headings.
The
Article and Section headings contained herein are for reference purposes
only
and shall not affect in any way the meaning or interpretation of this Agreement.
All references herein to Articles, Sections, subsections or Exhibits shall
be
construed as referring to Articles, Sections or subsections hereof or Exhibits
hereto, respectively. Whenever
the terms “hereto”, “hereunder”, “herein” or “hereof” are used in this
Agreement, they shall be construed as referring to this entire Agreement,
rather
than to any individual Article, Section, subsection or sentence.
11.7
Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original.
11.8
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware.
11.9
Inurement.
This
Agreement shall bind and inure to the benefit of Purisima, the Acquired Funds
and the Acquiring Fund, 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.
[signature
page follows]
17
IN
WITNESS WHEREOF, Purisima and Purisima each have caused this Agreement to
be
duly executed for themselves and on behalf of each of the Acquired Funds
and the
Acquiring Fund, respectively.
THE
PURISIMA FUNDS,
FOR
ITSELF AND ON BEHALF OF
THE
PURISIMA PURE AMERICAN FUND
AND
THE
PURISIMA PURE FOREIGN FUND
By:
______________________________
Name:
Xxxxxxx X. Xxxxxx
Title:
Chairman
THE
PURISIMA FUNDS,
FOR
ITSELF AND ON BEHALF OF
THE
PURISIMA TOTAL RETURN FUND
By:
______________________________
Name:
Xxxxxxx X. Xxxxxx
Title:
Chairman
18
TABLE
OF CONTENTS
|
Page
|
||||
|
INTRODUCTION
|
5
|
|||
|
A.
|
GENERAL
|
5
|
||
|
B.
|
SUMMARY
OF THE PROPOSAL
|
5
|
||
|
C.
|
RISK
FACTORS
|
7
|
||
|
D.
|
COMPARISON
OF EXPENSES
|
8
|
||
|
E.
|
SHARES
AND VOTING
|
9
|
||
|
II.
|
THE
PROPOSAL
|
11
|
||
|
A.
|
DESCRIPTION
OF THE PROPOSED REORGANIZATION
|
11
|
||
|
1.
|
The
Reorganization
|
11
|
||
|
2.
|
Effect
of the Reorganization
|
12
|
||
|
3.
|
Federal
Income Tax Consequences
|
13
|
||
|
4.
|
Description
of the Emerging Markets Focus Fund Shares
|
13
|
||
|
5.
|
Capitalization
|
14
|
||
|
B.
|
COMPARISON
OF THE FUNDS
|
14
|
||
|
1.
|
Investment
Objective and Principal Strategy
|
14
|
||
|
2.
|
Investment
Restrictions
|
15
|
||
|
3.
|
Comparative
Performance Information
|
18
|
||
|
4.
|
Advisory
Fees and Other Expenses
|
21
|
||
|
5.
|
Portfolio
Managers
|
22
|
||
|
6.
|
Distribution
and Shareholder Services
|
23
|
||
|
7.
|
Purchase,
Redemption and Exchange Procedures
|
23
|
||
|
8.
|
Income
Dividends, Capital Gains Distributions and Taxes
|
31
|
||
|
9.
|
Portfolio
Transactions and Brokerage Commissions
|
31
|
||
|
10.
|
Shareholders’
Rights
|
32
|
||
|
C.
|
RISK
FACTORS
|
32
|
||
|
D.
|
RECOMMENDATION
OF THE BOARD OF TRUSTEES
|
33
|
||
|
E.
|
DISSENTERS’
RIGHTS OF APPRAISAL
|
33
|
||
|
F.
|
FURTHER
INFORMATION ABOUT THE ACQUIRED FUND AND THE ACQUIRING FUND
|
34
|
||
|
G.
|
VOTE
REQUIRED
|
34
|
||
|
H.
|
FINANCIAL
HIGHLIGHTS
|
35
|
||
|
III.
|
MISCELLANEOUS
ISSUES
|
37
|
||
|
A.
|
OTHER
BUSINESS
|
37
|
||
-i-
TABLE
OF CONTENTS
(continued)
(continued)
|
Page
|
||||
|
B.
|
NEXT
MEETING OF SHAREHOLDERS
|
37
|
||
|
C.
|
LEGAL
MATTERS
|
37
|
||
|
D.
|
EXPERTS
|
37
|
||
|
EXHIBIT
A: AGREEMENT AND PLAN OF REORGANIZATION
|
40
|
|||
-ii-
