Exhibit I
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as of
the 8th day of March, 1996 by and among Fidelity Devonshire Trust, a
Massachusetts business trust, on behalf of Spartan Long-Term Government
Bond Fund (Long-Term Government), a series of Fidelity Devonshire Trust,
and Fidelity Fixed-Income Trust, a Massachusetts business trust, on behalf
of Spartan Government Income Fund (Government Income), a series of Fidelity
Fixed-Income Trust. Fidelity Devonshire Trust and Fidelity Fixed-Income
Trust may be referred to herein collectively as the "Trusts" or each
individually as a "Trust." Government Income and Long-Term Government may
be referred to herein collectively as the "Funds" or each individually as
the "Fund."
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the Code). The reorganization will
comprise: (a) the transfer of all of the assets of Long-Term Government
to Government Income solely in exchange for shares of beneficial interest
in Government Income (the Government Income Shares) and the assumption by
Government Income of Long-Term Government's liabilities; and (b) the
constructive distribution of such shares by Long-Term Government PRO RATA
to its shareholders in complete liquidation and termination of Long-Term
Government in exchange for all of Long-Term Government's outstanding
shares. Long-Term Government shall receive shares of Government Income
equal in value to the net asset value per share of Long-Term Government
multiplied by the number of shares of Long-Term Government then
outstanding, which Long-Term Government shall then distribute PRO RATA to
its shareholders. The foregoing transactions are referred to herein as the
"Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF LONG-TERM GOVERNMENT. Long-Term
Government represents and warrants to and agrees with Government Income
that:
(a) Long-Term Government is a series of Fidelity Devonshire Trust, a
business trust duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts, and has the power to own all
of its properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations
to carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Devonshire Trust is an open-end, management investment
company duly registered under the Investment Company Act of 1940, as
amended (the 1940 Act), and such registration is in full force and effect;
(c) The Prospectus and Statement of Additional Information of Long-Term
Government dated March 22, 1995, previously furnished to Government Income,
did not and 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 not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Long-Term Government, threatened against
Long-Term Government which assert liability on the part of Long-Term
Government. Long-Term Government knows of no facts which might form the
basis for the institution of such proceedings;
(e) Long-Term Government is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws, or,
to the knowledge of Long-Term Government, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Long-Term
Government is a party or by which Long-Term Government is bound or result
in the acceleration of any obligation or the imposition of any penalty
under any agreement, judgment or decree to which Long-Term Government is a
party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Per-Share Data and Ratios, and the
Schedule of Investments (including market values) of Long-Term Government
at January 31, 1996, have been audited by Coopers & Xxxxxxx L.L.P.,
independent accountants, and have been furnished to Government Income
together with such unaudited financial statements and schedule of
investments (including market values) for the six month period ended July
31, 1995. Said statements of assets and liabilities and schedules of
investments fairly present the Fund's financial position as of such dates
and said statement of operations and changes in net assets fairly reflect
its results of operations and changes in financial position for the periods
covered thereby in conformity with generally accepted accounting principles
consistently applied;
(g) Long-Term Government has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
statement of assets and liabilities as of July 31, 1995 and those incurred
in the ordinary course of Long-Term Government's business as an investment
company since July 31, 1995;
(h) The registration statement (Registration Statement) to be filed with
the Securities and Exchange Commission (Commission) by Government Income on
Form N-14 relating to the shares of Government Income issuable hereunder
and the proxy statement of Long-Term Government included therein (Proxy
Statement), on the effective date of the Registration Statement and insofar
as they relate to Long-Term Government (i) will comply in all material
respects with the provisions of the Securities Act of 1933, as amended (the
1933 Act), the Securities Exchange Act of 1934, as amended (the 1934 Act),
and the 1940 Act, and the rules and regulations thereunder, and (ii) will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time of the shareholders'
meeting referred to in Section 7 and on the Closing Date, the prospectus
contained in the Registration Statement of which the Proxy Statement is a
part (the Prospectus), as amended or supplemented, insofar as it relates to
Long-Term Government, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(i) All material contracts and commitments of Long-Term Government (other
than this Agreement) will be terminated without liability to Long-Term
Government prior to the Closing Date (other than those made in connection
with redemptions of shares and the purchase and sale of portfolio
securities made in the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Long-Term
Government of the transactions contemplated by this Agreement, except such
as have been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and
state securities or blue sky laws (which term as used herein shall include
the District of Columbia and Puerto Rico);
(k) Long-Term Government has filed or will file all federal and state tax
returns which, to the knowledge of Long-Term Government's officers, are
required to be filed by Long-Term Government and has paid or will pay all
federal and state taxes shown to be due on said returns or provision shall
have been made for the payment thereof, and, to the best of Long-Term
Government's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(l) Long-Term Government has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment company for
all prior taxable years and intends to meet such requirements for its
current taxable year ending on the Closing Date (as defined in Section 6);
(m) All of the issued and outstanding shares of Long-Term Government are,
and at the Closing Date will be, duly and validly issued and outstanding
and fully paid and nonassessable as a matter of Massachusetts law (except
as disclosed in the Fund's Statement of Additional Information), and have
been offered for sale and in conformity with all applicable federal
securities laws. All of the issued and outstanding shares of Long-Term
Government will, at the Closing Date, be held by the persons and in the
amounts set forth in the list of shareholders submitted to Government
Income in accordance with this Agreement;
(n) At both the Valuation Time (as defined in Section 4) and the Closing
Date (as defined in Section 6), Long-Term Government will have the full
right, power, and authority to sell, assign, transfer, and deliver its
portfolio securities and any other assets of Long-Term Government to be
transferred to Government Income pursuant to this Agreement. At the
Closing Date, subject only to the delivery of Long-Term Government's
portfolio securities and any such other assets as contemplated by this
Agreement, Government Income will acquire Long-Term Government's portfolio
securities and any such other assets subject to no encumbrances, liens, or
security interests (except for those that may arise in the ordinary course
and are disclosed to Government Income) and without any restrictions upon
the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Long-Term Government, and this Agreement constitutes
a valid and binding obligation of Long-Term Government enforceable in
accordance with its terms, subject to shareholder approval.
2. REPRESENTATIONS AND WARRANTIES OF GOVERNMENT INCOME. Government Income
represents and warrants to and agrees with Long-Term Government that:
(a) Government Income is a series of Fidelity Fixed-Income Trust, a
business trust duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts, and has the power to own all
of its properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations
to carry on its business as now being conducted and to carry out this
Agreement;
(b) Fidelity Fixed-Income Trust is an open-end, management investment
company duly registered under the 1940 Act, and such registration is in
full force and effect;
(c) The Prospectus and Statement of Additional Information of Government
Income, dated June 24, 1995, previously furnished to Long-Term Government
did not and 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 not misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Government Income, threatened against
Government Income which assert liability on the part of Government Income.
Government Income knows of no facts which might form the basis for the
institution of such proceedings;
(e) Government Income is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws, or,
to the knowledge of Government Income, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Government
Income is a party or by which Government Income is bound or result in the
acceleration of any obligation or the imposition of any penalty under any
agreement, judgment, or decree to which Government Income is a party or is
bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations,
the Statement of Changes in Net Assets, Per-Share Data and Ratios, and the
Schedule of Investments (including market values) of Government Income at
April 30, 1995, have been audited by Coopers & Xxxxxxx L.L.P., independent
accountants, and have been furnished to Long-Term Government together with
such unaudited financial statements and schedule of investments (including
market values) for the six month period ended October 31, 1995. Said
statements of assets and liabilities and schedules of investments fairly
present its financial position as of such dates and said statement of
operations and changes in net assets fairly reflect its results of
operations and changes in financial position for the periods covered
thereby in conformity with generally accepted accounting principles
consistently applied;
(g) Government Income has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
statement of assets and liabilities as of October 31, 1995 and those
incurred in the ordinary course of Government Income's business as an
investment company since October 31, 1995;
(h) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Government
Income of the transactions contemplated by this Agreement, except such as
have been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and
state securities or blue sky laws (which term as used herein shall include
the District of Columbia and Puerto Rico);
(i) Government Income has filed or will file all federal and state tax
returns which, to the knowledge of Government Income's officers, are
required to be filed by Government Income and has paid or will pay all
federal and state taxes shown to be due on said returns or provision shall
have been made for the payment thereof, and, to the best of Government
Income's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(j) Government Income has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company for all
prior taxable years and intends to meet such requirements for its current
taxable year ending on October 31, 1996;
(k) By the Closing Date, the shares of beneficial interest of Government
Income to be issued to Long-Term Government will have been duly authorized
and, when issued and delivered pursuant to this Agreement, will be legally
and validly issued and will be fully paid and nonassessable (except as
disclosed in the Fund's Statement of Additional Information) by Government
Income, and no shareholder of Government Income will have any preemptive
right of subscription or purchase in respect thereof;
(l) The execution, performance, and delivery of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate
action on the part of Government Income, and this Agreement constitutes a
valid and binding obligation of Government Income enforceable in accordance
with its terms, subject to approval by the shareholders of Long-Term
Government;
(m) The Registration Statement and the Proxy Statement, on the effective
date of the Registration Statement and insofar as they relate to Government
Income, (i) will comply in all material respects with the provisions of the
1933 Act, the 1934 Act, and the 1940 Act, and the rules and regulations
thereunder, and (ii) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of
the shareholders' meeting referred to in Section 7 and on the Closing Date,
the Prospectus, as amended or supplemented, insofar as it relates to
Government Income, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(n) The issuance of the Government Income Shares pursuant to this
Agreement will be in compliance with all applicable federal securities
laws; and
(o) All of the issued and outstanding shares of beneficial interest of
Government Income have been offered for sale and sold in conformity with
the federal securities laws.
3. REORGANIZATION.
(a) Subject to the requisite approval of the shareholders of Long-Term
Government and to the other terms and conditions contained herein,
Long-Term Government agrees to assign, sell, convey, transfer, and deliver
to Government Income on the Closing Date (as defined in Section 6) all of
the assets of Long-Term Government of every kind and nature existing on the
Closing Date. Government Income agrees in exchange therefor: (i) to
assume all of Long-Term Government's liabilities existing on or after the
Closing Date, whether or not determinable on the Closing Date, and (ii) to
issue and deliver to Long-Term Government the number of full and fractional
shares of Government Income having an aggregate net asset value equal to
the value of the assets of Long-Term Government transferred hereunder, less
the value of the liabilities of Long-Term Government, determined as
provided for under Section 4.
(b) The assets of Long-Term Government to be acquired by Government Income
shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest or dividends receivables), claims, choses
in action, and other property owned by Long-Term Government, and any
deferred or prepaid expenses shown as an asset on the books of Long-Term
Government on the Closing Date. Long Term Government will pay or cause to
be paid to Government Income any dividend or interest payments received by
it on or after the Closing Date with respect to the assets transferred to
Government Income hereunder, and Government Income will retain any dividend
or interest payments received by it after the Valuation Time (as defined in
Section 4) with respect to the assets transferred hereunder without regard
to the payment date thereof.
(c) The liabilities of Long-Term Government to be assumed by Government
Income shall include (except as otherwise provided for herein) all of
Long-Term Government's liabilities, debts, obligations, and duties, of
whatever kind or nature, whether absolute, accrued, contingent, or
otherwise, whether or not arising in the ordinary course of business,
whether or not determinable on the Closing Date, and whether or not
specifically referred to in this Agreement. Notwithstanding the foregoing,
Long-Term Government agrees to use its best efforts to discharge all of its
known liabilities prior to the Closing Date.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), Long-Term Government will
constructively distribute PRO RATA to its shareholders of record,
determined as of the Valuation Time on the Closing Date, the Government
Income Shares in exchange for such shareholders' shares of beneficial
interest in Long-Term Government and Long-Term Government will be
liquidated in accordance with Long-Term Government's Amended and Restated
Declaration of Trust. Such distribution shall be accomplished by the
Funds' transfer agent opening accounts on Government Income's share
transfer books in the names of the Long-Term Government shareholders and
transferring the Government Income Shares thereto. Each Long-Term
Government shareholder's account shall be credited with the respective PRO
RATA number of full and fractional (rounded to the third decimal place)
Government Income Shares due that shareholder. All outstanding Long-Term
Government shares, including any represented by certificates, shall
simultaneously be canceled on Long-Term Government's share transfer
records. Government Income shall not issue certificates representing the
Government Income Shares in connection with the Reorganization.
(e) Any reporting responsibility of Long-Term Government is and shall
remain its responsibility up to and including the date on which it is
terminated.
(f) Any transfer taxes payable upon issuance of the Government Income
Shares in a name other than that of the registered holder on Long-Term
Government's books of the Long-Term Government shares constructively
exchanged for the Government Income Shares shall be paid by the person to
whom such Government Income Shares are to be issued, as a condition of such
transfer.
4. VALUATION.
(a) The Valuation Time shall be 4:00 p.m. Eastern time on the Closing Date
(as defined in Section 6), or such day as may be mutually agreed upon in
writing by the parties hereto (the Valuation Time).
(b) On the Closing Date, Government Income will deliver to Long-Term
Government the number of Government Income Shares having an aggregate net
asset value equal to the value of the assets of Long-Term Government
transferred hereunder less the liabilities of Long-Term Government,
determined as provided in this Section 4.
(c) The net asset value of the Government Income Shares to be delivered to
Long-Term Government, the value of the assets of Long-Term Government
transferred hereunder, and the value of the liabilities of Long-Term
Government to be assumed hereunder shall in each case be determined as of
the Valuation Time.
(d) The net asset value of the Government Income Shares shall be computed
in the manner set forth in the then-current Government Income Prospectus
and Statement of Additional Information, and the value of the assets and
liabilities of Long-Term Government shall be computed in the manner set
forth in the then-current Long-Term Government Prospectus and Statement of
Additional Information.
(e) All computations pursuant to this Section shall be made by or under
the direction of Fidelity Service Co., a division of FMR Corp., in
accordance with its regular practice as pricing agent for Long-Term
Government and Government Income.
5. FEES; EXPENSES.
(a) Pursuant to the Funds' management contracts with Fidelity Management &
Research Company (FMR), FMR will pay all fees and expenses, including
legal, accounting, printing, filing, and proxy solicitation expenses,
portfolio transfer taxes (if any), or other similar expenses incurred in
connection with the transactions contemplated by this Agreement (but not
including costs incurred in connection with the purchase or sale of
portfolio securities).
(b) Each of Government Income and Long-Term Government represents that
there is no person who has dealt with it who by reason of such dealings is
entitled to any broker's or finder's or other similar fee or commission
arising out of the transactions contemplated by this Agreement.
6. CLOSING DATE
(a) The Reorganization, together with related acts necessary to consummate
the same (the Closing), unless otherwise provided herein, shall occur at
the principal office of the Trusts, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, at the Valuation Time on May 31, 1996, or at some other
time, date, and place agreed to by Long-Term Government and Government
Income (the Closing Date).
(b) In the event that on the Closing Date: (i) the market for U.S.
government securities is closed to trading, or (ii) trading thereon is
restricted, or (iii) trading or the reporting of trading on said market or
elsewhere is disrupted, all so that accurate appraisal of the total net
asset value of Long-Term Government and the net asset value per Government
Income Share is impracticable, the Valuation Time and the Closing Date
shall be postponed until the first business day after the day when such
trading shall have been fully resumed and such reporting shall have been
restored, or such other date as the parties may agree.
7. SHAREHOLDER MEETING AND TERMINATION OF LONG-TERM GOVERNMENT
(a) Long-Term Government agrees to call a meeting of its shareholders
after the effective date of the Registration Statement, to consider
transferring its assets to Government Income as herein provided, adopting
this Agreement, and authorizing the liquidation of Long-Term Government.
(b) Long-Term Government agrees that as soon as reasonably practicable
after distribution of the Government Income Shares, Long-Term Government
shall be terminated as a series of Fidelity Devonshire Trust pursuant to
its Amended and Restated Declaration of Trust, any further actions shall be
taken in connection therewith as required by applicable law, and on and
after the Closing Date Long-Term Government shall not conduct any business
except in connection with its liquidation and termination.
8. CONDITIONS TO GOVERNMENT INCOME'S OBLIGATIONS. The obligations of
Government Income hereunder shall be subject to the following conditions:
(a) That Long-Term Government furnishes to Government Income a statement,
dated as of the Closing Date, signed by the Treasurer or Assistant
Treasurer of Long-Term Government, certifying that as of the Valuation Time
and the Closing Date all representations and warranties of Long-Term
Government made in this Agreement are true and correct in all material
respects and that Long-Term Government has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied
at or prior to such dates;
(b) That Long-Term Government furnishes Government Income with copies of
the resolutions, certified by an officer of Fidelity Devonshire Trust,
evidencing the adoption of this Agreement and the approval of the
transactions contemplated herein by the requisite vote of the holders of
the outstanding shares of beneficial interest of Long-Term Government;
(c) That, on or prior to the Closing Date, Long-Term Government will
declare one or more dividends or distributions which, together with all
previous such dividends or distributions, shall have the effect of
distributing to the shareholders of Long-Term Government substantially all
of Long-Term Government's investment company taxable income and all of its
net realized capital gain, if any, as of the Closing Date;
(d) That Long-Term Government shall deliver to Government Income at the
Closing a statement of its assets and liabilities, together with a list of
its portfolio securities showing each such security's adjusted tax basis
and holding period by lot, with values determined as provided in Section 4
of this Agreement, all as of the Valuation Time, certified on Long-Term
Government's behalf by its Treasurer or Assistant Treasurer;
(e) That Long-Term Government's custodian shall deliver to Government
Income a certificate identifying the assets of Long-Term Government held by
such custodian as of the Valuation Time on the Closing Date and stating
that at the Valuation Time: (i) the assets held by the custodian will be
transferred to Government Income; (ii) Long-Term Government's assets have
been duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof; and (iii) to the best of the custodian's
knowledge, all necessary taxes in conjunction with the delivery of the
assets, including all applicable federal and state stock transfer stamps,
if any, have been paid or provision for payment has been made;
(f) That Long-Term Government's transfer agent shall deliver to Government
Income at the Closing a certificate setting forth the number of shares of
Long-Term Government outstanding as of the Valuation Time and the name and
address of each holder of record of any such shares and the number of
shares held of record by each such shareholder;
(g) That Long-Term Government calls a meeting of its shareholders to be
held after the effective date of the Registration Statement, to consider
transferring its assets to Government Income as herein provided, adopting
this Agreement, and authorizing the liquidation and termination of
Long-Term Government;
(h) That Long-Term Government delivers to Government Income a certificate
of an officer, dated the Closing Date, that there has been no material
adverse change in Long-Term Government's financial position since October
31, 1995, other than changes in the market value of its portfolio
securities, or changes due to net redemptions of its shares, dividends
paid, or losses from operations; and
(i) That all of the issued and outstanding shares of beneficial interest
of Long-Term Government shall have been offered for sale and sold in
conformity with all applicable state securities laws and, to the extent
that any audit of the records of Long-Term Government or its transfer agent
by Government Income or its agents shall have revealed otherwise, Long-Term
Government shall have taken all actions that in the opinion of Government
Income are necessary to remedy any prior failure on the part of Long-Term
Government to have offered for sale and sold such shares in conformity with
such laws.
9. CONDITIONS TO OBLIGATIONS OF LONG-TERM GOVERNMENT.
(a) That Government Income shall have executed and delivered to Long-Term
Government an Assumption of Liabilities, certified by an officer of
Fidelity Fixed-Income Trust, dated as of the Closing Date pursuant to which
Government Income will assume all of the liabilities of Long-Term
Government existing at the Valuation Time in connection with the
transactions contemplated by this Agreement;
(b) That Government Income furnishes to Long-Term Government a statement,
dated as of the Closing Date, signed by the Treasurer or Assistant
Treasurer of Government Income, certifying that as of the Valuation Time
and the Closing Date all representations and warranties of Government
Income made in this Agreement are true and correct in all material
respects, and Government Income has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such dates; and
(c) That Long-Term Government shall have received an opinion of
Xxxxxxxxxxx & Xxxxxxxx LLP, counsel to Long-Term Government and Government
Income, to the effect that the Government Income Shares are duly authorized
and upon delivery to Long-Term Government as provided in this Agreement
will be validly issued and will be fully paid and nonassessable by
Government Income (except as disclosed in Long-Term Government's Statement
of Additional Information) and no shareholder of Government Income has any
preemptive right of subscription or purchase in respect thereof.
10. CONDITIONS TO OBLIGATIONS OF GOVERNMENT INCOME AND LONG-TERM
GOVERNMENT.
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of the
holders of the outstanding shares of beneficial interest of Long-Term
Government;
(b) That all consents of other parties and all other consents, orders, and
permits of federal, state, and local regulatory authorities (including
those of the Commission and of state Blue Sky and securities authorities,
including "no action" positions of such federal or state authorities)
deemed necessary by Government Income or Long-Term Government 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 Government Income or Long-Term
Government, provided that either party hereto may for itself waive any of
such conditions;
(c) That all proceedings taken by either Fund in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto shall be satisfactory in form and substance to it and its counsel,
Xxxxxxxxxxx & Xxxxxxxx LLP;
(d) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement;
(e) That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Government Income and Long-Term
Government, threatened by the Commission; and
(f) That Government Income and Long-Term Government shall have received an
opinion of Xxxxxxxxxxx & Xxxxxxxx LLP satisfactory to Government Income and
Long-Term Government that for federal income tax purposes:
(i) The Reorganization will be a reorganization under section
368(a)(1)(C) of the Code, and Long-Term Government and Government Income
will each be parties to the Reorganization under section 368(b) of the
Code;
(ii) No gain or loss will be recognized by Long-Term Government upon the
transfer of all of its assets to Government Income in exchange solely for
the Government Income Shares and the assumption of Long-Term Government's
liabilities followed by the distribution of those Government Income Shares
to the shareholders of Long-Term Government;
(iii) No gain or loss will be recognized by Government Income on the
receipt of Long-Term Government's assets in exchange solely for the
Government Income Shares and the assumption of Long-Term Government's
liabilities;
(iv) The basis of Long-Term Government's assets in the hands of
Government Income will be the same as the basis of such assets in Long-Term
Government's hands immediately prior to the Reorganization;
(v) Government Income's holding period in the assets to be received from
Long-Term Government will include Long-Term Government's holding period in
such assets;
(vi) A Long-Term Government shareholder will recognize no gain or loss on
the exchange of his or her shares of beneficial interest in Long-Term
Government for the Government Income Shares in the Reorganization;
(vii) A Long-Term Government shareholder's basis in the Government Income
Shares to be received by him or her will be the same as his or her basis in
the Long-Term Government shares exchanged therefor;
(viii) A Long-Term Government shareholder's holding period for his or
her Government Income Shares will be determined by including the period for
which he or she held the Long-Term Government shares exchanged therefor,
provided that those Long-Term Government shares were held as capital assets
on the date of the Reorganization.
Notwithstanding anything herein to the contrary, each of Long-Term
Government and Government Income may not waive the conditions set forth in
this subsection 10(f).
11. COVENANTS OF GOVERNMENT INCOME AND LONG-TERM GOVERNMENT.
(a) Government Income and Long-Term Government each covenants to operate
its respective business in the ordinary course between the date hereof and
the Closing Date, it being understood that such ordinary course of business
will include the payment of customary dividends and distributions;
(b) Long-Term Government covenants that it is not acquiring the Government
Income Shares for the purpose of making any distribution other than in
accordance with the terms of this Agreement;
(c) Long-Term Government covenants that it will assist Government Income
in obtaining such information as Government Income reasonably requests
concerning the beneficial ownership of Long-Term Government's shares; and
(d) Long-Term Government covenants that its liquidation and termination
will be effected in the manner provided in its Amended and Restated
Declaration of Trust in accordance with applicable law and after the
Closing Date, Long-Term Government will not conduct any business except in
connection with its liquidation and termination.
12. TERMINATION; WAIVER.
Government Income and Long-Term Government may terminate this Agreement by
mutual agreement. In addition, either Government Income or Long-Term
Government may at its option terminate this Agreement at or prior to the
Closing Date because:
(i) of a material breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to the Closing Date;
or
(ii) 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.
In the event of any such termination, there shall be no liability for
damages on the part of Long-Term Government or Government Income, or their
respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter, may
not be changed except by a letter of agreement signed by each party hereto
and shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of Government Income or
Long-Term Government; provided, however, that following the shareholders'
meeting called by Long-Term Government pursuant to Section 7 of this
Agreement, no such amendment may have the effect of changing the provisions
for determining the number of Government Income Shares to be paid to
Long-Term Government shareholders under this Agreement to the detriment of
such shareholders without their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on the
interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the Agreement,
or in any document delivered pursuant hereto or in connection herewith,
shall survive the consummation of the transactions contemplated hereunder.
14. DECLARATIONS OF TRUST.
A copy of the Declaration of Trust of each Fund, as restated and amended,
is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
on behalf of the Trustees of each Fund as trustees and not individually and
that the obligations of each Fund under this instrument are not binding
upon any of such Fund's Trustees, officers, or shareholders individually
but are binding only upon the assets and property of such Fund. Each Fund
agrees that its obligations hereunder apply only to such Fund and not to
its shareholders individually or to the Trustees of such Fund.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
of any rights or obligations hereunder shall be made by any party without
the written consent of the other parties. 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.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by an appropriate officer.
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