AGREEMENT AND PLAN OF REORGANIZATION
Exhibit 16(4)
THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this ___day of
January , 2007, by and between the Income Equity Fund (the “Acquiring Fund”) and the Diversified
Equity Fund (the “Transferring Fund”), each a series of The Coventry Group (the “Trust”). The
Trust is a Massachusetts business trust, with its principal place of business at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000.
The reorganization (the “Reorganization”) will consist of (i) the transfer of all of the
assets of the Transferring Fund in exchange solely for shares of beneficial interest, without par
value per share, of the Acquiring Fund (the “Acquiring Fund Shares”); (ii) the assumption by the
Acquiring Fund of all of the liabilities of the Transferring Fund; and (iii) the distribution,
after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the shareholders of
the Transferring Fund in liquidation of the Transferring Fund as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Transferring Fund and the Acquiring Fund are each a separate investment series of
an open-end, registered investment company of the management type and the Transferring Fund owns
securities that generally are assets of the character in which the Acquiring Fund is permitted to
invest;
WHEREAS, the Transferring Fund and the Acquiring Fund are authorized to issue their shares of
beneficial interest;
WHEREAS, the Trustees of the Trust have determined that the transactions contemplated herein
will be in the best interests of the Acquiring Fund and its shareholders;
WHEREAS, the Trustees of the Trust have determined that the Transferring Fund should exchange
all of its assets and liabilities for Acquiring Fund Shares and that the interests of the existing
shareholders of the Transferring Fund will not be diluted as a result of the transactions
contemplated herein;
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE TRANSFERRING FUND IN EXCHANGE FOR THE ACQUIRING FUND SHARES
AND ASSUMPTION OF TRANSFERRING FUND LIABILITIES AND LIQUIDATION OF THE TRANSFERRING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth and on the basis of
the representations and warranties contained herein, the Transferring Fund agrees to transfer all
of the Transferring Fund’s assets as set forth in paragraph 1.2 to the Acquiring Fund. The
Acquiring Fund agrees in exchange for the Transferring Fund’s assets (i) to deliver to the
Transferring Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund
Shares, computed in the manner and as of the time and date set forth in paragraphs 2.2 and
2.3; and (ii) to assume all of the liabilities of the Transferring Fund, as set forth in paragraph
1.3. Such transactions shall take place on the Closing Date provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Transferring Fund to be acquired by the
Acquiring Fund shall consist of all property, including, without limitation, all cash, securities,
commodities, interests in futures and dividends or interest receivables, that is owned by the
Transferring Fund and any deferred or prepaid expenses shown as an asset on the books of the
Transferring Fund on the Closing Date.
The Transferring Fund has provided the Acquiring Fund with its most recent audited financial
statements, which contain a list of all of the Transferring Fund’s assets as of the date thereof.
The Transferring Fund hereby represents that as of the date of the execution of this Agreement
there have been no changes in its financial position as reflected in said financial statements
other than those occurring in the ordinary course of its business in connection with the purchase
and sale of securities and the payment of its normal operating expenses and the payment of
dividends, capital gains distributions and redemption proceeds to shareholders. The Transferring
Fund reserves the right to sell any of such securities, but will not, without the prior written
approval of the Acquiring Fund, acquire any additional securities other than securities of the type
in which the Acquiring Fund is permitted to invest.
The Acquiring Fund will, within a reasonable time prior to the Closing Date, furnish the
Transferring Fund with a list of the securities, if any, on the Transferring Fund’s list referred
to in the second sentence of this paragraph that do not conform to the Acquiring Fund’s investment
objectives, policies, and restrictions. The Transferring Fund will, within a reasonable period of
time (not less than 30 days) prior to the Closing Date, furnish the Acquiring Fund with a list of
its portfolio securities and other investments. In the event that the Transferring Fund holds any
investments that the Acquiring Fund may not hold, the Transferring Fund, if requested by the
Acquiring Fund, will dispose of such securities prior to the Closing Date. In addition, if it is
determined that the Transferring Fund and the Acquiring Fund portfolios, when aggregated, would
contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with
respect to such investments, the Transferring Fund if requested by the Acquiring Fund will dispose
of a sufficient amount of such investments as may be necessary to avoid violating such limitations
as of the Closing Date. Notwithstanding the foregoing, nothing herein will require the
Transferring Fund to dispose of any investments or securities if, in the reasonable judgment of the
Transferring Fund, such disposition would violate the Transferring Fund’s fiduciary duty to its
shareholders.
1.3 LIABILITIES TO BE ASSUMED. The Transferring Fund will endeavor to discharge all of its
known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall assume all
of the Transferring Fund’s liabilities and obligations of any kind whatsoever, whether absolute,
accrued, contingent or otherwise in existence on the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as is conveniently
practicable (the “Liquidation Date”), (a) the Transferring Fund will liquidate and distribute pro
rata to the Transferring Fund’s shareholders of record, determined as of the close of business on
the Valuation Date (the “Transferring Fund Shareholders”), the Acquiring Fund
Shares received by the Transferring Fund pursuant to paragraph 1.1; and (b) the Transferring
Fund will thereupon proceed to terminate as set forth in paragraph 1.8 below. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares then credited to the
account of the Transferring Fund on the books of the Acquiring Fund to open accounts on the share
records of the Acquiring Fund in the names of the Transferring Fund Shareholders and representing
the respective pro rata number of the Acquiring Fund Shares due such shareholders. All issued and
outstanding shares of the Transferring Fund will simultaneously be canceled on the books of the
Transferring Fund. The Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund’s transfer agent. Shares of the Acquiring Fund will be issued in the manner
described in the Proxy Statement/Prospectus on Form N-14 which has been distributed to shareholders
of the Transferring Fund as described in paragraph 4.1(o).
1.6 TRANSFER TAXES. Transferring Fund Shareholders shall pay any transfer taxes payable upon
the issuance of Acquiring Fund Shares. Any transfer taxes payable upon issuance of the Acquiring
Fund Shares in a name other than the registered holder of the Transferring Fund shares on the books
of the Transferring Fund as of that time shall, as a condition of such issuance and transfer, be
paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Transferring Fund is and
shall remain the responsibility of the Transferring Fund up to and including the Closing Date and
such later date on which the Transferring Fund is terminated.
1.8 TERMINATION. The Trust shall take all necessary and appropriate steps under applicable
law to terminate the Transferring Fund promptly following the Closing Date and the making of all
distributions pursuant to paragraph 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Transferring Fund’s assets to be acquired by
the Acquiring Fund hereunder shall be the value of such assets computed as of the close of business
on the New York Stock Exchange on [the business day next preceding the Closing Date][March 28,
2007] (such time and date being hereinafter called the “Valuation Date”), using the valuation
procedures set forth in the Trust’s Declaration of Trust and the Transferring Fund’s then current
prospectus and statement of additional information or such other valuation procedures as shall be
mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring Fund Shares shall be
the net asset value per share computed as of the close of business on the New York Stock Exchange
on the Valuation Date, using the valuation procedures set forth in the Trust’s Declaration of Trust
and the Acquiring Fund’s then current prospectus and statement of additional information.
2.3 SHARES TO BE ISSUED. The number of full and fractional Acquiring Fund Shares to be issued
in exchange for the Transferring Fund’s assets shall be determined by multiplying the outstanding
shares of the Transferring Fund by the ratio computed by dividing the net asset value per share of
the Transferring Fund by the net asset value per share of the Acquiring Fund on the Valuation Date,
determined in accordance with in paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by BISYS Fund Services
Ohio, Inc., the Acquiring Fund and Transferring Fund’s accounting agent, in accordance with its
regular practice in pricing the shares and assets of the Acquiring Fund and Transferring Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing of the Reorganization (the “Closing”) shall take place on
or about March 30, 2007 or such other date as the parties may agree to in writing (the “Closing
Date”). All acts taking place at the Closing shall be deemed to take place simultaneously
immediately prior to the opening of business on the Closing Date unless otherwise provided. The
Closing shall be held as of 8:00 a.m. Eastern Time (“ET”) at the offices of the Trust, or at such
other time and/or place as the parties may agree.
3.2 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation Date (a) the New York
Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund or
the Transferring Fund shall be closed to trading or trading thereon shall be restricted; or (b)
trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the Acquiring Fund or the Transferring Fund is
impracticable, the Valuation Date (and the Closing Date) shall be postponed until the first
business day after the day when trading shall have been fully resumed and reporting shall have been
restored.
3.3 TRANSFER AGENT’S CERTIFICATE. The Transferring Fund shall cause its transfer agent to
deliver at the Closing a certificate of an authorized officer stating that its records contain the
names and addresses of the Transferring Fund Shareholders and the number and percentage ownership
of outstanding shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall issue and deliver, or cause its transfer agent, to issue and deliver, to the
Secretary of the Trust a confirmation evidencing the Acquiring Fund Shares to be credited on the
Closing Date or provide evidence satisfactory to the Transferring Fund that such Acquiring Fund
Shares have been credited to the Transferring Fund’s 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 and other documents as such other party or its counsel may
reasonably request.
3.4 CUSTODIAN’S CERTIFICATE. Fifth Third Bank, as custodian for the Transferring Fund, shall
deliver at the Closing a certificate of an authorized officer stating that: (a) the Transferring
Fund’s portfolio securities, cash, and any other assets shall have been delivered in proper form to
its respective Acquiring Fund on the Closing Date; and (b) all necessary taxes including all
applicable federal and state stock transfer stamps, if any, shall have
been paid, or provision for payment shall have been made, in conjunction with the delivery of
portfolio securities by the Transferring Fund.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE TRANSFERRING FUND. The Transferring Fund represents and warrants
to the Acquiring Fund as follows:
(a) The Transferring Fund is a separate investment series of the Trust, a business trust duly
organized, validly existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(b) The Transferring Fund is a separate investment series of the Trust, which is registered as
an investment company classified as a management company of the open-end type, and its registration
with the Securities and Exchange Commission (the “Commission”) as an investment company under the
Investment Company Act of 1940, as amended (the “1940 Act”), is in full force and effect.
(c) The current prospectus and statement of additional information of the Transferring Fund
conform in all material respects to the applicable requirements of the Securities Act of 1933, as
amended (the “1933 Act”), and the 1940 Act and the rules and regulations of the Commission
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.
(d) The Transferring Fund is not, and the execution, delivery, and performance of this
Agreement (subject to shareholder approval) will not result, in violation of any provision of the
Trust’s Declaration of Trust or By-Laws or of any material agreement, indenture, instrument,
contract, lease, or other undertaking to which the Transferring Fund is a party or by which it is
bound.
(e) The Transferring Fund has no material contracts or other commitments (other than this
Agreement) that will be terminated with liability to it prior to the Closing Date, except for
liabilities, if any, to be discharged as provided in paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted by the Acquiring Fund, no
litigation, administrative proceeding, or investigation of or before any court or governmental body
is presently pending or to its knowledge threatened against the Transferring Fund or any of its
properties or assets, which, if adversely determined, would materially and adversely affect its
financial condition, the conduct of its business, or the ability of the Transferring Fund to carry
out the transactions contemplated by this Agreement. The Transferring Fund 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 that materially
and adversely affects its business or its ability to consummate the transactions herein
contemplated.
(g) The audited financial statements of the Transferring Fund at March 31, 2006 and the
unaudited financial statement at September 30, 2006 are in accordance with generally accepted
accounting principles consistently applied, and such statements (copies of which have been
furnished to the Acquiring Fund) fairly reflect the financial condition of the Transferring Fund as
of such date, and there are no known contingent liabilities of the Transferring Fund as of such
date not disclosed therein.
(h) Since September 30, 2006, there has not been any material adverse change in the
Transferring Fund’s financial condition, assets, liabilities, or business other than changes
occurring in the ordinary course of business, or any incurrence by the Transferring Fund of
indebtedness maturing more than one year from the date such indebtedness was incurred, except as
otherwise disclosed to and accepted by the Acquiring Fund. For the purposes of this subparagraph
(h), a decline in the net asset value of the Transferring Fund shall not constitute a material
adverse change.
(i) At the Closing Date, all federal and other tax returns and reports of the Transferring
Fund required by law to have been filed by such date shall have been filed, and all federal and
other taxes shown due on said returns and reports shall have been paid, or provision shall have
been made for the payment thereof. To the best of the Transferring Fund’s knowledge, no such
return is currently under audit, and no assessment has been asserted with respect to such returns.
(j) For each fiscal year of its operation, the Transferring Fund has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated investment company and has
distributed in each such year all net investment income and realized capital gains.
(k) All issued and outstanding shares of the Transferring Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid and non-assessable by the Transferring
Fund. All of the issued and outstanding shares of the Transferring Fund will, at the time of the
Closing Date, be held by the persons and in the amounts set forth in the records of the transfer
agent as provided in paragraph 3.3. The Transferring Fund does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any of the Transferring Fund shares, nor is
there outstanding any security convertible into any of the Transferring Fund shares.
(l) At the Closing Date, the Transferring Fund will have good and marketable title to the
Transferring Fund’s assets to be transferred to the Acquiring Fund pursuant to paragraph 1.2 and
full right, power, and authority to sell, assign, transfer, and deliver such assets hereunder, and,
upon delivery and payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof, including such restrictions
as might arise under the 1933 Act, other than as disclosed to the Acquiring Fund and accepted by
the Acquiring Fund.
(m) The execution, delivery, and performance of this Agreement have been duly authorized by
all necessary action on the part of the Transferring Fund and, subject to approval by the
Transferring Fund’s shareholders, this Agreement constitutes a valid and binding obligation of the
Transferring Fund, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors’ rights and to general equity principles.
(n) The information furnished by the Transferring Fund for use in no-action letters,
applications for orders, registration statements, proxy materials, and other documents that may be
necessary in connection with the transactions contemplated hereby is accurate and complete in all
material respects and complies in all material respects with federal securities and other laws and
regulations thereunder applicable thereto.
(o) The Transferring Fund has provided the Acquiring Fund with information reasonably
necessary for the preparation of a prospectus, which included the proxy statement of the
Transferring Fund (the “Proxy Statement/Prospectus”), all of which was included in a Registration
Statement on Form N-14 of the Acquiring Fund (the “Registration Statement”), in compliance with the
1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the 1940 Act in
connection with the meeting of the shareholders of the Transferring Fund to approve this Agreement
and the transactions contemplated hereby. The Proxy Statement/Prospectus included in the
Registration Statement (other than information therein that relates to the Acquiring Fund and any
other fund described therein other than the Transferring Fund) does 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 misleading.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund represents and warrants to the
Transferring Fund as follows:
(a) The Acquiring Fund is a separate investment series of the Trust, a business trust duly
organized, validly existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(b) The Acquiring Fund is a separate investment series of the Trust, which is registered as an
investment company classified as a management company of the open-end type, and its registration
with the Securities and Exchange Commission (the “Commission”) as an investment company under the
Investment Company Act of 1940, as amended (the “1940 Act”), is in full force and effect.
(c) The prospectus and statement of additional information, as of the date of the Proxy
Statement/Prospectus, of the Acquiring Fund will conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission
thereunder and 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.
(d) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement
will not result, in violation of the Trust’s Declaration of Trust or By-Laws or of any material
agreement, indenture, instrument, contract, lease, or other undertaking to which the Acquiring Fund
is a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the Transferring Fund and accepted by the
Transferring Fund, no litigation, administrative proceeding or investigation of or before any court
or governmental body is presently pending or to its knowledge threatened against the Acquiring Fund
or any of its properties or assets, which, if adversely determined, would materially and adversely
affect its financial condition and the conduct of its business or the ability of the Acquiring Fund
to carry out the transactions contemplated by this Agreement. The Acquiring Fund knows of no facts
that might form the basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to consummate the transactions
contemplated herein.
(f) The audited financial statements of the Acquiring Fund at March 31, 2006 and the unaudited
financial statements at September 30, 2006 are in accordance with generally accepted accounting
principles consistently applied, and such statements (copies of which have been furnished to the
Transferring Fund) fairly reflect the financial condition of the Acquiring Fund as of such date,
and there are no known contingent liabilities of the Acquiring Fund as of such date not disclosed
therein.
(g) Since September 30, 2006, 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 to and
accepted by the Transferring Fund. For the purposes of this subparagraph (g), a decline in the net
asset value of the Acquiring Fund shall not constitute a material adverse change.
(h) At the Closing Date, all federal and other tax returns and reports of the Acquiring Fund
required by law then to be filed by such date shall have been filed, and all federal and other
taxes shown due on said returns and reports shall have been paid or provision shall have been made
for the payment thereof. To the best of the Acquiring Fund’s knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such returns.
(i) For each fiscal year of its operation, the Acquiring Fund has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated investment company and has
distributed in each such year all net investment income and realized capital gains.
(j) All issued and outstanding Acquiring Fund Shares are, and at the Closing Date will be,
duly and validly issued and outstanding, fully paid and non-assessable. The Acquiring Fund does
not have outstanding any options, warrants, or other rights to subscribe for or purchase any
Acquiring Fund Shares, nor is there outstanding any security convertible into any Acquiring Fund
Shares.
(k) The execution, delivery, and performance of this Agreement have been duly authorized by
all necessary action on the part of the Acquiring Fund, and this Agreement constitutes a valid and
binding obligation of the Acquiring Fund enforceable in accordance with
its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors’ rights and to general equity principles.
(l) The Acquiring Fund Shares to be issued and delivered to the Transferring Fund, for the
account of the Transferring 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.
(m) The information furnished by the Acquiring Fund for use in no-action letters, applications
for orders, registration statements, proxy materials, and other documents that may be necessary in
connection with the transactions contemplated hereby is accurate and complete in all material
respects and complies in all material respects with federal securities and other laws and
regulations applicable thereto.
(n) The Proxy Statement/Prospectus included in the Registration Statement (only insofar as it
relates to the Acquiring Fund) does 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 misleading.
(o) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act, and such of the state Blue Sky or securities
laws as it may deem appropriate in order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE TRANSFERRING FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Transferring 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
distributions.
5.2 APPROVAL BY SHAREHOLDERS. The Trust will call a meeting of the shareholders of the
Transferring Fund to consider and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Transferring Fund covenants that 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.
5.4 ADDITIONAL INFORMATION. The Transferring Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of
the Transferring Fund shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the Acquiring Fund and the
Transferring Fund will each take, or cause to be taken, all action, and do or cause to be done, all
things reasonably necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including any actions required to be taken after the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUND
The obligations of the Transferring Fund to consummate the transactions provided for
herein shall be subject, at its election, to the performance by 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 further conditions:
6.1 All representations and warranties of the Acquiring Fund contained in this Agreement shall
be true and correct in all material respects as of the date hereof and as of the Closing Date with
the same force and effect as if made on and as of the Closing Date, and the Acquiring Fund shall
have delivered to the Transferring Fund a certificate executed in its name by the Trust’s President
or Vice President, in form and substance reasonably satisfactory to the Transferring Fund and dated
as of the Closing Date, to such effect and as to such other matters as the Transferring Fund shall
reasonably request.
6.2 With respect to the Transferring Fund, the Trust shall have received on the Closing Date
an opinion from Xxxxxxxx Xxxx LLP, special counsel to the Trust and the Acquiring Fund, dated as of
the Closing Date, in a form reasonably satisfactory to the Transferring Fund, covering the
following points:
(a) The Acquiring Fund is a separate investment series of a business trust duly organized,
validly existing and in good standing under the laws of the Commonwealth of Massachusetts and, to
such counsel’s knowledge, has the trust power to own all of its properties and assets and, to carry
on its business as presently conducted.
(b) The Acquiring Fund is a separate series of a Massachusetts business trust registered as an
investment company under the 1940 Act, and, to such counsel’s knowledge, such registration with the
Commission 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 on behalf of
the Acquiring Fund and, assuming due authorization, execution and delivery of this Agreement by the
Transferring Fund, is a valid and binding obligation of the Acquiring Fund enforceable against the
Acquiring Fund in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium, and other laws relating to or affecting creditors’
rights generally and to general equity principles.
(d) Assuming that a consideration therefore not less than the net asset value thereof has been
paid, the Acquiring Fund Shares to be issued and delivered to the Transferring Fund on behalf of
the Transferring Fund Shareholders as provided by this Agreement are duly
authorized and upon such delivery will be legally issued and outstanding and fully paid and
non-assessable, and no shareholder of the Acquiring Fund has any statutory preemptive rights in
respect thereof.
(e) The Registration Statement, to the knowledge of such counsel, has been declared effective
by the Commission and no stop order under the 1933 Act pertaining thereto has been issued; and to
the knowledge of such counsel, no consent, approval, authorization or order of any court or
governmental authority of the United States or the Commonwealth of Massachusetts is required for
consummation by the Acquiring Fund of the transactions contemplated herein, except such as have
been obtained under the 1933 Act and the 1940 Act, and as may be required under state securities
laws.
(f) The execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, result in a violation of the Trust’s Declaration of
Trust or By-Laws or a material provision of any material agreement, indenture, instrument,
contract, lease or other undertaking (in each case known to such counsel) to which the Acquiring
Fund is a party or by which it or any of its properties may be bound or, to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any penalty under any
agreement, judgment, or decree to which the Acquiring Fund is a party or by which it is bound.
(g) Only insofar as they relate to the Acquiring Fund, the descriptions in the Proxy
Statement/Prospectus of statutes, legal and governmental proceedings and material contracts, if
any, are accurate and fairly present the information required to be shown.
(h) In the ordinary course of such counsel’s representation of the Acquiring Fund, and without
having made any investigation, such counsel does not know of any legal or governmental proceedings,
only insofar as they relate to the Acquiring Fund, existing on or before the effective date of the
Registration Statement or the Closing Date required to be described in the Registration Statement
or to be filed as exhibits to the Registration Statement which are not described or filed as
required.
(i) In the ordinary course of such counsel’s representation of the Acquiring Fund, and without
having made any investigation, and except as otherwise disclosed, to the knowledge of such counsel,
no litigation or administrative proceeding or investigation of or before any court or governmental
body is presently pending or threatened as to the Acquiring Fund or any of its properties or assets
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 its business,
other than as previously disclosed in the Registration Statement.
(j) To the knowledge of such counsel no consent, approval, authorization or order of any court
or governmental authority of the United States or the Commonwealth of Massachusetts is required for
consummation by the Acquiring Fund of the transaction contemplated herein, except as has and as may
be obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may be required under state
securities laws.
Such opinion shall contain such assumptions and limitations as shall be in the opinion of
Xxxxxxxx Xxxx LLP appropriate to render the opinions expressed therein.
ARTICLE VII
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 Transferring 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 Transferring Fund contained in this Agreement
shall be true and correct as of the date hereof and as of the Closing Date with the same force and
effect as if made on and as of the Closing Date, and the Transferring Fund shall have delivered to
the Acquiring Fund on the Closing Date a certificate executed in its name by the Trust’s President
or Vice President, in form and substance satisfactory to the Acquiring Fund and dated as of the
Closing Date, to such effect and as to such other matters as the Acquiring Fund shall reasonably
request.
7.2 The Transferring Fund shall have delivered to the Acquiring Fund a statement of the
Transferring Fund’s assets and liabilities, together with a list of the Transferring Fund’s
portfolio securities showing the tax costs of such securities by lot and the holding periods of
such securities, as of the Closing Date, certified by the Treasurer or Assistant Treasurer of the
Trust.
7.3 With respect to the Acquiring Fund, the Trust shall have received on the Closing Date an
opinion of Xxxxxxxx Xxxx LLP, special counsel to the Trust and the Transferring Fund, in a form
reasonably satisfactory to the Acquiring Fund, covering the following points:
(a) The Transferring Fund is a separate investment series of the Trust, a business trust duly
organized, validly existing and in good standing under the laws of the Commonwealth of
Massachusetts and has the trust power to own all of its properties and assets and, to the knowledge
of such counsel, to carry on its business as presently conducted.
(b) The Transferring Fund is a separate investment series of a Massachusetts business trust
registered as an investment company under the 1940 Act, and, to such counsel’s knowledge, such
registration with the Commission 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 on behalf of
the Transferring Fund and, assuming due authorization, execution, and delivery of this Agreement by
the Acquiring Fund, is a valid and binding obligation of the Transferring Fund enforceable against
the Transferring Fund in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other laws relating to or affecting
creditors’ rights generally and to general equity principles.
(d) Assuming that a consideration therefore of not less than the net asset value thereof has
been paid, and assuming that such shares were issued in accordance with the terms of the
Transferring Fund’s registration statement, or any amendment thereto, in effect at the time of such
issuance, all issued and outstanding shares of the Transferring Fund are legally issued and fully
paid and non-assessable.
(e) The execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, result in a violation of the Trust’s Declaration of
Trust or By-laws, or a material provision of any material agreement, indenture, instrument,
contract, lease or other undertaking (in each case known to such counsel) to which the Transferring
Fund is a party or by which it or any of its properties may be bound or, to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any penalty, under any
agreement, judgment, or decree to which the Transferring Fund is a party or by which it is bound.
(f) Only insofar as they relate to the Transferring Fund, the descriptions in the Proxy
Statement/Prospectus of statutes, legal and governmental proceedings and material contracts, if
any, are accurate and fairly represent the information required to be shown.
(g) In the ordinary course of such counsel’s representation of the Transferring Fund and
without having made any investigation, such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Transferring Fund existing on or before the
effective date of the Registration Statement or the Closing Date, required to be described in the
Registration Statement or to be filed as exhibits to the Registration Statement which are not
described or filed as required.
(h) In the ordinary course of such counsel’s representation of the Transferring Fund and
without having made any investigation, and except as otherwise disclosed, to the knowledge of such
counsel, no litigation or administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Transferring Fund or any of its
respective properties or assets and the Transferring Fund is not a party to nor subject to the
provisions of any order, decree or judgment of any court or governmental body, which materially and
adversely affects its business other than as previously disclosed in the Proxy
Statement/Prospectus.
(i) To the knowledge of such counsel, no consent, approval, authorization or order of any
court or governmental authority of the United States or the Commonwealth of Massachusetts is
required for consummation by the Transferring Fund of the transactions contemplated herein, except
such as have been obtained under the 1933 Act, 1934 Act and the 1940 Act, and as may be required
under state securities laws.
Such opinion shall contain such other assumptions and limitations as shall be in the opinion
of Xxxxxxxx Xxxx LLP appropriate to render the opinions expressed therein.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE ACQUIRING FUND AND THE TRANSFERRING FUND
THE ACQUIRING FUND AND THE TRANSFERRING FUND
If any of the conditions set forth below do not exist on or before the Closing Date with
respect to the Transferring Fund or the Acquiring Fund, the other party to this Agreement shall, at
its option, not be required to consummate the transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have been approved by the
requisite vote of the holders of the outstanding shares of the Transferring Fund in accordance with
the provisions of the Trust’s Agreement and Declaration of Trust and By-Laws and certified copies
of the resolutions evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Transferring
Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an unfavorable report under
Section 25(b) of the 1940 Act, nor instituted any proceeding seeking to enjoin the consummation of
the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act and no action,
suit or other proceeding shall be threatened or pending before any court or governmental agency in
which it is sought to restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein.
8.3 All required consents of other parties and all other consents, orders, and permits of
federal, state and local regulatory authorities (including those of the Commission and of state
Blue Sky securities authorities, including any necessary “no-action” positions of and exemptive
orders from such federal and state authorities) to permit consummation of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the assets or properties
of the Acquiring Fund or the Transferring Fund, provided that either party hereto may for itself
waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933 Act, and no stop
orders suspending the effectiveness of the Registration Statement 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.
8.5 The Transferring Fund shall have declared a dividend or dividends which, together with all
previous such dividends shall have the effect of distributing to the Transferring Fund Shareholders
all of the Transferring Fund’s investment company taxable income for all taxable periods ending on
the Closing Date (computed without regard to any deduction for dividends paid) and all of the net
capital gains realized in all taxable periods ending on the Closing Date (after reduction for any
capital loss carryforward).
8.6 The Trust shall have received a favorable opinion of Xxxxxxxx Xxxx LLP addressed to the
Acquiring Fund and the Transferring Fund substantially to the effect that, for federal income tax
purposes:
(a) The transfer of all of the Transferring Fund assets in exchange for the Acquiring Fund
Shares and the assumption by the Acquiring Fund of the liabilities of the Transferring Fund
followed by the distribution of the Acquiring Fund Shares to the Transferring
Fund Shareholders in dissolution and liquidation of the Transferring Fund will constitute a
“reorganization” within the meaning of Section 368(a) of the Code, and the Acquiring Fund and the
Transferring 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 Transferring Fund solely in exchange for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of the liabilities of the Transferring Fund.
(c) No gain or loss will be recognized by the Transferring Fund upon the transfer of the
Transferring Fund’s assets to the Acquiring Fund in exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the liabilities of the Transferring Fund or upon the
distribution (whether actual or constructive) of the Acquiring Fund Shares to Transferring Fund
Shareholders in exchange for their shares of the Transferring Fund.
(d) No gain or loss will be recognized by the Transferring Fund Shareholders upon the exchange
of their Transferring Fund shares for the Acquiring Fund Shares in liquidation of the Transferring
Fund.
(e) The aggregate tax basis for the Acquiring Fund Shares received by each Transferring Fund
Shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the
Transferring Fund shares held by such Shareholder immediately prior to the Closing. The holding
period of the Acquiring Fund Shares received by each Transferring Fund Shareholder will include the
period during which the Transferring Fund shares exchanged therefore were held by such Shareholder
(provided the Transferring Fund shares were held as capital assets on the date of the Closing).
(f) The tax basis of the Transferring Fund assets acquired by the Acquiring Fund will be the
same as the tax basis of such assets to the Transferring Fund immediately prior to the Closing, and
the holding period of the assets of the Transferring Fund in the hands of the Acquiring Fund will
include the period during which those assets were held by the Transferring Fund.
(g) The Acquiring Fund will succeed to and take into account the items of the Transferring
Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified
in Sections 381, 382, 383 and 384 of the Code and applicable regulations thereunder.
Such opinion shall contain such assumptions and limitations as shall be in the opinion of
Xxxxxxxx Xxxx LLP appropriate to render the opinions expressed therein. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Transferring Fund may waive the
conditions set forth in this paragraph 8.6.
ARTICLE IX
EXPENSES
9.1 The Acquiring Fund, the Transferring Fund, and the shareholders of the Transferring
Fund will pay their respective expenses, if any, incurred in connection with the Reorganization.
Notwithstanding the foregoing, 1st Source Corporation Investment Advisors, Inc., the investment
advisor to the Funds or one of its affiliates, will pay or assume those expenses of the Acquiring
Fund and the Transferring Fund that are solely and directly realted to the Reorganization,
determined in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Transferring Fund agree that neither party has made any
representation, warranty or covenant not set forth herein and that 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 hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring Fund and the
Transferring Fund. In addition, either the Acquiring Fund or the Transferring Fund may at its
option terminate this Agreement at or prior to the Closing Date because:
(a) of a breach by the other of any representation, warranty, or agreement contained herein to
be performed at or prior to the Closing Date, if not cured within 30 days;
(b) a 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; or
(c) a determination by the Trust’s Board of Trustees that the consummation of the Transaction
contemplated herein is not in the best interest of the Transferring Fund or the Acquiring Fund.
11.2 In the event of any such termination, in the absence of willful default, there shall be
no liability for damages on the part of the Acquiring Fund, the Transferring Fund, the Trust, or
its Trustees or officers, to the other party, but each shall bear the expenses incurred by it
incidental to the preparation and carrying out of this Agreement as provided in paragraph 9.1.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Trust; provided, however, that
following the meeting of shareholders of the Transferring Fund pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Shares to be issued to the Transferring Fund Shareholders under this
Agreement to the detriment of such Transferring Fund Shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts, without giving effect to the conflicts of laws provisions thereof.
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
permitted assigns, any rights or remedies under or by reason of this Agreement.
13.5 With respect to the Trust, the name used herein refers respectively to the trust created
and, as the case may be, the Trustees, as trustees but not individually or personally, acting from
time to time under organizational documents filed in Massachusetts, which are hereby referred to
and are also on file at the principal offices of the Trust. The obligations of the Trust entered
into in the name or on behalf thereof by any of the Trustees, representatives or agents of the
Trust, are made not individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders or representatives of the Trust personally, but bind only the trust
property, and all persons dealing with the Transferring Fund and the Acquiring Fund must look
solely to the trust property belonging to the Transferring Fund and the Acquiring Fund for the
enforcement of any claims against the Transferring Fund and the Acquiring Fund, respectively.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first
written above.
| THE COVENTRY GROUP ON BEHALF OF THE INCOME EQUITY FUND |
||||
| By: | ||||
| Name: | R. Xxxxxxx Xxxxx | |||
| Title: | President | |||
| THE COVENTRY GROUP ON BEHALF OF THE DIVERSIFIED EQUITY FUND |
||||
| By: | ||||
| Name: | R. Xxxxxxx Xxxxx | |||
| Title: | President | |||
