Exhibit 99.4
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS FORM OF AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made
as of this 23rd day of October 2003, by and between XXXXXX XXXXXXX INSTITUTIONAL
FUND TRUST, a Pennsylvania business trust (the "Trust"), on behalf of its U.S.
Small Cap Value Portfolio (the "Acquiring Fund") and the TRUST, on behalf of its
Strategic Small Value Portfolio (the "Target Fund").
Where appropriate, references to the Acquiring Fund mean to the Trust,
on behalf of the Acquiring Fund and references to the Target Fund mean the
Trust, on behalf of the Target Fund.
This Agreement is intended to be and is adopted as a "plan of
reorganization" within the meaning of Treasury Regulations Section 1.368-2(g),
for a reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "Code"). The reorganization ("Reorganization") will
consist of the transfer to the Acquiring Fund of substantially all of the assets
of the of the Target Fund in exchange for the assumption by the Acquiring Fund
of all stated liabilities of the Target Fund and the issuance by the Acquiring
Fund of shares of common stock, par value $0.001 per share (the "Acquiring Fund
Shares"), to be distributed, after the Closing Date hereinafter referred to, to
the shareholders of the Target Fund in liquidation of the Target Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. THE REORGANIZATION AND LIQUIDATION OF THE TARGET FUND
1.1 Subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained
herein, the Target Fund agrees to assign, deliver and
otherwise transfer the Target Fund Assets (as defined in
paragraph 1.2) to the Acquiring Fund and the Acquiring Fund
agrees in exchange therefor to assume all of the Target Fund
stated liabilities on the Closing Date as set forth in
paragraph 1.3(a) and to deliver to the Target Fund the number
of Acquiring Fund Shares, including fractional shares,
determined in the manner set forth in paragraph 2.3. Such
transactions shall take place at the closing provided for in
paragraph 3.1 ("Closing").
1.2 (a) The "Target Fund Assets" shall consist of all property,
including without limitation, all cash (other than the "Cash
Reserve" (as defined in paragraph 1.3(b)), cash equivalents,
securities and dividend and interest receivables owned by the
Target Fund, and any deferred or prepaid expenses shown as an
asset on the Target Funds' books on the Valuation Date.
(b) On or prior to the Valuation Date, the Target Fund will
provide the Acquiring Fund with a list of all of the assets to
be assigned, delivered and otherwise transferred to the
Acquiring Fund and of the stated liabilities to be assumed by
the Acquiring Fund pursuant to this Agreement. The Target Fund
reserves the right to sell any of the securities on such list
but will not, without the prior approval of the Acquiring
Fund, acquire any additional securities other than securities
of the type in which the Acquiring Fund is permitted to invest
and in amounts agreed to in writing by the Acquiring Fund.
The Acquiring Fund will, within a reasonable time prior to the
Valuation Date, furnish the Target Fund with a statement of
its investment objectives, policies and restrictions and a
list of the securities, if any, on the list referred to in the
first sentence of this paragraph that do not conform to the
Acquiring Fund's investment objective, policies and
restrictions. In the event that the Target Fund holds any
investments that the Acquiring Fund is not permitted to hold,
the Target Fund will dispose of such securities on or prior to
the Valuation Date. In addition, if it is determined that the
portfolios of the Target Fund and the Acquiring Fund, when
aggregated, would contain investments exceeding certain
percentage limitations imposed upon the Acquiring Fund with
respect to such investments, the Target Fund, if requested by
the Acquiring Fund will, on or prior to the Valuation Date,
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 (as defined in paragraph
3.1).
1.3 (a) The Target Fund will endeavor to discharge all of its
liabilities and obligations on or prior to the Valuation Date.
The Acquiring Fund will assume all stated liabilities, which
include, without limitation, all expenses, costs, charges and
reserves reflected on an unaudited Statement of Assets and
Liabilities of the Target Fund prepared by the Treasurer of
the Trust, on behalf of the Target Fund, as of the Valuation
Date in accordance with generally accepted accounting
principles consistently applied from the prior audited period.
(b) On the Valuation Date, the Target Fund may establish a cash
reserve, which shall not exceed 5% of the Target Funds' net
assets as of the close of business on the Valuation Date
("Cash Reserve") to be retained by the Target Fund and used
for the payment of its liabilities not discharged prior to the
Valuation Date and for the expenses of dissolution.
1.4 In order for the Target Fund to comply with Section 852(a)(1)
of the Code and to avoid having any investment company taxable
income or net capital gain (as defined in Sections 852(b)(2)
and 1222(11) of the Code, respectively) in the short taxable
year ending with its dissolution, the Target Fund will on or
before the Valuation Date (a) declare a dividend in an amount
large enough so that it will have declared dividends of all of
its investment company taxable income and net capital gain, if
any, for such taxable year (determined without regard to any
deduction for dividends paid) and (b) distribute such
dividend.
1.5 On the Closing Date or as soon as practicable thereafter, the
Target Fund will distribute the Acquiring Fund Shares received
by the Target Fund pursuant to paragraph 1.1 pro rata to its
shareholders of record determined as of the close of business
on the Valuation Date ("Target Fund Shareholders").
Institutional Class Shareholders of the Target Fund will
receive Class A Shares of Acquiring Fund. Adviser Class
Shareholders will receive Class B Shares of Acquiring Fund.
Such distribution will be accomplished by an instruction,
signed by the Secretary of the Trust, to transfer Acquiring
Fund Shares then credited to the Target Funds' account on the
books of the Acquiring Fund, to open accounts on the books of
the Acquiring Fund in the names of the Target Fund
Shareholders and representing the respective pro rata number
of Acquiring Fund Shares due to such Target Fund Shareholders.
All issued and outstanding shares of the Target Fund
simultaneously will be canceled on the Target Funds' books;
however, share certificates representing interests in the
Target Fund will represent a number of Acquiring Fund Shares
after the Closing Date as determined in accordance with
paragraph 2.3. The Acquiring Fund will issue certificates
representing the Acquiring Fund Shares in
connection with such exchange only upon the written request of
a Target Fund Shareholder.
1.6 Ownership of Acquiring Fund Shares will be shown on the books
of the Acquiring Fund's transfer agent. The Acquiring Fund
Shares will be issued in the manner described in the Trust's
current Prospectus and Statement of Additional Information.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the
Acquiring Fund Shares on the Target Fund's books as of the
close of business on the Valuation Date shall, as a condition
of such issuance and transfer, be paid by the person to whom
the Acquiring Fund Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Target Fund, is and shall
remain the responsibility of the Target Fund up to and
including the date on which the Target Fund is dissolved
pursuant to paragraph 1.9.
1.9 Within one year after the Closing Date, the Target Fund shall
pay or make provision for the payment of all its liabilities
and taxes, and distribute to the shareholders of the Target
Fund as of the close of business on the Valuation Date any
remaining amount of the Cash Reserve (as reduced by the
estimated cost of distributing it to shareholders). If and to
the extent that any trust, escrow account, or other similar
entity continues after the close of such one-year period in
connection either with making provision for payment of
liabilities or taxes or with distributions to shareholders of
the Target Fund, such entity shall either (i) qualify as a
liquidating trust under Section 7701 of the Code (and
applicable Treasury Regulations thereunder) or other entity
which does not constitute a continuation of the Target Fund
for federal income tax purposes, or (ii) be subject to a
waiver under Section 368(a)(2)(G)(ii) of the complete
distribution requirement of Section 368(a)(2)(G)(i) of the
Code. The Target Fund shall be dissolved as a portfolio of the
Trust promptly following the making of all distributions
pursuant to paragraph 1.5 (and, in any event, within one year
after the Closing Date).
1.10 Copies of all books and records maintained on behalf of the
Target Fund in connection with its obligations under the
Investment Company Act of 1940, as amended (the "1940 Act"),
the Code, state Blue Sky laws or otherwise in connection with
this Agreement will promptly after the Closing be delivered to
officers of the Acquiring Fund or their designee and the
Acquiring Fund or its designee shall comply with applicable
record retention requirements to which the Target Fund is
subject under the 1940 Act.
2. VALUATION
2.1 The value of the Target Fund Assets shall be the value of such
assets computed as of 4:00 p.m. on the New York Stock Exchange
on the third business day following the receipt of the
requisite approval by shareholders of the Target Fund of this
Agreement or at such time on such earlier or later date after
such approval as may be mutually agreed upon in writing (such
time and date being hereinafter called the "Valuation Date"),
using the valuation procedures set forth in the Trust's then
current Prospectus and Statement of Additional Information.
2.2 The net asset value of an Acquiring Fund Share shall be the
net asset value per share computed on the Valuation Date,
using the valuation procedures set forth in the Trust's then
current Prospectus and Statement of Additional Information.
2.3 The number of Acquiring Fund Shares (including fractional
shares, if any) to be issued hereunder shall be determined,
with respect to each class, by dividing the aggregate net
asset value of the applicable class of Target Fund shares
(calculated in accordance with paragraph 2.1) by the net asset
value per share of the applicable class of shares of the
Acquiring Fund. For purposes of this paragraph, the aggregate
net asset value of the shares of the Target Fund shall not
include the amount of the Cash Reserve.
2.4 All computations of value shall be made by JPMorgan Investor
Services Company in accordance with its regular practice in
pricing the Acquiring Fund. The Acquiring Fund shall cause
JPMorgan Investor Services Company to deliver a copy of its
valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1 The Closing shall take place on the Valuation Date or in no
event later than the next business day following the Valuation
Date (the "Closing Date"). The Closing shall be held as of
5:00 p.m. Eastern time, or at such other time as the parties
may agree. The Closing shall be held in a location mutually
agreeable to the parties hereto. All acts taking place at the
Closing shall be deemed to take place simultaneously as of
5:00 p.m. Eastern time on the Closing Date unless otherwise
provided.
3.2 Portfolio securities held by the Target Fund and represented
by a certificate or other written instrument shall be
presented by it or on its behalf to JPMorgan Chase & Co. (the
"Custodian"), as custodian for the Acquiring Fund, for
examination no later than five business days preceding the
Valuation Date. Such portfolio securities (together with any
cash or other assets) shall be delivered by the Target Fund to
the Custodian for the account of the Acquiring Fund on or
before the Closing Date in conformity with applicable custody
provisions under the 1940 Act and duly endorsed in proper form
for transfer in such condition as to constitute good delivery
thereof in accordance with the custom of brokers. The
portfolio securities shall be accompanied by all necessary
Federal and state stock transfer stamps or a check for the
appropriate purchase price of such stamps. Portfolio
securities and instruments deposited with a securities
depository (as defined in Rule 17f-4 under the 0000 Xxx) shall
be delivered on or before the Closing Date by book-entry in
accordance with customary practices of such depository and the
Custodian. The cash delivered shall be in the form of a
Federal Funds wire, payable to the order of "JPMorgan Chase &
Co., Custodian for the Acquiring Fund."
3.3 In the event that on the 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 both the Target Fund and Acquiring Fund,
accurate appraisal of the value of the net assets of the
Acquiring Fund or the Target Fund Assets is impracticable, the
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.
3.4 If requested, the Target Fund shall deliver to the Acquiring
Fund or its designee (a) at the Closing, a list, certified by
the Secretary of the Trust of the names, addresses and
taxpayer identification numbers of the Target Fund
Shareholders and the number and percentage ownership of
outstanding Target Fund shares owned by each such Target Fund
Shareholder, all as of the Valuation Date, and (b) as soon as
practicable after the Closing, all original documentation
(including Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Target
Funds' taxpayer identification numbers and their liability for
or exemption from back-up withholding. The Acquiring Fund
shall issue and deliver to such Secretary a confirmation
evidencing delivery of Acquiring Fund Shares to be credited on
the Closing Date to the Target Fund or provide evidence
satisfactory to the Target Fund that such Acquiring Fund
Shares have been credited to the Target Funds' account on the
books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments,
share certificates, if any, receipts or other documents as
such other party or its counsel may reasonably request.
4. COVENANTS OF THE TARGET FUND AND ACQUIRING FUND
4.1 Except as otherwise expressly provided herein with respect to
the Target Fund, the Acquiring Fund and the Target Fund each
will operate its business in the ordinary course between the
date hereof and the Closing Date, it being understood that
such ordinary course of business will include customary
dividends and other distributions.
4.2 The Trust, will prepare and file with the Securities and
Exchange Commission ("Commission") a registration statement on
Form N-14 under the Securities Act of 1933, as amended ("1933
Act"), relating to the Acquiring Shares ("Registration
Statement"). The Target Fund will provide the Trust with the
Proxy Materials as described in paragraph 4.3 below, for
inclusion in the Registration Statement. The Target Fund will
further provide the Trust with such other information and
documents relating to the Target Fund as are reasonably
necessary for the preparation of the Registration Statement.
4.3 The Target Fund will call a meeting of the Target Fund
shareholders to consider and act upon this Agreement and to
take all other action necessary to obtain approval of the
transactions contemplated herein. The Target Fund will prepare
the notice of meeting, form of proxy and proxy statement
(collectively, "Proxy Materials") to be used in connection
with such meeting; provided that the Trust will furnish the
Target Fund with its currently effective prospectus for
inclusion in the Proxy Materials and with such other
information relating to the Acquiring Fund as is reasonably
necessary for the preparation of the Proxy Materials.
4.4 The Target Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of Target Fund Shares.
4.5 Subject to the provisions of this Agreement, the Target Fund
and the Acquiring 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.
4.6 The Target Fund shall furnish or cause to be furnished to the
Acquiring Fund within 30 days after the Closing Date a
statement of the Target Funds' assets and liabilities as of
the Closing Date, which statement shall be certified by the
Treasurer of the Trust and shall be
in accordance with generally accepted accounting principles
consistently applied. As promptly as practicable, but in any
case within 60 days after the Closing Date, the Target Fund
shall furnish the Acquiring Fund, in such form as is
reasonably satisfactory to the Acquiring Fund, a statement
certified by the Treasurer of the Trust of earnings and
profits of the Target Fund for Federal income tax purposes
that will be carried over to the Acquiring Fund pursuant to
Section 381 of the Code.
4.7 As soon after the Closing Date as is reasonably practicable,
the Target Fund (a) shall prepare and file all Federal and
other tax returns and reports of the Target Fund required by
law to be filed with respect to all periods ending on or
before the Closing Date but not theretofore filed and (b)
shall 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, including without limitation, all taxes for
which the provision for payment was made as of the Closing
Date (as represented in paragraph 5.2(k)).
4.8 The Trust agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act and the
1940 Act and to make such filings required by the state Blue
Sky and securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
5. REPRESENTATIONS AND WARRANTIES
5.1 The Trust represents and warrants to the Target Fund, on
behalf of the Acquiring Fund, as follows:
(a) The Trust is a validly existing Pennsylvania business trust
with full power to carry on its business as presently
conducted;
(b) The Trust is a duly registered, open-end, management
investment company, and its registration with the Commission
as an investment company under the 1940 Act and the
registration of its shares under the 1933 Act are in full
force and effect;
(c) All of the issued and outstanding shares of the Acquiring Fund
have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933
Act and state securities laws. Shares of the Acquiring Fund
are registered in all jurisdictions in which they are required
to be registered under state securities laws and other laws,
and said registrations, including any periodic reports or
supplemental filings, are complete and current, all fees
required to be paid have been paid, and the Acquiring Fund is
not subject to any stop order and is fully qualified to sell
its shares in each state in which its shares have been
registered;
(d) The current Prospectus and Statement of Additional Information
of the Trust conforms in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the regulations thereunder and do not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(e) The Trust is not in, and the execution, delivery and
performance of this Agreement will not result in, a material
violation of any provision of the Trust's Declaration of Trust
or
By-Laws or of any agreement, indenture, instrument, contract,
lease or other undertaking to which the Trust is a party or by
which it is bound;
(f) No litigation or 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 or the conduct of its business; and the
Trust knows of no facts that might form the basis for the
institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects, or is reasonably likely to materially and adversely
effect, its business or its ability to consummate the
transactions herein contemplated;
(g) The Statement of Net Assets, Statement of Operations,
Statement of Changes in Net Assets and Financial Highlights
of the Trust for the year ended September 30, 2003, audited
by Ernst & Young LLP (copies of which have been furnished to
the Target Fund) fairly present, in all material respects,
the Acquiring Fund's financial condition as of such date in
accordance with generally accepted accounting principles,
and its results of such operations, changes in its net
assets and financial highlights for such period, and as of
such date there were no known liabilities of the Acquiring
Fund (contingent or otherwise) not disclosed therein that
would be required in accordance with generally accepted
accounting principles to be disclosed therein;
(h) All issued and outstanding Acquiring Fund Shares are, and at
the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof, except as set
forth in the Trust's current Prospectus incorporated by
reference in the Registration Statement. The Acquiring Fund
does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares;
(i) The execution, delivery and performance of this Agreement have
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 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.
No other consents, authorizations or approvals are necessary
in connection with the Trust's performance of this Agreement;
(j) The Acquiring Fund Shares to be issued and delivered to the
Target Fund, for the account of the Target Fund Shareholders,
pursuant to the terms of this Agreement will at the Closing
Date have been duly authorized and, when so issued and
delivered, will be duly and validly issued Acquiring Fund
Shares, and will be fully paid and non-assessable with no
personal liability attaching to the ownership thereof, except
as set forth in the Trust's current Statement of Additional
Information incorporated by reference in the Statement of
Additional Information to this Registration Statement;
(k) All material Federal and other tax returns and reports of the
Acquiring Fund required by law to be filed on or before the
Closing Date have been filed and are correct, and all Federal
and other taxes shown as due or required to be shown as due on
said returns and reports have been paid or provision has been
made for the payment thereof, and to the
best of the Trust's knowledge, no such return is currently
under audit and no assessment has been asserted with respect
to any such return;
(l) For each taxable year since its inception, the Acquiring Fund
has met the requirements of Subchapter M of the Code for
qualification and treatment as a "regulated investment
company" and neither the execution or delivery of nor the
performance of its obligations under this Agreement will
adversely affect, and no other events are foreseen, or
reasonably likely to occur, which will adversely affect the
ability of the Acquiring Fund to continue to meet the
requirements of Subchapter M of the Code;
(m) Since September 30, 2003 there has been no change by the Trust
in accounting methods, principles, or practices, including
those required by generally accepted accounting principles;
(n) The information furnished or to be furnished by the Trust for
use in registration statements, proxy materials and other
documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and
complete in all material respects and shall comply in all
material respects with Federal securities and other laws and
regulations applicable thereto; and
(o) The Proxy Materials to be included in the Registration
Statement (only insofar as they relate to the Acquiring Fund)
will, on the effective date of the Registration Statement and
on the Closing Date, not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were
made, not materially misleading.
5.2 The Trust, on behalf of the Target Fund represents and
warrants to the Acquiring Fund, as follows:
(a) The Trust is a validly existing Pennsylvania business trust
with full power to carry on its business as presently
conducted;
(b) The Trust is a duly registered, open-end, management
investment company, and its registration with the Commission
as an investment company under the 1940 Act and the
registration of its shares under the 1933 Act are in full
force and effect;
(c) All of the issued and outstanding shares of beneficial
interest of the Target Fund have been offered and sold in
compliance in all material respects with applicable
requirements of the 1933 Act and state securities laws. Shares
of the Target Fund are registered in all jurisdictions in
which they are required to be registered and said
registrations, including any periodic reports or supplemental
filings, are complete and current, all fees required to be
paid have been paid, and the Target Fund is not subject to any
stop order and is fully qualified to sell its shares in each
state in which its shares have been registered;
(d) The current Prospectus and Statement of Additional Information
of the Trust conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the regulations thereunder and do not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(e) The Trust is not, and the execution, delivery and performance
of this Agreement will not result, in a material violation of
any provision of the Trust's Declaration of Trust or By-Laws
or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Trust is a party or by which it
is bound;
(f) No litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending
or, to its knowledge, threatened against the Target Fund or
any of its properties or assets which, if adversely
determined, would materially and adversely affect its
financial condition or the conduct of its business; and the
Trust knows of no facts that might form the basis for the
institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects, or is reasonably likely to materially and adversely
effect, its business or its ability to consummate the
transactions herein contemplated;
(g) The Statement of Net Assets, Statement of Operations,
Statement of Changes in Net Assets and Financial Highlights
of the Trust for the year ended September 30, 2003 audited
by Ernst & Young LLP (copies of which have been or will be
furnished to the Trust) fairly present, in all material
respects, the Target Funds' financial condition as of such
date, and its results of operations, changes in its net
assets and financial highlights for such period in
accordance with generally accepted accounting principles,
and as of such date there were no known liabilities of the
Target Fund (contingent or otherwise) not disclosed therein
that would be required in accordance with generally accepted
accounting principles to be disclosed therein;
(h) The Trust has no material contracts or other commitments
(other than this Agreement) that will be terminated with
liability to it prior to the Closing Date;
(i) All issued and outstanding shares of the Target Fund are, and
at the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof. The Target Fund
does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of its shares, nor is
there outstanding any security convertible to any of its
shares. All such shares will, at the time of Closing, be held
by the persons and in the amounts set forth in the list of
shareholders submitted to the Acquiring Fund pursuant to
paragraph 3.4;
(j) 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 the Trust, and subject to the
approval of the Target Funds' shareholders, this Agreement
constitutes a valid and binding obligation of the Trust,
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. No other consents,
authorizations or approvals are necessary in connection with
the Trust's performance of this Agreement;
(k) All material Federal and other tax returns and reports of the
Target Fund required by law to be filed on or before the
Closing Date shall have been filed and are correct and all
Federal and other taxes shown as due or required to be shown
as due on said returns and reports have been paid or provision
has been made for the payment thereof, and to the best of the
Trust's knowledge, no such return is currently under audit and
no assessment has been asserted with respect to any such
return;
(l) For each taxable year since its inception, the Target Fund has
met all the requirements of Subchapter M of the Code for
qualification and treatment as a "regulated investment
company";
(m) At the Closing Date, the Trust will have good and valid title
to the Target Fund Assets, subject to no liens (other than the
obligation, if any, to pay the purchase price of portfolio
securities purchased by the Target Fund which have not settled
prior to the Closing Date), security interests or other
encumbrances, and full right, power and authority to assign,
deliver and otherwise transfer such assets hereunder, and upon
delivery and payment for such assets, the Acquiring Fund will
acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, including any
restrictions as might arise under the 1933 Act;
(n) On the effective date of the Registration Statement, at the
time of the meeting of the Target Funds' shareholders and on
the Closing Date, the Proxy Materials (exclusive of the
currently effective Trust Prospectus contained therein) will
(i) comply in all material respects with the provisions of the
1933 Act, the Securities Exchange Act of 1934, as amended
("1934 Act") and the 0000 Xxx and the regulations thereunder
and (ii) not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
Any other information furnished by the Trust for use in the
Registration Statement or in any other manner that may be
necessary in connection with the transactions contemplated
hereby shall be accurate and complete and shall comply in all
material respects with applicable Federal securities and other
laws and regulations thereunder;
(o) The Target Fund will, on or prior to the Valuation Date,
declare one or more dividends or other distributions to
shareholders that, together with all previous dividends and
other distributions to shareholders, shall have the effect of
distributing to the shareholders all of its investment company
taxable income and net capital gain, if any, through the
Valuation Date (computed without regard to any deduction for
dividends paid);
(p) The Trust has maintained or has caused to be maintained on its
behalf all books and accounts as required of a registered
investment company in compliance with the requirements of
Section 31 of the 1940 Act and the Rules thereunder; and
(q) The Target Fund is not acquiring the Acquiring Fund Shares to
be issued hereunder for the purpose of making any distribution
thereof other than in accordance with the terms of this
Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND
The obligations of the Target Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Trust 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:
6.1 All representations and warranties of the Trust contained in
this Agreement 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;
6.2 The Trust shall have delivered to the Target Fund, a
certificate of its President and Treasurer, in a form
reasonably satisfactory to the Target Fund and dated as of the
Closing Date, to the effect that the representations and
warranties of the Trust made in this Agreement are true and
correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement,
and as to such other matters as the Target Fund shall
reasonably request;
6.3 The Target Fund, shall have received a favorable opinion from
Mayer, Brown, Xxxx & Maw LLP, counsel to the Trust, dated as
of the Closing Date, to the effect that:
(a) The Trust is a validly existing Pennsylvania business trust,
and has the power to own all of its properties and assets and
to carry on its business as presently conducted (Pennsylvania
counsel may be relied upon in delivering such opinion);
(b) the Trust is a duly registered, 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) this Agreement has been duly authorized, executed and
delivered by the Trust and, assuming that the Registration
Statement complies with the 1933 Act, the 1934 Act and the
1940 Act and regulations thereunder and assuming due
authorization, execution and delivery of this Agreement by the
Trust, is a valid and binding obligation of the Trust
enforceable against the Trust 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;
(d) the Acquiring Fund Shares to be issued to the Target Fund
Shareholders as provided by this Agreement are duly authorized
and upon such delivery will be validly issued, fully paid and
non-assessable (except as set forth in the Trust's Statement
of Additional Information), and no shareholder of the Trust
has any preemptive rights to subscription or purchase in
respect thereof (Pennsylvania counsel may be relied upon in
delivering such opinion);
(e) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate the Trust's Declaration of Trust or By-Laws
(Pennsylvania counsel may be relied upon in delivering such
opinion); and
(f) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority
of the United States or any state is required for the
consummation by the Trust of the transactions contemplated
herein, except such as have been obtained under the 1933 Act,
the 1934 Act and the 1940 Act and such as may be required
under state securities laws; and
6.4 As of the Closing Date, there shall have been no material
change in the Acquiring Fund's investment objective, policies
and restrictions nor any increase in the investment management
fees from those described in the Trust's Prospectus dated May
1, 2003 and Statement of Additional Information dated May 1,
2003.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Trust, on behalf of the Target Fund, of all the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
7.1 All representations and warranties of the Trust contained in
this Agreement 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;
7.2 The Trust shall have delivered to the Acquiring Fund at the
Closing a certificate of its President and its Treasurer, in
form and substance satisfactory to the Acquiring Fund and
dated as of the Closing Date, to the effect that the
representations and warranties of the Trust made in this
Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters
as the Trust shall reasonably request;
7.3 The Target Fund shall have delivered to the Acquiring Fund, a
statement of the Target Fund Assets and its liabilities,
together with a list of the Target Funds' portfolio securities
and other assets showing the respective adjusted bases and
holding periods thereof for income tax purposes, as of the
Closing Date, certified by the Treasurer of the Trust;
7.4 The Trust shall have received at the Closing a favorable
opinion from Mayer, Brown, Xxxx & Maw LLP, counsel to the
Trust, dated as of the Closing Date to the effect that:
(a) The Trust is a validly existing Pennsylvania business trust
and has the power to own all of its properties and assets and
to carry on its business as presently conducted (Pennsylvania
counsel may be relied upon in delivering such opinion);
(b) the Trust is a duly registered, open-end, management
investment company under the 1940 Act, and its registration
with the Commission as an investment company under the 1940
Act is in full force and effect;
(c) this Agreement has been duly authorized, executed and
delivered by the Trust, and, assuming that the Registration
Statement complies with the 1933 Act, the 1934 Act and the
1940 Act and the regulations thereunder and assuming due
authorization, execution and delivery of this Agreement by the
Trust, is a valid and binding obligation of the Trust
enforceable against the Trust 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;
(d) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate the Trust's Declaration of Trust or By-Laws
(Pennsylvania counsel may be relied upon in delivering such
opinion); and
(e) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority
of the United States or any state is required for the
consummation by the Trust of the transactions contemplated
herein, except such as have been obtained under the 1933 Act,
the 1934 Act and the 1940 Act and such as may be required
under state securities laws; and
7.5 On the Closing Date, the Target Fund Assets shall include no
assets that the Acquiring Fund, by reason of limitations of
the Acquiring Fund's Declaration of Trust or otherwise, may
not properly acquire.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND AND THE
ACQUIRING FUND
The obligations of the Trust, on behalf of a Target Fund, and the Trust
on behalf of the Acquiring Fund, hereunder are each subject to the further
conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the
outstanding shares of the Target Fund in accordance with the
provisions of the Trust's Declaration of Trust, and certified
copies of the resolutions evidencing such approval shall have
been delivered to the Trust;
8.2 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 the transactions
contemplated herein;
8.3 All 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 and
securities authorities, including "no-action" positions of and
exemptive orders from such Federal and state authorities)
deemed necessary by Target Fund or 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
involve risk of a material adverse effect on the assets or
properties of the Trust or the Target Fund or Acquiring Fund;
8.4 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 1933 Act;
8.5 The Target Fund shall have declared and paid a dividend or
dividends and/or other distribution or distributions that,
together with all previous such dividends or distributions,
shall have the effect of distributing to the Target Fund
Shareholders all of the Target Funds' investment company
taxable income (computed without regard to any deduction for
dividends paid) and all of its net capital gain (after
reduction for any capital loss carry-forward and computed
without regard to any deduction for dividends paid) for all
taxable years ending on or before the Closing Date; and
8.6 The parties shall have received the opinion of the law firm of
Mayer, Brown, Xxxx & Maw LLP (based on such representations as
such law firm shall reasonably request), addressed to the
Trust on behalf of the Acquiring Fund and the Trust, on behalf
of the Target Fund, which opinion may be relied upon by the
shareholders of the Target Fund, substantially to the effect
that, for Federal income tax purposes:
(a) The transfer of the Target Fund's assets in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund
of certain stated liabilities of the Target Fund followed by
the distribution by the Target Fund of Acquiring Fund Shares
to the Target Fund Shareholders in exchange for their Target
Fund Shares pursuant to and in accordance with the terms of
the Reorganization Agreement will constitute a
"reorganization" within the meaning of Section 368(a)(1)(C) of
the Code, and the Target Fund and the Acquiring 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 Target Fund solely in
exchange for the Acquiring Fund Shares and the assumption by
the Acquiring Fund of the stated liabilities of the Target
Fund;
(c) No gain or loss will be recognized by the Target Fund upon the
transfer of the assets of the Target Fund to the Acquiring
Fund in exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the stated liabilities or
upon the distribution of the Acquiring Fund Shares to the
Target Fund Shareholders in exchange for their Target Fund
Shares;
(d) No gain or loss will be recognized by the Target Fund
Shareholders upon the exchange of the Target Fund Shares for
Acquiring Fund Shares;
(e) The aggregate tax basis for Acquiring Fund Shares received by
each Target Fund Shareholder pursuant to the reorganization
will be the same as the aggregate tax basis of the Target Fund
Shares held by each such Target Fund Shareholder immediately
prior to the Reorganization;
(f) The holding period of Acquiring Fund Shares to be received by
each Target Fund Shareholder will include the period during
which the Target Fund Shares surrendered in exchange therefor
were held (provided such Target Fund Shares were held as
capital assets on the date of the Reorganization);
(g) The tax basis of the assets of Target Fund acquired by the
Acquiring Fund will be the same as the tax basis of such
assets to the Target Fund immediately prior to the
Reorganization; and
(h) The holding period of the assets of the Target Fund in the
hands of the Acquiring Fund will include the period during
which those assets were held by the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Target Fund may waive the conditions
set forth in this paragraph 8.6.
9. FEES AND EXPENSES
9.1 (a) The Target Fund shall equally bear all of the expenses of
proxy solicitation including the cost of preparing and mailing
the Proxy Statement and Prospectus. The Target Fund and the
Acquiring Fund will each bear all of their respective expenses
incurred in connection with the entering into, and carrying
out of, the provisions of this Agreement, including legal,
accounting, Commission registration fees and Blue Sky
expenses, legal and accounting fees, filing and portfolio
transfer taxes (if any) incurred in connection with the
consummation of the transactions contemplated herein.
(b) In the event the transactions contemplated herein are not
consummated by reason of the Target Fund being either
unwilling or unable to go forward (other than by reason of the
nonfulfillment or failure of any condition to the Target
Fund's obligations specified in this Agreement), the Target
Fund's only obligation hereunder shall be to reimburse the
Acquiring Fund for all reasonable out-of-pocket fees and
expenses incurred by the Acquiring Fund in connection with
those transactions.
(c) In the event the transactions contemplated herein are not
consummated by reason of the Acquiring Fund being either
unwilling or unable to go forward (other than by reason of the
nonfulfillment or failure of any condition to the Acquiring
Fund's obligations specified in this Agreement), the Acquiring
Fund's only obligation hereunder shall be to reimburse the
Target Fund for all reasonable out-of-pocket fees and expenses
incurred by the Target Fund in connection with those
transactions.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement between the
parties.
10.2 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, except that the
representations, warranties and covenants of the Trust
hereunder shall not survive the dissolution and complete
liquidation of the Target Fund in accordance with Section 1.9.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of the Target Fund, and the
Acquiring Fund;
(b) by either, the Target Fund, or the Acquiring Fund, by notice
to the other, without liability to the terminating party on
account of such termination (providing the terminating party
is not otherwise in material default or breach of this
Agreement) if the Closing shall not have occurred on or before
March 31, 2004; or
(c) by either the Target Fund, or the Acquiring Fund, in writing
without liability to the terminating party on account of such
termination (provided the terminating party is not otherwise
in material default or breach of this Agreement), if (i) the
other party shall fail to perform in any material respect its
agreements contained herein required to be performed on or
prior to the Closing Date, (ii) the other party materially
breaches any of its representations, warranties or covenants
contained herein, (iii) the Target Fund shareholders fail to
approve this Agreement at any meeting called for such purpose
at which a quorum was present or (iv) any other condition
herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 (a) Termination of this Agreement pursuant to paragraphs
11.1(a) or (b) shall terminate all obligations of the parties
hereunder and there shall be no liability for damages on the
part of the Trust on behalf of the Target Fund or the Trust on
behalf of the Acquiring Fund, or the trustees or officers of
the Trust on behalf of the Target Fund or the Trust on behalf
of the Acquiring Fund, to any other party or its trustees or
officers.
(b) Termination of this Agreement pursuant to paragraph 11.1(c)
shall terminate all obligations of the parties hereunder and
there shall be no liability for damages on the part of the
Trust on behalf of the Target Fund or the Trust on behalf of
the Acquiring Fund, or the trustees or officers of the Trust
on behalf of the Target Fund or the Trust on behalf of the
Acquiring Fund, except that any party in breach of this
Agreement shall, upon demand, reimburse the non-breaching
party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by
this Agreement, including legal, accounting and filing fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the parties.
13. MISCELLANEOUS
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 Pennsylvania.
13.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns,
but 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 The obligations and liabilities of the Trust hereunder are
solely those of the Trust. It is expressly agreed that no
shareholder, nominee, trustee, officer, agent, or employee of
the Trust shall be personally liable hereunder. The execution
and delivery of this Agreement have been authorized by the
trustees of the Trust and signed by authorized officers of the
Trust acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally.
13.6 The obligations and liabilities of the Trust hereunder are
solely those of the Trust. It is expressly agreed that no
shareholder, nominee, trustee, officer, agent, or employee of
the Trust shall be personally liable hereunder. The execution
and delivery of this Agreement have been authorized by the
trustees of the Trust and signed by authorized officers of the
Trust acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer.
XXXXXX XXXXXXX INSTITUTIONAL FUND TRUST on
behalf of the U.S. SMALL CAP VALUE PORTFOLIO
By:________________________________
Xxxxxx X. Xxxxxxx
Executive Vice President and Principal
Executive Officer
XXXXXX XXXXXXX INSTITUTIONAL FUND TRUST on
behalf of STRATEGIC SMALL VALUE PORTFOLIO
By:________________________________
Xxxxxx X. Xxxxxxx
Executive Vice President and Principal
Executive Officer
