Exhibit (4)
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of September 17, 2009 (the
"Agreement"), by and between Sentinel Group Funds, Inc., a Maryland corporation
(the "Corporation"), on behalf of the Sentinel Government Money Market Fund, a
series of the Corporation (the "Acquired Fund"), and Daily Income Fund, a
Massachusetts business trust (the "Trust"), on behalf of the U.S. Government
Portfolio, a series of the Trust (the "Acquiring Fund").
This Agreement is intended to be and is adopted as a "plan of
reorganization" within the meaning of the regulations under Section 368(a) of
the United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization will consist of the transfer of all of the assets of the Acquired
Fund to the Acquiring Fund in exchange solely for the Acquiring Fund's
Institutional Service Class shares ("Acquiring Fund Shares") of beneficial
interest, par value $.01 per share, and the assumption by the Acquiring Fund of
the liabilities of the Acquired Fund as described herein, and the distribution,
after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to
the shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement (the "Reorganization").
WHEREAS, the Acquired Fund is a series of a registered, open-end management
investment company, and the Acquiring Fund is a series of a registered, open-end
management investment company, and the Acquired Fund owns securities which are
assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both the Acquiring Fund and the Acquired Fund are authorized to
issue their shares of beneficial interest and common stock, respectively;
WHEREAS, the Corporation's Board has determined that the Reorganization is
in the best interests of the Acquired Fund and the Acquired Fund's shareholders
and that the interests of the Acquired Fund's existing shareholders will not be
diluted as a result of the Reorganization; and
WHEREAS, the Trust's Board has determined that the Reorganization is in the
best interests of the Acquiring Fund and the Acquiring Fund's shareholders and
that the interests of the Acquiring Fund's existing shareholders will not be
diluted as a result of the Reorganization:
NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties agree as follows:
1. THE REORGANIZATION.
1.1. Subject to the terms and conditions contained herein and on the basis
of the representations and warranties contained herein, the Acquired
Fund agrees to assign, transfer and convey to the Acquiring Fund
substantially
all of the assets of the Acquired Fund, as set forth in
paragraph 1.2, free and clear of all liens, encumbrances and claims
whatsoever. The Acquiring Fund agrees in exchange therefor (a) to
deliver to the Acquired Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined as set forth in
paragraph 2.3; and (b) to assume the stated liabilities of the
Acquired Fund, as set forth in paragraph 1.3. Such transactions shall
take place at the closing (the "Closing") as of the close of business
on the closing date (the "Closing Date"), provided for in paragraph
3.1. In lieu of delivering certificates for the Acquiring Fund Shares,
the Acquiring Fund shall credit the Acquiring Fund Shares to the
Acquired Fund's account on the books of the Acquiring Fund and shall
deliver a confirmation thereof to the Acquired Fund.
1.2. The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of substantially all assets, including, without
limitation, all portfolio securities, cash, cash equivalents,
commodities, interests in futures and other financial instruments,
claims (whether absolute or contingent, known or unknown), receivables
(including dividends or interest and other receivables) and other
property belonging to the Acquired Fund, and any deferred or prepaid
expenses, reflected on an unaudited statement of assets and
liabilities of the Acquired Fund as of the Valuation Date (as defined
in paragraph 2.1) (the "Assets").
1.3. The Acquired Fund will endeavor to identify and, to the extent
practicable, discharge all of its known liabilities and obligations
before the Closing Date. The Acquiring Fund shall assume the
liabilities, expenses, costs, charges and reserves reflected on an
unaudited statement of assets and liabilities of the Acquired Fund.
1.4. Delivery of the Acquired Fund's Assets shall be made on the Closing
Date and shall be delivered to The Bank of New York Mellon, the
Acquiring Fund's custodian (the "Custodian"), for the account of the
Acquiring Fund, with all securities not in bearer or book-entry form
duly endorsed, or accompanied by duly executed separate assignments or
stock powers, in proper form for transfer, with signatures guaranteed,
and with all necessary stock transfer stamps, sufficient to transfer
good and marketable title thereto (including all accrued interest and
dividends and rights pertaining thereto) to the Custodian for the
account of the Acquiring Fund free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered
shall be in the form of immediately available funds payable to the
order of the Custodian for the account of the Acquiring Fund.
1.5. The Acquired Fund will pay or cause to be paid to the Acquiring Fund
any dividends and interest received on or after the Closing Date with
respect to Assets transferred to the Acquiring Fund hereunder. The
Acquired Fund will transfer to the Acquiring Fund any distributions,
rights or other assets received by the Acquired Fund after the Closing
Date as distributions on
or with respect to the securities transferred. Such assets shall be
deemed included in the Assets transferred to the Acquiring Fund on the
Closing Date and shall not be separately valued.
1.6. Upon completion of the transfer of assets and delivery of Acquiring
Fund Shares pursuant to paragraph 1.1, the Acquired Fund will
distribute pro rata to holders of record of the Acquired Fund's Class
A shares and Class B shares, determined as of the close of business on
the Closing Date ("Fund Shareholders"), Institutional Service Class
shares of the Acquiring Fund received by the Acquired Fund pursuant to
paragraph 1.1. As soon after the Closing Date as is conveniently
practicable, the Acquired Fund will take such additional steps as are
necessary to liquidate and, promptly thereafter, terminate as a series
of the Corporation in accordance with applicable laws of the State of
Maryland and federal securities laws. Such distribution and
liquidation will be accomplished by the transfer of the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books
of the Acquiring Fund to an open account in the name of Sentinel
Administrative Services, Inc., for the exclusive benefit of its
customers, on the share records of the Acquiring Fund. All issued and
outstanding shares of the Acquired Fund simultaneously will be
redeemed and canceled on the books of the Acquired Fund and will be
null and void. Acquiring Fund Shares distributed to Fund Shareholders
will be reflected on the books of Sentinel Administrative Services,
Inc. as uncertificated, book-entry shares; the Acquiring Fund will not
issue share certificates in the Reorganization.
1.7. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent as an account for Sentinel
Administrative Services, Inc., for the exclusive benefit of its
customers. Acquiring Fund Shares will be issued in the manner
described in the Acquiring Fund's then-current prospectus and
statement of additional information.
1.8. Any transfer taxes payable upon issuance of the Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund Shares
on the books of the Acquired 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.
1.9. Any reporting responsibility of the Acquired Fund, including the
responsibility for filing regulatory reports, tax returns, or other
documents with the Securities and Exchange Commission (the
"Commission"), any state securities commission, and any federal, state
or local tax authorities or any other relevant regulatory authority,
is and shall remain the responsibility of the Acquired Fund up to and
including the Closing Date and such later date on which the Acquired
Fund's existence is terminated.
1.10. As soon as practicable after the Closing Date, the Acquired Fund
shall provide the Acquiring Fund with copies of all books and records
that pertain to the Acquired Fund that the Acquiring Fund is required
to
maintain under the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules of the Commission thereunder.
2. VALUATION.
2.1. The value of the Acquired Fund's Assets to be acquired, and the amount
of the Acquired Fund's liabilities to be assumed, by the Acquiring
Fund hereunder shall be computed as of the close of trading on the
floor of the New York Stock Exchange (usually 4:00 p.m., Eastern time)
on the Closing Date (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures set forth in the
Acquiring Fund's then-current prospectus or statement of additional
information, or such other valuation procedures as shall be mutually
agreed upon by the parties hereto.
2.2. The net asset value of an Acquiring Fund share shall be the net asset
value per share computed as of the Valuation Date, using the valuation
procedures set forth in the Acquiring Fund's then-current prospectus
or statement of additional information, which are and shall be
consistent with the policies currently in effect for the Acquired
Fund.
2.3. The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Acquired Fund's net assets shall
be determined by dividing the value of the net assets of the
applicable class of the Acquired Fund determined using the same
valuation procedures referred to in paragraph 2.1 by the net asset
value of one Acquiring Fund Share of the corresponding class,
determined in accordance with paragraph 2.2.
2.4. All computations of value shall be made by Sentinel Administrative
Services, Inc., in cooperation with Xxxxx & Xxxx Asset Management,
LLC, on behalf of the Acquired Fund and the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1. The Closing Date shall be November 13, 2009, or such other date as the
parties may mutually agree. All acts taking place at the Closing shall
be deemed to take place simultaneously on the Closing Date unless
otherwise provided. The Closing shall be held at 5:00 p.m., Eastern
time, at the offices of Xxxxx & Tang Asset Management, LLC, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx such other time and/or place as the
parties may mutually agree.
3.2. The Custodian shall deliver at the Closing a certificate of an
authorized officer stating that the Acquired Fund's Assets have been
delivered in proper form to the Acquiring Fund on the Closing Date.
The Acquired Fund's portfolio securities and instruments deposited
with a securities depository (as defined in Rule 17f-4 under the 0000
Xxx) or with a
permitted counterparty or futures commission merchant (as defined in
Rule 17f-6 under the 0000 Xxx) shall be delivered to the Custodian as
of the Closing Date by book entry, in accordance with the customary
practices of the Custodian. The cash to be transferred by the Acquired
Fund shall be delivered to the Custodian for the account of the
Acquiring Fund by wire transfer of federal funds on the Closing Date.
3.3. If on the Valuation Date (a) the New York Stock Exchange or another
primary trading market for portfolio securities of the Acquiring Fund
or the Acquired 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
Acquired Fund is impracticable, 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 or such
other date as the parties hereto may agree.
3.4. The Acquired Fund's transfer agent shall deliver at the Closing a
certificate of an authorized officer stating that its records contain
the names and addresses of the Fund Shareholders and the number and
percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund's
transfer agent shall issue and deliver to the Acquired Fund's
Secretary a confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date, or provide evidence satisfactory to the
Acquired Fund that such Acquiring Fund Shares have been credited to
the Acquired Fund's account on the books of the Acquiring Fund.
3.5. At the Closing, each party shall deliver to the other such bills of
sale, checks, assignments, receipts, transfer agent certificates,
officers certificates, custodian certificates, opinion and other
certificates and documents as such other party or its counsel may
reasonably request.
3.6. If the Acquired Fund is unable to make delivery to the Custodian
pursuant to paragraph 3.2 of any of the Assets for the reason that any
of such Assets have not yet been delivered to the Acquired Fund by the
Acquired Fund's broker, dealer or other counterparty, then, in lieu of
such delivery, the Acquired Fund shall deliver with respect to said
Assets executed copies of an agreement of assignment and due bills
executed on behalf of said broker, dealer or other counterparty,
together with such other documents as may be required by the Acquiring
Fund or the Custodian, including broker confirmation slips.
4. REPRESENTATIONS AND WARRANTIES.
4.1. The Acquired Fund represents and warrants to the Acquiring Fund as
follows:
4.1.1. The Acquired Fund is a separate series of the Corporation, which is
duly organized and validly existing under the laws of the State of
Maryland.
4.1.2. The Corporation is registered under the 1940 Act as an open-end
management investment company, and the Acquired Fund's shares are
registered under the Securities Act of 1933, as amended (the "1933
Act"), and such registrations have not been revoked or rescinded and
are in full force and effect.
4.1.3. The current prospectus and statement of additional information of
the Acquired Fund 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 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
materially misleading.
4.1.4. The Acquired Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation
of the Acquired Fund's Articles of Amendment and Restatement, as
amended and supplemented (the "Acquired Fund's Charter"), or its
Bylaws or of any material agreement, indenture, instrument, contract,
lease or other undertaking to which the Acquired Fund is a party or by
which the Acquired Fund is bound.
4.1.5. The Acquired Fund has no material contracts or other commitments
that will be terminated with liability to it on or prior to the
Closing Date.
4.1.6. No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated herein, except as may
be required under the 1933 Act, the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the 1940 Act and by state securities
laws.
4.1.7. No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or to the
Acquired Fund's knowledge threatened against the Acquired Fund or any
of the Acquired Fund's properties or assets which, if adversely
determined, would materially and adversely affect the Acquired Fund's
financial condition or the conduct of the Acquired Fund's business.
The Acquired Fund knows of no facts which 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 the Acquired
Fund's business or the Acquired Fund's ability to consummate the
transactions contemplated herein.
4.1.8. The financial statements of the Acquired Fund for the fiscal year
ended November 30, 2008 have been prepared by in accordance with
generally accepted accounting principles and audited by
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, and such statements (copies of which have been
furnished to the Acquiring Fund) fairly reflect the financial
condition of
the Acquired Fund as of such date, and there are no known
contingent liabilities of the Acquired Fund as of such date not
disclosed therein.
4.1.9. Since November 30, 2008, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of
business, or any incurrence by the Acquired Fund of indebtedness
maturing more than one year from the date such indebtedness was
incurred, except as disclosed on the statement of assets and
liabilities referred to in paragraphs 1.3 and 4.1.8 or otherwise
disclosed to and accepted by the Acquiring Fund. For the purposes of
this paragraph 4.1.9, a decline in the net asset value of the Acquired
Fund shall not constitute a material adverse change.
4.1.10. At the Closing Date, all federal and other tax returns and reports
of the Acquired Fund required by law then to be filed shall have been
filed, and all federal and other taxes shown as due on said returns
and reports shall have been paid so far as due, or provision shall
have been made for the payment thereof, and to the knowledge of the
Acquired Fund no such return is currently under audit and no
assessment or deficiency has been asserted with respect to such
returns.
4.1.11. For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
4.1.12. All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable by the Acquired Fund. All of the issued
and outstanding shares of the Acquired Fund will, at the time of
Closing, be held by the persons and in the amounts set forth in the
records of its transfer agent as provided in paragraph 3.4. The
Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Fund's shares,
nor is there outstanding any security convertible into any of the
Acquired Fund's shares.
4.1.13. On the Closing Date, the Acquired Fund will have good and
marketable title to the Assets and full right, power and authority to
sell, assign, transfer and deliver the Assets to be transferred by it
hereunder free of any liens or other encumbrances, and upon delivery
and payment for the 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 and accepted by the Acquiring
Fund.
4.1.14. 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 Acquired Fund's Board and does not require the
approval or consent of Fund Shareholders, and this Agreement will
constitute the valid and legally binding obligation of the Acquired
Fund, enforceable in
accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and to general
principles of equity and the discretion of the court (regardless of
whether the enforceability is considered in a proceeding in equity or
at law).
4.1.15. The information to be furnished by the Acquired Fund for use in
registration statements, information statements and other documents
filed or to be filed with any federal, state or local regulatory
authority (including the Financial Industry Regulatory Authority),
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.
4.1.16. The Registration Statement on Form N-14 and the Combined
Prospectus/Information Statement contained therein as amended or
supplemented (the "Registration Statement"), as of the effective date
of the Registration Statement and at all times subsequent thereto up
to and including the Closing Date, conform and will conform, as it
relates to the Acquired Fund, in all material respects to the
requirements of the federal and state securities laws and the rules
and regulations thereunder and do not and will not include, as it
relates to the Acquired Fund, 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 such statements were made, not misleading.
4.2. The Acquiring Fund represents and warrants to the Acquired Fund as
follows:
4.2.1. The Acquiring Fund is a separate series of the Daily Income Fund,
which is organized as a Massachusetts business trust.
4.2.2. The Trust is registered under the 1940 Act as an open-end management
investment company, and the Acquiring Fund's shares are registered
under the 1933 Act, and such registrations have not been revoked or
rescinded and are in full force and effect.
4.2.3. The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations 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
materially misleading.
4.2.4. The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation
of the Acquiring Fund's Declaration of Trust, as amended or its
Amended
and Restated By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring Fund is a
party or by which the Acquiring Fund is bound.
4.2.5. No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated herein, except as may
be required under the 1933 Act, the 1934 Act and the 1940 Act and by
state securities laws.
4.2.6. No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or to the
Acquiring Fund's knowledge threatened against the Acquiring Fund or
any of the Acquiring Fund's properties or assets which, if adversely
determined, would materially and adversely affect the Acquiring Fund's
financial condition or the conduct of the Acquiring Fund's business.
The Acquiring Fund knows of no facts which 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 the Acquiring
Fund's business or the Acquiring Fund's ability to consummate the
transactions contemplated herein.
4.2.7. The financial statements of the Acquiring Fund for the fiscal year
ended March 31, 2009 have been prepared in accordance with generally
accepted accounting principles and audited by PricewaterhouseCoopers
LLP an independent registered public accounting firm, and are in
accordance with GAAP, consistently applied, and such statements
(copies of which have been furnished to the Acquired Fund) fairly
reflect the financial condition of the Acquiring Fund as of such date.
4.2.8. Since March 31, 2009, 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 disclosed on the statement of assets and
liabilities referred to in paragraph 4.2.8, or as otherwise disclosed
to and accepted by the Acquired Fund. For the purposes of this
paragraph 4.2.8, a decline in the net asset value of the Acquiring
Fund shall not constitute a material adverse change.
4.2.9. At the Closing Date, all federal and other tax returns and reports
of the Acquiring Fund required by law then to be filed shall have been
filed, and all federal and other taxes shown as due on said returns
and reports shall have been paid so far as due, or provision shall
have been made for the payment thereof, and to the knowledge of the
Acquiring Fund no such return is currently under audit and no
assessment or deficiency has been asserted with respect to such
returns.
4.2.10. For each taxable year of its operation, the Acquiring Fund has met,
and for the taxable year that includes the Closing Date, the Acquiring
Fund expect to meet, the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
4.2.11. All issued and outstanding shares of the Acquiring Fund are, and at
the Closing Date (including the shares of the Acquiring Fund to be
issued pursuant to paragraph 1.1 of this Agreement) will be, duly and
validly issued and outstanding, fully paid and non-assessable by the
Acquiring Fund. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of
the Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares.
4.2.12. 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 Acquiring Fund's Board, and this Agreement will
constitute the valid and legally binding obligation of the Acquiring
Fund, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and to general
principles of equity and the discretion of the court (regardless of
whether the enforceability is considered in a proceeding in equity or
at law).
4.2.13. The Registration Statement as of its effective date and at all
times subsequent thereto up to and including the Closing Date,
conforms and will conform, as it relates to the Acquiring Fund, in all
material respects to the requirements of the federal and state
securities laws and the rules and regulations thereunder and does not
and will not include, as it relates to the Acquiring Fund, 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 such statements
were made, not misleading. No representations and warranties in this
paragraph 4.2 shall apply to statements or omissions made in reliance
upon and in conformity with written information concerning the
Acquired Fund furnished to the Acquiring Fund by the Acquired Fund.
4.2.14. No consideration other than the Acquiring Fund Shares (and the
Acquiring Fund's assumption of the Acquired Fund's stated liabilities)
will be issued in exchange for the Acquired Fund's assets in the
Reorganization.
4.2.15. The Acquiring Fund does not directly or indirectly own, nor on the
Closing Date will it directly or indirectly own, nor has it directly
or indirectly owned at any time during the past five years, any shares
of the Acquired Fund.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
5.1. The Acquiring Fund and the Acquired 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 payment of customary dividends and other
distributions.
5.2. Subject to the provisions of this Agreement, the Acquired 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.
5.3. As promptly as practicable, but in any case within sixty days after
the Closing Date, the Acquired Fund shall furnish the Acquiring Fund,
in such form as is reasonably satisfactory to the Acquiring Fund, a
statement of the earnings and profits of the Acquired Fund for federal
income tax purposes which will be carried over to the Acquiring Fund
as a result of Section 381 of the Code and which will be certified by
the Acquired Fund's Chief Executive Officer, President, Chief
Financial Officer or its Vice President and Treasurer.
5.4. The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of the Registration Statement
and the Acquiring Fund will take such steps and make such filings as
are required to register Acquiring Fund Shares transferred in the
Reorganization under the 1933 Act and the 1940 Act.
5.5. 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.
5.6. The Acquired Fund covenants that the Acquired 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.
5.7. As soon as is reasonably practicable after the Closing, the Acquired
Fund will make a liquidating distribution to the Acquired Fund's
shareholders consisting of the Acquiring Fund Shares received at the
Closing.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired 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 Acquired Fund 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 Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with
a list of the Acquired Fund's portfolio securities showing the tax
basis of such securities by lot and the holding periods of such
securities, as of the Closing Date, certified by the Acquired Fund's
Treasurer.
6.3. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in the Acquired Fund's name by the
Acquired Fund's Chief Executive Officer, President or Vice President
and its Treasurer, in form and substance satisfactory to the Acquiring
Fund, to the effect that the representations and warranties of the
Acquired Fund 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
Acquiring Fund shall reasonably request.
6.4. The Acquiring Fund shall have received an opinion(s) of counsel(s) of
the Acquired Fund as to the matters identified in paragraphs 4.1.1,
4.1.2., 4.1.6. and 4.1.14.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired 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 conditions:
7.1. 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, 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 Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in the Acquiring Fund's name by
the Acquiring Fund's Chief Executive Officer, President or Vice
President and its Treasurer, in form and substance reasonably
satisfactory to the Acquired Fund, to the effect that the
representations and warranties of the Acquiring Fund 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 Acquired Fund shall
reasonably request.
7.3. The Acquired Fund shall have received an opinion(s) of counsel(s) of
the Acquiring Fund as to the matters identified in paragraphs 4.2.1,
4.2.2., 4.2.5. and 4.2.12.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND AND THE
ACQUIRING FUND.
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired 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 Boards of each of the Acquired Fund and the
Acquiring Fund.
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) deemed necessary by the Acquired Fund or the Acquiring
Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except
where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or
properties of the Acquired Fund or the Acquiring 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 thereof shall have
been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 0000
Xxx.
8.5. The Acquired Fund shall have declared and paid a dividend or dividends
which, together with all previous dividends, shall have the effect of
distributing to Acquired Fund shareholders all of the Acquired Fund's
investment company taxable income (within the meaning of Section
852(b)(2) of the Code) for all taxable years or periods ending on or
prior to the Closing Date (computed without regard to any deduction
for dividends paid); the excess of its interest income excludable from
gross income under Section 103(a) of the Code over its disallowed
deductions under Sections 265 and 171(a)(2) of the Code, for all
taxable years or periods; and all of its net capital gain (as defined
in Section 1222(11) of
the Code) realized in all taxable years or periods (after reduction
for any capital loss carryforward).
8.6. The Acquired Fund and Acquiring Fund shall have received an opinion of
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP substantially to the effect that
based on the facts and assumptions stated herein and conditioned on
consummation of the Reorganization in accordance with this Agreement,
for federal income tax purposes:
a) The transfer of all of the assets and liabilities of the Acquired Fund
to the Acquiring Fund in exchange for shares of the Acquiring Fund and
the distribution to shareholders of the Acquired Fund of shares of the
Acquiring Fund, as described in the Plan, will constitute a tax-free
"reorganization" within the meaning of Section 368(a)(1)(C) of the
Code, and the Acquired Fund and the Acquiring Fund each will be
considered "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 Acquired Fund upon (a) the
transfer of its assets and liabilities to the Acquiring Fund in
exchange for the issuance of shares of the Acquiring Fund to the
Acquired Fund and the assumption by the Acquiring Fund of the Acquired
Fund's liabilities, if any, and (b) the distribution by the Acquired
Fund to its shareholders of shares of the Acquiring Fund received as a
result of the Reorganization (Sections 361(a), 354(a) and 357(a) of
the Code);
c) No gain or loss will be recognized by the Acquiring Fund upon its
receipt of the assets and liabilities of the Acquired Fund in exchange
for the issuance of shares of the Acquiring Fund to the Acquired Fund
and the assumption by the Acquiring Fund of the Acquired Fund's
liabilities, if any (Section 1032(a) of the Code);
d) The tax basis of the Acquiring Fund shares received by a shareholder
of the Acquired Fund in the aggregate will be the same as the
aggregate tax basis of the shareholders' Acquired Fund shares
immediately prior to the Reorganization (Section 358(a)(i) of the
Code);
e) The tax basis of the Acquiring Fund in the assets and liabilities of
the Acquired Fund received pursuant to the Reorganization will be the
same as the tax basis of the assets and liabilities in the hands of
the Acquired Fund immediately before the Reorganization (Section
362(b) of the Code);
f) The tax holding period for the shares of the Acquiring Fund issued in
connection with the Reorganization will be determined by including the
period for which the shareholder held shares of the Acquired Fund
exchanged therefor, provided that the shareholder held such shares of
the Acquired Fund as capital assets;
g) The tax holding period for the Acquiring Fund with respect to the
assets and liabilities of the Acquired Fund received in the
Reorganization will include the period for which such assets and
liabilities were held by the Acquired Fund (Section 1223(2) of the
Code);
h) The Acquired Fund's shareholders will not recognize gain or loss upon
the exchange of their shares of the Acquired Fund for shares of the
Acquiring Fund as part of the Reorganization;
i) The Acquiring Fund will succeed to and take into account the items of
the Acquired Fund described in Section 381(c) of the Code, subject to
the provisions and limitations specified in Sections 381, 382, 383 and
384 of the Code and the regulations thereunder (Section 381(a) of the
Code); and
j) The tax year of the Acquired Fund will end on the date of the
Reorganization (Section 381(b) of the Code).
In rendering its opinion, counsel may rely as to factual matters,
exclusively and without independent verification, on the representations and
warranties made in this Agreement, which counsel may treat as representations
and warranties made to it, and in separate letters addressed to counsel and the
certificates delivered pursuant to this Agreement.
No opinion will be expressed as to the effect of the Reorganization on (i)
the Acquired Fund or the Acquiring Fund with respect to any asset as to which
any unrealized gain or loss is required to be recognized for federal income tax
purposes at the end of a taxable year (or on the termination or transfer
thereof) under a xxxx-to-market system of accounting, and (ii) any Fund
Shareholder that is required to recognize unrealized gains and losses for
federal income tax purposes under a xxxx-to-market system of accounting.
9. TERMINATION OF AGREEMENT; EXPENSES.
9.1. This Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of the Acquiring
Fund or of the Acquired Fund, as the case may be, at any time prior to
the Closing Date if circumstances should develop that, in the opinion
of the party's Board, make proceeding with the Reorganization
inadvisable.
9.2. If this Agreement is terminated and the transactions contemplated
hereby are abandoned pursuant to the provisions of this Section 9,
this Agreement shall become void and have no effect, without any
liability on the part of any party hereto or the Board members or
officers of the Acquired Fund or the Acquiring Fund, or shareholders
of the Acquired Fund or of the Acquiring Fund, as the case may be, in
respect of this Agreement.
9.3. Each party acknowledges that all expenses directly incurred in
connection with the Reorganization will be borne by Xxxxx & Tang Asset
Management, LLC and Sentinel Asset Management, Inc.; provided however,
that expenses will in any event be paid by the party directly
incurring such expenses if and to the extent that the payment by
another person of such expenses would result in the disqualification
of such party
as a "regulated investment company" within the meaning of Section 851
of the Code.
10. WAIVER.
At any time prior to the Closing Date, except as otherwise expressly
provided, any of the foregoing conditions may be waived by the Board of the
Corporation or of the Trust if, in the judgment of either, such waiver will not
have a material adverse effect on the benefits intended under this Agreement to
the shareholders of the Acquired Fund or of the Acquiring Fund, as the case may
be.
11. MISCELLANEOUS.
11.1. None of the representations and warranties included or provided for
herein shall survive consummation of the transactions contemplated
hereby.
11.2. This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof,
and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature between them relating to the
subject matter hereof. Neither party shall be bound by any condition,
definition, warranty or representation, other than as set forth or
provided in this Agreement or as may be, on or subsequent to the date
hereof, set forth in a writing signed by the party to be bound
thereby. In this Agreement, any references to the Acquired Fund or the
Acquiring Fund taking action shall mean and include all necessary
actions of the Corporation on behalf of the Acquired Fund or the Trust
on behalf of the Acquiring Fund, respectively, unless the context of
this Agreement or the 1940 Act requires otherwise.
11.3. This Agreement shall be governed and construed in accordance with the
internal laws of the State of New York, without giving effect to
principles of conflict of laws; provided, however, that the due
authorization, execution and delivery of this Agreement by the Trust
and the Corporation shall be governed and construed in accordance with
the internal laws of the state of each party's incorporation or
formation, without giving effect to principles of conflict of laws;
provided that, in the case of any conflict between those laws and the
federal securities laws, the latter shall govern.
11.4. This Agreement may be amended only by a signed writing between the
parties.
11.5. This Agreement may be executed in counterparts, each of which, when
executed and delivered, shall be deemed to be an original, but all of
which together shall constitute one and the same Agreement. Delivery
of an executed signature page of this Agreement by facsimile or e-mail
shall constitute due and sufficient delivery of such counterpart.
11.6. 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.
11.7. It is expressly agreed that the obligations of the parties hereunder
shall not be binding upon any of the Board members or officers of the
Acquired Fund or the Acquiring Fund, or shareholders, nominees,
agents, or employees of the Acquired Fund or the Acquiring Fund
personally, but shall bind only the property of the Acquired Fund or
the Acquiring Fund, as the case may be, as provided in the Acquired
Fund's Charter or the Acquiring Fund's Declaration of Trust,
respectively. The execution and delivery of this Agreement by such
officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the property of the Acquired Fund or the Acquiring
Fund, as the case may be.
[Signature pages follow]
IN WITNESS WHEREOF, the Acquired Fund and the Acquiring Fund have caused this
Agreement and Plan of Reorganization to be executed and attested on its behalf
by its duly authorized representatives as of the date first above written.
SENTINEL GROUP FUNDS, INC., on behalf of the Sentinel
Government Money Market Fund
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Xxxxxxxxx X. Xxxxxxxx
President & Chief Executive Officer
IN WITNESS WHEREOF, the Acquired Fund and the Acquiring Fund have caused this
Agreement and Plan of Reorganization to be executed and attested on its behalf
by its duly authorized representatives as of the date first above written.
DAILY INCOME FUND, on behalf of the U.S. Government Portfolio
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Xxxxxx Xxxxxxxxx
Chief Financial Officer
