EXHIBIT (h)(5)
AGREEMENT AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of the __ day
of _______ 2008, by and between American Independence Funds Trust, a Delaware
business trust (the “Acquiring Trust”), on behalf of the International Bond
Fund, Ultra Short Bond Fund, Short-Term Bond Fund, Global Inflation-Indexed
Hedged Fund and U.S. Inflation-Indexed Fund (the “Acquiring Funds”), with its
principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx, XX
00000, and FFTW Funds, Inc., a Maryland corporation (“FFTW Funds”), on behalf of
the U.S. Short-Term Portfolio, the Limited Duration Portfolio, the International
Portfolio, the U.S. Inflation-Indexed Portfolio and the Global Inflation-Indexed
Hedged Portfolio (the “Acquired Funds”), with its principal place of business at
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
XX 00000. The Acquiring Funds and the Acquired Funds are sometimes referred to
collectively herein as the “Funds” and individually as a “Fund.”
This
Agreement is intended to be and is adopted as a plan of a “reorganization” as
defined in Section 368(a)(1) of the United States Internal Revenue Code of 1986,
as amended (the “Code”) and the Treasury Regulations there under. Each
reorganization (the “Reorganization”) will consist of (1) the transfer of all of
the assets of each Acquired Fund to the corresponding Acquiring Fund in exchange
solely for (A) the issuance of shares of beneficial interest of the Acquiring
Fund (collectively, the “Acquiring Fund Shares” and each, an “Acquiring Fund
Share”) to the corresponding Acquired Fund, and (B) the assumption by each
Acquiring Fund of the known liabilities that are included in the calculation of
the corresponding Acquired Fund’s net asset value on the closing date of the
Reorganization (the “Closing Date”) (collectively, the “Assumed Liabilities”),
and (2) the distribution by each Acquired Fund, on or promptly after the Closing
Date as provided herein, of the corresponding Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation and dissolution of the Acquired
Fund, all upon the terms and conditions hereinafter set forth in this Agreement.
The parties to this Agreement intend that each reorganization will qualify as a
“reorganization” as defined in Section 368(a)(1) of the Code. The terms of this
Agreement shall apply separately to each Acquired
Fund and its corresponding Acquiring Fund:
| Acquired
Fund |
Acquiring
Fund |
| FFTW International
Portfolio |
International Bond
Fund |
| FFTW U.S. Short-Term
Portfolio |
Ultra Short Bond
Fund |
| FFTW Limited
Duration Portfolio |
Short-Term Bond
Fund |
| FFTW Global
Inflation-Indexed Hedged |
Global Inflation-Indexed Hedged
Fund |
| Portfolio |
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| FFTW U.S.
Inflation-Indexed Portfolio |
U.S.
Inflation-Indexed Fund |
WHEREAS,
the Acquiring Trust and FFTW Funds are each registered investment companies
classified as management companies of the open-end type.
WHEREAS,
the Acquiring Fund is authorized to issue unlimited shares of beneficial
interest.
WHEREAS,
the Board of Directors of FFTW Funds and the Board of Trustees of the Acquiring
Trust have determined that the Reorganization is in the best interests of the
Acquired Fund shareholders and the Acquiring Fund shareholders, respectively,
and is not dilutive of the interests of those shareholders.
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NOW,
THEREFORE, in consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:TRANSFER OF ASSETS OF EACH ACQUIRED FUND IN EXCHANGE FOR EACH CORRESPONDING ACQUIRING FUND SHARES AND ASSUMPTION OF
THE KNOWN LIABILITIES; LIQUIDATION AND TERMINATION OF THE ACQUIRED FUND.
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1.1. |
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Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, each
Acquired Fund will transfer all of its assets as set forth in Paragraph
1.2 (the “Acquired Assets”) to its corresponding Acquiring Fund free and
clear of all liens and encumbrances (other than those arising under the
Securities Act of 1933, as amended (the “Securities Act”), liens for taxes
not yet due and contractual restrictions on the transfer of the Acquired
Assets) and each Acquiring Fund agrees in exchange therefor: (i) to issue
to its corresponding Acquired Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, of each class with an
aggregate NAV equal to the aggregate NAV of the corresponding Acquired
Fund attributable to the corresponding class of the Acquired Fund’s
shares, as determined in the manner set forth in Paragraphs 2.1 and 2.2;
and (ii) to assume all known liabilities that are included in the
calculation of the corresponding Acquired Fund’s net asset value. Such
transactions shall take place at the Closing (as defined in Paragraph 3.1
below). |
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1.2. |
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1.2.a. |
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The Acquired Assets
shall consist of all of each Acquired Fund’s assets and property,
including, without limitation, all cash, portfolio securities and
instruments, commodities and futures interests and dividends and interest
receivables that are owned by each Acquired Fund and any deferred or
prepaid expenses shown as an asset on the books of each Acquired Fund on
the closing date, goodwill, contractual rights and chooses in action of
each Acquired Fund or FFTW Funds in respect of such Acquired Fund, all
other intangible property owned by or attributable to each Acquired Fund,
originals or copies of all books and records of the Acquired Funds, and
all other assets of each Acquired Fund on the Closing Date (collectively,
“Assets”). The Acquiring Fund shall also be entitled to receive (or, to
the extent agreed upon between FFTW Funds and the Acquiring Trust, be
provided access to) copies of all records that FFTW Funds is required to
maintain under the Investment Company Act of 1940, as amended (the
“Investment Company Act”), and the rules of the Securities and Exchange
Commission (the “Commission”) thereunder to the extent such records
pertain to each Acquired Fund. |
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1.2.b. |
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Each Acquired Fund has
provided the corresponding Acquiring Fund with a list of all of the
Acquired Fund’s securities and other assets as of the date of execution of
this Agreement, and each Acquiring Fund has provided the corresponding
Acquired Fund with a copy of the current fundamental investment policies
and restrictions and fair value procedures applicable to the Acquiring
Fund. |
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1.3. |
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Each Acquired
Fund will endeavor to discharge all of its known liabilities and
obligations that are or will become due prior to the Closing. |
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1.4. |
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On, or as
soon after the Closing Date as is conveniently practicable (the
“Liquidation Date”), FFTW Funds shall liquidate each Acquired Fund and
distribute pro rata to its shareholders of record, determined as of the
close of regular trading on the New York Stock Exchange on the Closing
Date (the “Acquired Fund Shareholders”), the corresponding Acquiring Fund
Shares received by each Acquired Fund pursuant to Paragraph 1.1 hereof.
Each Acquired Fund Shareholder shall receive the number of Acquiring Fund
Shares that have an aggregate NAV equal to the aggregate NAV of each class
of shares of beneficial interest of the Acquired Fund (the “Acquired Fund
Shares”) held by such Acquired Fund Shareholder of record on the Closing
Date. Such liquidation and distribution will be accomplished by FFTW Funds
instructing the Acquiring Trust to transfer the Acquiring Fund Shares then
credited to the account of each corresponding Acquired Fund on the books
of the corresponding Acquiring Fund to open accounts on the share records
of the corresponding Acquiring Fund established and maintained by the
Acquiring Fund’s transfer agent in the names of the Acquired Fund
Shareholders and representing the respective pro rata number of the
Acquiring Fund Shares due the Acquired Fund Shareholders. FFTW Funds shall
promptly provide the Acquiring Trust with evidence of such liquidation and
distribution. All issued and outstanding Acquired Fund Shares will
simultaneously be cancelled on the books of the Acquired Fund, and the
Acquired Fund will be dissolved. The Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares in connection with
such exchange. |
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1.5. |
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Ownership of
Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s
transfer agent. Any certificates representing ownership of Acquired Fund
Shares that remain outstanding on the Closing Date shall be deemed to be
cancelled and shall no longer evidence ownership of Acquired Fund
Shares. |
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1.6. |
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Any transfer
taxes payable upon issuance of Acquiring Fund Shares in a name other than
the registered holder of the Acquired Fund Shares on the books of each
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. |
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1.7. |
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Any reporting
responsibility of FFTW Funds with respect to the Acquired Fund for taxable
periods ending on or before the Closing Date, including, but not limited
to, the responsibility for filing of regulatory reports, Tax Returns (as
defined in Paragraph 4.1), or other documents with the Commission, any
state securities commissions, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and shall
remain the responsibility of FFTW Funds. |
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VALUATION |
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2.1. |
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The NAV of the
Acquiring Fund Shares and the NAV of the Acquired Fund shall, in each
case, be determined as of the close of business (4:00 p.m., Boston time)
on the Closing Date (the “Valuation Time”). The NAV of each Acquiring Fund
Share shall be computed by JPMorgan World Wide Security Services (the
“Acquiring Fund Accountant”) in the manner set forth in the Acquiring
Funds’ Declaration of Trust (the “Declaration”), or By-Laws, and the
Acquiring Fund’s then-current prospectus and statement of additional
information. The NAV of the Acquired Fund shall be computed by State
Street Bank & Trust Company (the “Acquired Fund Accountant”) by
calculating the value of the Acquired Assets and by subtracting therefrom
the amount of the known liabilities of the Acquired Fund on the Closing
Date included on the Statement of Assets and Liabilities of the Acquired
Fund delivered pursuant to Paragraph 5.7 (the “Statement of Assets and
Liabilities”). The Acquired Fund Accountant shall value all assets and
liabilities in the manner set forth in the Acquired Fund’s then current
prospectus and statement of additional information. The Acquired Fund
Accountant shall have the right to review, confirm and verify the
calculation of the NAV of the Acquiring Fund Shares. |
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2.2. |
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The number of
Acquiring Fund Shares to be issued to each corresponding Acquired Fund
(including fractional shares, if any) in exchange for the Acquired Assets
shall be determined by the Acquiring Fund Accountant by dividing the NAV
of the Acquired Fund, as determined in accordance with Paragraph 2.1, by
the NAV of each Acquiring Fund Share, as determined in accordance with
Paragraph 2.1. |
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2.3. |
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Each Acquiring Fund
and each corresponding Acquired Fund shall cause the Acquiring Fund
Accountant and the Acquired Fund Accountant, respectively, to deliver a
copy of its valuation report to the other party at Closing. All
computations of value shall be made by the Acquiring Fund Accountant and
the Acquired Fund Accountant in accordance with its regular practice as
pricing agent for the Acquiring Fund and the Acquired Fund,
respectively. |
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CLOSING AND
CLOSING DATE |
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3.1. |
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The Closing Date shall
be March __, 2008, or such later date as the parties may agree to in
writing. All acts necessary to consummation the Reorganization (the
“Closing”) shall be deemed to take place simultaneously as of 5:00 p.m.
(Eastern Time) on the Closing Date unless otherwise provided. The Closing
shall be held at the offices of Dechert LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx, or at such other place as the parties may
agree. |
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3.2. |
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Portfolio securities
that are held other than in book-entry form in the name of State Street
Bank & Trust Company shall be duly endorsed in proper form for
transfer, in such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be accompanied by all
necessary federal and state stock transfer stamps or a check for the
appropriate purchase price thereof. Portfolio securities held of record by
State Street Bank (the “Acquired Fund Custodian”) in book-entry form on
behalf of each Acquired Fund shall be delivered by the Acquired Fund
Custodian through the Depository Trust Company (State Street) to
the Acquiring Fund Custodian and by the Acquiring Fund Custodian recording
the beneficial ownership thereof by each Acquiring Fund on the Acquiring
Fund Custodian’s records. Any cash shall be delivered by the Acquired Fund
Custodian transmitting immediately available funds by wire transfer to the
Acquiring Fund Custodian the cash balances maintained by the Acquired Fund
Custodian and the Acquiring Fund Custodian crediting such amount to the
account of the Acquiring Fund. |
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3.3. |
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The Acquiring Fund
Custodian shall deliver within one business day after the Closing a
certificate of an authorized officer stating that: (a) the Acquired Assets
have been delivered in proper form to each Acquiring Fund on the Closing
Date, and (b) all necessary transfer taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or
provision for payment has been made in conjunction with the delivery of
portfolio securities as part of the Acquired Assets. |
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3.4. |
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If on the Closing Date
(a) the New York Stock Exchange is closed to trading or trading thereon
shall be restricted or (b) trading or the reporting of trading on such
exchange or elsewhere is disrupted so that accurate appraisal of the NAV
of the Acquiring Fund Shares or the Acquired Fund Shares pursuant to
Paragraph 2.1 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. |
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3.5. |
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Each Acquired Fund
shall deliver at the Closing a list of the names, addresses, federal
taxpayer identification numbers and backup withholding and nonresident
alien withholding status and certificates of the Acquired Fund
Shareholders and the number and percentage ownership of each class of
outstanding Acquired Fund Shares owned by each Acquired Fund Shareholder
as of the Valuation Time, certified by both the President or a Secretary
of FFTW Funds and its Treasurer or other authorized officer (the
“Shareholder List”) as being an accurate record of the information (a)
provided by the Acquired Fund Shareholders, (b) provided by the Acquired
Fund Custodian, or (c) derived from FFTW Funds’ records by such officers
or one of FFTW Funds’ service providers. Each Acquiring Fund shall issue
and deliver to each corresponding Acquired Fund 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. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, stock certificates, receipts or other
documents as such other party or its counsel may reasonably
request. |
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REPRESENTATIONS AND WARRANTIES |
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4.1. |
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Except as set forth on
a disclosure schedule previously provided by FFTW Funds to the Acquiring
Trust (which disclosure schedule shall be organized by the sections of
this Section 4.1 and any disclosure shall only modify the portions of this
Section 4.1 expressly identified in such schedule), FFTW Funds, on behalf
of each Acquired Fund, represents, warrants and covenants to the
corresponding Acquiring Fund, which representations, warranties and
covenants will be true and correct on the date hereof and on the Closing
Date as though made on and as of the Closing Date, as
follows: |
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4.1.a. |
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The Acquired Fund is a series of
FFTW Funds. FFTW Funds is a corporation validly existing and in good
standing under the laws of the state of Maryland and has the power to own
all of its properties and assets and, subject to approval by the Acquired
Fund’s shareholders, to perform its obligations under this Agreement. To
the best of its knowledge, each Acquired Fund is not required to qualify
to do business in any jurisdiction in which it is not so qualified or
where failure to qualify would subject it to any material liability or
disability. To the best of its knowledge, FFTW Funds and each Acquired
Fund has all necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as now being
conducted; |
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4.1.b. |
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FFTW Funds is a registered
investment company classified as a management company of the open-end
type, and its registration with the Commission as an investment company
under the Investment Company Act is in full force and effect; |
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4.1.c. |
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To the best of its knowledge,
FFTW Funds is not in material violation of, and the execution and delivery
of this Agreement and the performance of its obligations under this
Agreement in respect of each Acquired Fund will not result in a material
violation of, any provision of FFTW Funds’ Articles of Incorporation or
By-Laws or any material agreement, indenture, instrument, contract, lease
or other undertaking with respect to an Acquired Fund to which FFTW Funds
is a party or by which an Acquired Fund or any of its assets are
bound; |
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4.1.d. |
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To the best knowledge of FFTW
Funds, no litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or threatened
against the Acquired Fund or any of the Acquired Fund’s properties or
assets. To the best knowledge of FFTW Funds, each Acquired Fund knows of
no facts that might form the basis for the institution of such
proceedings. To the best knowledge of FFTW Funds, neither FFTW Funds nor
any Acquired Fund is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that materially
adversely affects the Acquired Fund’s business or its ability to
consummate the transactions contemplated herein or would be binding upon
an Acquiring Fund as the successor to a corresponding Acquired
Fund; |
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4.1.e. |
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To the best of its knowledge,
each Acquired Fund has no material contracts or other commitments (other
than this Agreement or agreements for the purchase and sale of securities
entered into in the ordinary course of business and consistent with its
obligations under this Agreement) that will not be terminated at or prior
to the Closing Date and no such termination will result in liability to
the Acquired Fund (or the corresponding Acquiring
Fund); |
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4.1.f. |
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The statement of assets and
liabilities of each Acquired Fund, and the related statements of
operations and changes in net assets, as of and for the fiscal year ended
December 31, 2006, have been audited by Xxxxx Xxxxxxxx LLP, independent
registered public accounting firm, and are in accordance with generally
accepted accounting principles (“GAAP”) consistently applied and fairly
reflect, in all material respects, the financial condition of the Acquired
Fund as of such date and the results of its operations for the period then
ended, and all known liabilities, whether actual or contingent, of the
Acquired Fund as of the date thereof are disclosed therein. The Statement
of Assets and Liabilities will be in accordance with GAAP consistently
applied and will fairly reflect, in all material respects, the financial
condition of each Acquired Fund as of such date and the results of its
operations for the period then ended. Except for the Assumed Liabilities,
and to the best of its knowledge, each Acquired Fund will not have any
known or contingent liabilities on the Closing Date. No significant
deficiency, material weakness, fraud, significant change or other factor
that could significantly affect the internal controls of the Acquired Fund
has been disclosed or is required to be disclosed in the Acquired Fund’s
reports on Form N-CSR to enable the chief executive officer and chief
financial officer or other officers of the Acquired Fund to make the
certifications required by the Xxxxxxxx-Xxxxx Act, and no deficiency,
weakness, fraud, change, event or other factor exists that will be
required to be disclosed in the Acquiring Fund’s Form N-CSR after the
Closing Date; |
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4.1.g. |
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Since the most recent fiscal year
end, except as specifically disclosed in each Acquired Fund’s prospectus,
its statement of additional information as in effect on the date of this
Agreement, or its semi-annual report for the period ended June 30, 2007,
there has not been, to the best of its knowledge, any material adverse
change in the Acquired Fund’s financial condition, assets, liabilities,
business or prospects, or any incurrence by each Acquired Fund of
indebtedness, except for normal contractual obligations incurred in the
ordinary course of business or in connection with the settlement of
purchases and sales of portfolio securities. For the purposes of this
subparagraph (g) (but not for any other purpose of this Agreement), a
decline in NAV per Acquired Fund Share arising out of its normal
investment operations or a decline in market values of securities in an
Acquired Fund’s portfolio or a decline in net assets of an Acquired Fund
as a result of redemptions shall not constitute a material adverse
change; |
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4.1.h. |
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4.1.h.A. |
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For each taxable year of its
operation since its inception, the Acquired Fund has met, and for the
current taxable year through the Closing Date it will meet, the
requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company. The Acquired Fund will qualify as such
as of the Closing Date and will satisfy the diversification requirements
of Section 851(b) (3) of the Code without regard to the last sentence of
Section 851(d) of the Code. The Acquired Fund has not taken any action,
caused any action to be taken or caused any action to fail to be taken
which action or failure could cause the Acquired Fund to fail to qualify
as a regulated investment company under the Code; |
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4.1.h.B. |
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Each Acquired Fund has properly
filed on a timely basis all Tax Returns (as defined below) that it was
required to file, and all such Tax Returns were complete and accurate in
all material respects. Each Acquired Fund has not been informed by any
jurisdiction that the jurisdiction believes that the Acquired Fund was
required to file any Tax Return that was not filed; and each Acquired
Fund does not know of any basis upon which a jurisdiction could assert
such a position; |
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4.1.h.C. |
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Each Acquired Fund has timely
paid, in the manner prescribed by law, all Taxes (as defined below), which
were due and payable; |
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4.1.h.D. |
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The Acquired Fund has not waived or extended
any applicable statute of limitations relating to the assessment or
collection of Taxes; |
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4.1.h.E. |
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Each Acquired Fund has not been
notified in writing that any examinations of the Tax Returns of the
Acquired Fund are currently in progress or threatened, and no deficiencies
have been asserted or assessed against the Acquired Fund as a result of
any audit by the Internal Revenue Service or any state, local or foreign
taxing authority, and, to its knowledge, no such deficiency has been
proposed or threatened; |
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4.1.h.F. |
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Each Acquired Fund has no actual
or potential liability for any Tax obligation of any taxpayer other than
itself. Each Acquired Fund is not and has never been a member of a group
of corporations with which it has filed (or been required to file)
consolidated, combined or unitary Tax Returns. Each Acquired Fund is not a
party to any Tax allocation, sharing, or indemnification agreement;
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4.1.h.G. |
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To the best of its knowledge, the
unpaid Taxes of each Acquired Fund for tax periods through the Closing
Date do not exceed the accruals and reserves for Taxes (Foreign tax
income?) (excluding accruals and reserves for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth on the Statement of Assets and Liabilities, rather than in any notes
thereto (the “Tax Reserves”). To the best of its knowledge, all Taxes that
each Acquired Fund is or was required by law to withhold or collect have
been duly withheld or collected and, to the extent required, have been
timely paid to the proper governmental agency; |
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4.1.h.H. |
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Each Acquired Fund has delivered
to the Acquiring Fund or made available to the Acquiring Fund complete and
accurate copies of all Tax Returns of the Acquired Fund, together with all
related examination reports and statements of deficiency for all periods
not closed under the applicable statutes of limitations and complete and
correct copies of all private letter rulings, revenue agent reports,
information document requests, notices of proposed deficiencies,
deficiency notices, protests, petitions, closing agreements, settlement
agreements, pending ruling requests and any similar documents submitted
by, received by or agreed to by or on behalf of the Acquired Fund. Each
Acquired Fund has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of
the Code; |
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4.1.h.I. |
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To the best of its
knowledge, each Acquired Fund has not undergone, has not agreed to
undergo, and is not required to undergo (nor will it be required as a
result of the transactions contemplated in this Agreement to undergo) a
change in its method of accounting resulting in an adjustment to its
taxable income pursuant to Section 481 of the Code. To the best of its
knowledge, each Acquired Fund will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a
result of any (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date under Section 481(c) of the Code
(or any corresponding or similar provision of state, local or foreign
income Tax law); (ii) “closing agreement” as described in Section 7121 of
the Code (or any corresponding or similar provision of state, local or
foreign income Tax law) executed on or prior to the Closing Date; (iii)
installment sale or open transaction disposition made on or prior to the
Closing Date; or (iv) prepaid amount received on or prior to the Closing
Date; |
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4.1.h.J. |
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To the best of its knowledge, each Acquired Fund has not
taken or agreed to take any action, and is not aware of any agreement,
plan or other circumstance, that is inconsistent with the representations
set forth in Annex B; |
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4.1.h.K. |
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To the best of its knowledge, there are (and as of
immediately following the Closing there will be) no liens on the assets of
the Acquired Fund relating to or attributable to Taxes, except for Taxes
not yet due and payable; |
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4.1.h.L. |
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To the best of its knowledge, the tax bases of the
assets of each Acquired Fund are accurately reflected on the Acquired
Fund’s Tax books and records; |
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4.1.h.M. |
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To the best of its knowledge, each Acquired Fund has not
incurred (or been allocated) an “overall foreign loss” as defined in
Section 904(f)(2) of the Code that has not been previously recaptured in
full as provided in Sections 904(f)(2) and/or 904(f)(3) of the
Code; |
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4.1.h.N. |
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Each Acquired Fund is not a party to a gain recognition
agreement under Section 367 of the Code; |
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4.1.h.O. |
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Each Acquired Fund does not own any interest in an
entity that is characterized as a partnership for income tax
purposes; |
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4.1.h.P. |
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Except for any limitation resulting from the
transactions contemplated by this Agreement, each Acquired Fund’s Tax
attributes are not limited under the Code (including but not limited to
any capital loss carry forward limitations under Sections 382 or 383 of
the Code and the Treasury Regulations there under) or comparable
provisions of state law; and |
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4.1.h.Q. |
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For purposes of this Agreement, “Taxes” or “Tax” shall
mean all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad
valorem, premium, value-added, excise, real property, personal property,
sales, use, transfer, withholding, employment, unemployment, insurance,
social security, business license, business organization, environmental,
workers compensation, payroll, profits, license, lease, service, service
use, severance, stamp, occupation, windfall profits, customs, duties,
franchise and other taxes imposed by the United States of America or any
state, local or foreign government, or any agency thereof, or other
political subdivision of the United States or any such government, and any
interest, fines, penalties, assessments or additions thereto; and “Tax
Returns” shall mean all reports, returns, declarations, or statements
required to be supplied to a governmental or regulatory authority or
agency, in connection with Taxes, and any schedules or attachments
thereto; |
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4.1.i. |
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All issued and outstanding Acquired Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding,
fully paid and nonassessable by the Acquired Fund. All of the issued and
outstanding Acquired Fund Shares will, at the time of Closing, be held of
record by the persons and in the amounts set forth in the Shareholder List
submitted to the Acquiring Fund pursuant to Paragraph 3.5 hereof. The
Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquired Fund Shares, nor is there
outstanding any security convertible into any Acquired Fund
Shares; |
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4.1.j. |
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At the Closing Date, the Acquired Fund will have good
and marketable title to the Acquired Assets, and full right, power and
authority to sell, assign, transfer and deliver the Acquired Assets to the
Acquiring Fund, and, upon delivery and payment for the Acquired Assets,
the Acquiring Fund will acquire good and marketable title thereto, subject
to no restrictions on the full transfer thereof, except such restrictions
as might arise under the Securities Act |
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4.1.k. |
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FFTW Funds has the trust power and authority to enter
into and perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement have been duly authorized by
all necessary action on the part of FFTW Funds, Inc. Board of Directors,
and, subject to the approval of the shareholders of each Acquired Fund,
assuming due authorization, execution and delivery by each Acquiring Fund,
this Agreement will constitute a valid and binding obligation of the
Acquired 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; |
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4.1.l. |
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To the best of its knowledge, the information to be
furnished by each Acquired Fund to each corresponding Acquiring Fund for
use in applications for orders, registration statements, proxy materials
and other documents that may be necessary in connection with the
transactions contemplated hereby and any information necessary to compute
the total return of each Acquired Fund shall be accurate and complete and
shall comply in all material respects with federal securities and other
laws and regulations applicable thereto; |
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4.1.m. |
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To the best of its knowledge, the information included
in the proxy statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (the “Proxy
Statement”) or the initial registration statement filed on Form N-14
forming part of the Acquiring Fund’s registration statement filed in
connection with this Agreement (the “Registration Statement”) that has
been furnished in writing by FFTW Funds on behalf of each Acquired Fund to
each corresponding Acquiring Fund for inclusion in the Registration
Statement, on the effective date of that Registration Statement and on the
Closing Date, will conform in all material respects to the applicable
requirements of the Securities Act, the Exchange Act, and the Investment
Company Act and the rules and regulations of the Commission there under
and 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; |
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4.1.n. |
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To the best of its knowledge, upon the effectiveness of
the Registration Statement, no consent, approval, authorization or order
of any court or governmental authority is required for the consummation by
FFTW Funds or any Acquired Fund of the transactions contemplated by this
Agreement; |
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4.1.o. |
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To the best of its knowledge, all of the issued and
outstanding Acquired Fund Shares have been offered for sale and sold in
material conformity with all applicable federal and state securities laws,
except as may have been previously disclosed in writing to the Acquiring
Fund; |
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4.1.p. |
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To the best of its knowledge, the prospectus and
statement of additional information of each of the Acquired Funds and any
amendments or supplements thereto, furnished to the Acquiring Funds, did
not as of their dates or the dates of their distribution to the public
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 in which such statements
were made, not misleading; |
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4.1.q. |
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To the best of its knowledge, each of the Acquired Funds
currently complies in all material respects with, and since its
organization has complied in all material respects with, the requirements
of, and the rules and regulations under, the Investment Company Act, the
Securities Act, the Exchange Act, state “Blue Sky” laws and all other
applicable federal and state laws or regulations. To the best of its
knowledge, each of the Acquired Fund currently complies in all material
respects with, and since its organization has complied in all material
respects with, all investment objectives, policies, guidelines and
restrictions and any compliance procedures established by FFTW Funds with
respect to the Acquired Fund. To the best of its knowledge, all
advertising and sales material used by each Acquired Fund complies in all
material respects with and has complied in all material respects with the
applicable requirements of the Securities Act, the Investment Company Act,
the rules and regulations of the Commission, and, to the extent
applicable, the Conduct Rules of the Financial Industry Regulatory
Authority (FINRA) and any applicable state regulatory authority. To the
best of its knowledge, all registration statements, prospectuses, reports,
proxy materials or other filings required to be made or filed with the
Commission, FINRA or any state securities authorities by the Acquired Fund
have been duly filed and have been approved or declared effective, if such
approval or declaration of effectiveness is required by law. To the best
of its knowledge, such registration statements, prospectuses, reports,
proxy materials and other filings under the Securities Act, the Exchange
Act and the Investment Company Act (i) are or were in compliance in all
material respects with the requirements of all applicable statutes and the
rules and regulations there under and (ii) do not or did 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 in which they were made, not false or
misleading; |
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4.1.r. |
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Neither each Acquired Fund nor, to the knowledge of the
Acquired Fund, any “affiliated person” of each Acquired Fund has been
convicted of any felony or misdemeanor, described in Section 9(a)(1) of
the Investment Company Act, nor, to the knowledge of the Acquired Fund,
has any affiliated person of the Acquired Fund been the subject, or
presently is the subject, of any proceeding or investigation with respect
to any disqualification that would be a basis for denial, suspension or
revocation of registration as an investment adviser under Section 203(e)
of the Investment Advisers Act of 1940, as amended (the “Investment
Advisers Act”), or Rule 206(4)-4(b) there under or of a broker-dealer
under Section 15 of the Exchange Act, or for disqualification as an
investment adviser, employee, officer or director of an investment company
under Section 9 of the Investment Company Act; and |
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4.1.s. |
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The tax representation certificate to be delivered by
FFTW Funds on behalf of the Acquired Fund to the Acquiring Trust and
Dechert LLP at the Closing pursuant to Paragraph 7.4 (the “Acquired Fund
Tax Representation Certificate”) will not on the Closing Date, to the best
knowledge of FFTW Funds, contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein
not misleading. |
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4.2. |
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Except as set forth on a disclosure
schedule previously provided by the Acquiring Trust to the FFTW Funds
(which disclosure schedule shall be organized by the sections of this
Section 4.2 and any disclosure shall only modify the portions of this
Section 4.2 expressly identified in such schedule), the Acquiring Trust,
on behalf of each Acquiring Fund, represents, warrants and covenants to
the Acquired Funds, which representations, warranties and covenants will
be true and correct on the date hereof and on the Closing Date as though
made on and as of the Closing Date, as follows: |
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4.2.a. |
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The Acquiring Trust is a statutory trust duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Acquiring Trust has the power to own all of its properties
and assets and to perform the obligations under this Agreement. To the
best of its knowledge, the Acquiring Fund is not required to qualify to do
business in any jurisdiction in which it is not so qualified or where
failure to qualify would subject it to any material liability or
disability. To the best of their knowledge, each of the Acquiring Trust
and the Acquiring Funds have all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted; |
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4.2.b. |
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The Acquiring Trust is a registered investment company
classified as a management company of the open-end type, and its
registration with the Commission as an investment company under the
Investment Company Act is in full force and effect; |
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4.2.c. |
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The Acquiring Fund’s registration statement on Form N-1A
and any post-effective amendments registering shares of the Acquiring Fund
that will be in effect on the Closing Date, and the prospectus and
statement of additional information of the Acquiring Fund included
therein, will conform in all material respects with the applicable
requirements of the Securities Act and the Investment Company Act and the
rules and regulations of the Commission there under, and did not as of the
effective date thereof and will not as of the Closing Date contain 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 in which they were made, not
misleading; |
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4.2.d. |
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The Registration Statement with respect
to the Acquiring Funds, and any amendments or supplements thereto in
effect on or prior to the Closing Date included in the Registration
Statement (other than written information furnished by the Acquired Funds
for inclusion therein, as covered by the Acquired Funds’ warranty in
Paragraph 4.1(m) hereof) will conform in all material respects to the
applicable requirements of the Securities Act and the Investment Company
Act and the rules and regulations of the Commission there under. Neither
the Registration Statement nor the Proxy Statement (other than written
information furnished by the Acquired Funds for inclusion therein, as
covered by the Acquired Fund’s warranty in Paragraph 4.1(m) hereof)
includes or will include any untrue statement of a material fact or omits
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; |
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4.2.e. |
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The Acquiring Trust is not in violation
of, and the execution and delivery of this Agreement and performance of
its obligations under this Agreement will not result in a violation of,
any provisions of the Declaration of Trust or by-laws of the Acquiring
Trust or any material agreement, indenture, instrument, contract, lease or
other undertaking with respect to the Acquiring Fund to which the
Acquiring Trust is a party or by which the Acquiring Fund or any of its
assets is bound; |
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4.2.f. |
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No litigation or administrative
proceeding or investigation of or before any court or governmental body is
currently pending or threatened against the Acquiring Fund or any of the
Acquiring Fund’s properties or assets. The Acquiring Fund knows of no
facts which might form the basis for the institution of such proceedings.
Neither the Acquiring Trust nor the Acquiring Fund is a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially adversely affects the Acquiring Fund’s
business or its ability to consummate the transactions contemplated
herein; |
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4.2.g. |
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The statement of assets and liabilities
of the Acquiring Funds, have been audited by Xxxxx Xxxxxxxx LLP,
independent registered public accounting firm, and are in accordance with
GAAP consistently applied and fairly reflect, in all material respects,
the financial condition of the Acquiring Funds as of such date and all
known liabilities, whether actual or contingent, of the Acquiring Funds as
of the date thereof are disclosed therein; |
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4.2.h. |
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4.2.h.A. |
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For each taxable year of its operation since its
inception, the Acquiring Fund has met, and for the current taxable year it
will meet, the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company and will qualify as such
as of the Closing Date and will satisfy the diversification requirements
of Section 851(b) (3) of the Code without regard to the last sentence of
Section 851(d) of the Code. To the best of its knowledge, each Acquiring
Fund has not taken any action, caused any action to be taken or caused any
action to fail to be taken which action or failure could cause each
Acquiring Fund to fail to qualify as a regulated investment company under
the Code; |
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4.2.h.B. |
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Each Acquiring Fund has properly filed on a timely basis
all Tax Returns that it was required to file, and all such Tax Returns
were complete and accurate in all material respects. Each Acquiring Fund
has not been informed by any jurisdiction that the jurisdiction believes
that the Acquiring Fund was required to file any Tax Return that was not
filed; and the Acquiring Funds do not know of any basis upon which a
jurisdiction could assert such a position; |
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4.2.h.C. |
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Each of the Acquiring Funds has timely paid, in the
manner prescribed by law, all Taxes that were due and
payable; |
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4.2.h.D. |
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Each of the Acquiring Funds has not waived or extended
any applicable statute of limitations relating to the assessment or
collection of Taxes; |
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4.2.h.E. |
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Each of the Acquiring Funds has not been notified that
any examinations of the Tax Returns of the Acquiring Fund are currently in
progress or threatened, and no deficiencies have been asserted or assessed
against the Acquiring Fund as a result of any audit by the Internal
Revenue Service or any state, local or foreign taxing authority, and, to
its knowledge, no such deficiency has been proposed or
threatened; |
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4.2.h.F. |
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Each of the Acquiring Funds has no actual or potential
liability for any Tax obligation of any taxpayer other than itself. The
Acquiring Funds are not and has never been a member of a group of
corporations with which it has filed (or been required to file)
consolidated, combined or unitary Tax Returns. The Acquiring Funds are not
a party to any Tax allocation, sharing, or indemnification
agreement; |
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4.2.h.G. |
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The unpaid Taxes of each Acquiring Fund for tax periods
through the Closing Date does not exceed the accruals and reserves for
Taxes (excluding accruals and reserves and deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the
Statement of Assets and Liabilities, rather than in any notes thereto (the
“Tax Reserves”). All Taxes that each Acquiring Fund is or was required by
law to withhold or collect have been duly withheld or collected and, to
the extent required, have been timely paid to the proper governmental
agency; |
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4.2.h.H. |
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The Acquiring Trust has delivered to FFTW Funds or made
available to FFTW Funds complete and accurate copies of all Tax Returns of
the Acquiring Fund, together with all related examination reports and
statements of deficiency for all periods not closed under the applicable
statutes of limitations and complete and correct copies of all private
letter rulings, revenue agent reports, information document requests,
notices of proposed deficiencies, deficiency notices, protests, petitions,
closing agreements, settlement agreements, pending ruling requests and any
similar documents submitted by, received by or agreed to by or on behalf
of the Acquiring Fund. Acquiring Fund has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of
Section 6662 of the Code; |
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4.2.h.I. |
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Each Acquiring Fund has not undergone, has not agreed to
undergo, and is not required to undergo (nor will it be required as a
result of the transactions contemplated in this Agreement to undergo) a
change in its method of accounting resulting in an adjustment to its
taxable income pursuant to Section 481 of the Code. Each Acquiring Fund
will not be required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the
Closing Date under Section 481(c) of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law); (ii)
“closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date; (iii) installment sale or
open transaction disposition made on or prior to the Closing Date; or (iv)
prepaid amount received on or prior to the Closing Date; |
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4.2.h.J. |
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Each Acquiring Fund has not taken or agreed to take any
action, and is not aware of any agreement, plan or other circumstance,
that is inconsistent with the representations set forth in Annex
A; |
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4.2.h.K. |
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There are (and as of immediately following the Closing
there will be) no liens on the assets of each Acquiring Fund relating to
or attributable to Taxes, except for Taxes not yet due and
payable; |
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4.2.h.L. |
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Each Acquiring Fund has not incurred (or been allocated)
an “overall foreign loss” as defined in Section 904(f)(2) of the Code
which has not been previously recaptured in full as provided in Sections
904(f)(2) and/or 904(f)(3) of the Code; |
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4.2.h.M. |
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Each Acquiring Fund is not a party to a gain recognition
agreement under Section 367 of the Code; |
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4.2.h.N. |
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Each Acquiring Fund does not own any interest in any
entity that is characterized as a partnership for income tax
purposes; |
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4.2.h.O. |
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Each Acquiring Fund’s Tax attributes are not limited
under the Code (including but not limited to any capital loss carry
forward limitations under Sections 382 or 383 of the Code and the Treasury
Regulations there under) or comparable provisions of state
law; |
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4.2.i. |
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The authorized capital of each of the
Acquiring Funds consist of an unlimited number of shares of beneficial
interest,] no par value per share. As of the Closing Date, each Acquiring
Fund will be authorized to issue an unlimited number of shares of
beneficial interest, no par value per share. The Acquiring Funds Shares to
be issued and delivered to the Acquired Funds for the account of the
Acquired Funds Shareholders pursuant to the terms of this Agreement will
have been duly authorized on the Closing Date and, when so issued and
delivered, will be duly and validly issued, fully paid and non-assessable.
Each of the Acquiring Funds does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Funds
shares, nor is there outstanding any security convertible into any
Acquiring Funds shares; |
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4.2.j. |
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The Acquiring Trust has the trust power and authority to
enter into and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Acquiring Trust’s
Board of Trustees, and, assuming due authorization, execution and delivery
by the Acquired Funds, this Agreement will constitute a valid and binding
obligation of the Acquiring Funds, 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; |
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4.2.k. |
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The information to be furnished in writing by the
Acquiring Funds or the Acquiring Fund Adviser for use in applications for
orders, registration statements, proxy materials and other documents which
may be necessary in connection with the transactions contemplated hereby
shall be accurate and complete in all material respects and shall comply
in all material respects with federal securities and other laws and
regulations applicable thereto or the requirements of any form for which
its use is intended, and shall not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
information provided not misleading; |
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4.2.l. |
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No consent, approval, authorization or order of or
filing with any court or governmental authority is required for the
execution of this Agreement or the consummation of the transactions
contemplated by the Agreement by the Acquiring Funds, except for the
registration of the Acquiring Fund Shares under the Securities Act and the
Investment Company Act; |
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4.2.m. |
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Neither each of the Acquiring Funds nor, to the
knowledge of the Acquiring Funds, any “affiliated person” of the Acquiring
Funds has been convicted of any felony or misdemeanor, described in
Section 9(a)(1) of the Investment Company Act, nor, to the knowledge of
each Acquiring Fund, has any affiliated person of the Acquiring Fund been
the subject, or presently is the subject, of any proceeding or
investigation with respect to any disqualification that would be a basis
for denial, suspension or revocation of registration as an investment
adviser under Section 203(e) of the Investment Advisers Act or Rule
206(4)-4(b) there under or of a broker-dealer under Section 15 of the
Exchange Act, or for disqualification as an investment adviser, employee,
officer or director of an investment company under Section 9 of the
Investment Company Act; and |
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4.2.n. |
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Since the most recent fiscal year end, except as
specifically disclosed in the Acquiring Funds’ prospectus, its statement
of additional information as in effect on the date of this Agreement,
there has not been any material adverse change in each of the Acquiring
Funds’ financial condition, assets, liabilities, business or prospects, or
any incurrence by the Acquiring Fund of indebtedness, except for normal
contractual obligations incurred in the ordinary course of business or in
connection with the settlement of purchases and sales of portfolio
securities. For the purposes of this subparagraph (n) (but not for any
other purpose of this Agreement), a decline in NAV per Acquiring Fund
Share arising out of its normal investment operations or a decline in
market values of securities in the Acquiring Funds’ portfolio or a decline
in net assets of the Acquiring Fund as a result of redemptions shall not
constitute a material adverse change; |
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4.2.o. |
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The tax representation certificate to be delivered by
the Acquiring Trust on behalf of the Acquiring Fund to FFTW Funds and
Dechert LLP at Closing pursuant to Section 6.3 (the “Acquiring Fund Tax
Representation Certificate”) will not on the Closing Date contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. |
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| 5. |
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COVENANTS OF THE FUNDS |
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5.1. |
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Each Acquired Fund will operate the
Acquired Fund’s business in the ordinary course of business between the
date hereof and the Closing Date. It is understood that such ordinary
course of business will include trading in portfolio securities, and the
declaration and payment of customary dividends and other distributions and
any other dividends and other distributions necessary or advisable (except
to the extent dividends or other distributions that are not customary may
be limited by representations made in connection with the issuance of the
tax opinion described in Paragraph 8.5 hereof), in each case payable
either in cash or in additional shares. |
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5.2. |
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FFTW Funds will call a special meeting
of the Acquired Funds’ shareholders to consider approval of this Agreement
and act upon the matters set forth in the Proxy Statement. |
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5.3. |
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Each of the Acquiring Funds will prepare
the notice of meeting, form of proxy and Proxy Statement (collectively,
“Proxy Materials”) to be used in connection with such meeting (subject to
the review and consent of the Board of Directors of FFTW Funds), and will
promptly prepare and file with the Commission the Registration Statement.
FFTW Funds will provide the Acquiring Funds with information reasonably
requested for the preparation of the Registration Statement and any
post-effective amendments registering shares of the Acquiring Fund in
compliance with the Securities Act, the Exchange Act, and the Investment
Company Act. |
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5.4. |
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Each of the Acquired Funds covenants
that the Acquiring Fund Shares to be issued hereunder are not being
acquired by the Acquired Funds for the purpose of making any distribution
thereof other than in accordance with the terms of this
Agreement. |
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5.5. |
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Each of the Acquired Funds will assist
the Acquiring Funds in obtaining such information as the Acquiring Funds
reasonably require concerning the beneficial ownership of the Acquired
Fund Shares. |
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5.6. |
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Subject to the provisions of this
Agreement, each of the Acquiring Funds and each of the Acquired Funds will
take, or cause to be taken, all actions, and do or cause to be done, all
things reasonably necessary, proper or advisable to consummate the
transactions contemplated by this Agreement. |
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5.7. |
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Each Acquired Fund shall furnish to the
Acquiring Fund on the Closing Date a Statement of Assets and Liabilities
of the Acquired Fund as of the Closing Date setting forth the NAV (as
computed pursuant to Paragraph 2.1) of the Acquired Fund as of the
Valuation Time. Each Statement of Assets and Liabilities shall be prepared
in accordance with GAAP consistently applied and certified by FFTW Funds’
Treasurer or Assistant Treasurer. As promptly as practicable, but in any
case within 60 days after the Closing Date, FFTW Funds shall furnish to
the Acquiring Trust, in such form as is reasonably satisfactory to the
Acquiring Trust, a statement of the earnings and profits of the Acquired
Fund for federal income tax purposes, and of any capital loss carryovers
and other items that will be carried over to the Acquiring Fund under the
Code, and which statement will be certified by the Treasurer of FFTW
Funds. |
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5.8. |
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No Acquiring Fund and no Acquired Fund shall take any
action that is inconsistent with the representations set forth in, with
respect to the Acquired Fund, the Acquired Fund Tax Representation
Certificate and, with respect to the Acquiring Fund, the Acquiring Fund
Tax Representation Certificate. |
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5.9. |
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From and after the date of this Agreement, each of the
Acquiring Funds, each of the Acquired Funds, FFTW Funds and the Acquiring
Trust shall use its best efforts to cause the Reorganization to qualify,
and will not knowingly take any action, cause any action to be taken, fail
to take any action or cause any action to fail to be taken, which action
or failure to act could prevent the Reorganization from qualifying, as a
reorganization under the provisions of Section 368(a) of the Code. The
parties hereby adopt this Agreement as a “plan of reorganization” within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the income tax
regulations promulgated under the Code. Unless otherwise required pursuant
to a “determination” within the meaning of Section 1313(a) of the Code,
the parties hereto shall treat and report the transactions contemplated
hereby as a reorganization within the meaning of Section 368(a)(1) of the
Code and shall not take any position inconsistent with such
treatment. |
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5.10. |
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From and after the date of this Agreement, each
Acquiring Fund and each Acquired Fund shall use its best efforts to cause
it to qualify, and will not knowingly take any action, cause any action to
be taken, fail to take any action or cause any action to fail to be taken,
which action or failure to act could prevent it from qualifying as a
regulated investment company under the provisions of Subchapter M of the
Code. |
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5.11. |
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Each Acquiring Fund and each Acquired Fund shall
prepare, or cause to be prepared, all of its Tax Returns for taxable
periods that end on or before the Closing Date and shall timely file, or
cause to be timely filed, all such Tax Returns. Each Fund shall make any
payments of Taxes required to be made by it with respect to any such Tax
Returns. |
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| 6. |
|
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE ACQUIRED FUND |
The
obligations of each of the Acquired Funds to complete the transactions provided
for herein shall be, at its election, subject 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, unless waived by the Acquired Funds in writing:
| |
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6.1. |
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All
representations and warranties by the Acquiring Trust on behalf of the
each Acquiring Fund contained in this Agreement shall be true and correct
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; |
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6.2. |
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The
Acquiring Trust shall have delivered to FFTW Funds on the Closing Date a
certificate of the Acquiring Trust on behalf of the Acquiring Fund
executed in its name by its President or Vice President and its Treasurer
or Assistant Treasurer, in form and substance satisfactory to FFTW Funds
and dated as of the Closing Date, to the effect that the representations
and warranties of the Acquiring Trust made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by
the transactions contemplated by this Agreement, that each of the
conditions to Closing in this Article 6 have been met, and as to such
other matters as FFTW Funds shall reasonably
request; |
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6.3. |
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The Acquiring Trust on behalf of the Acquiring Funds
shall have delivered to FFTW Funds and Dechert LLP an Acquiring Fund Tax
Representation Certificate, satisfactory to FFTW Funds and Dechert LLP,
substantially in the form attached to this Agreement as Annex A,
concerning certain tax-related matters with respect to the Acquiring
Funds; |
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6.4. |
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With respect to the Acquiring Funds, the Board of
Trustees of the Acquiring Trust shall have determined that the
Reorganization is in the best interests of the Acquiring Funds and, based
upon such determination, shall have approved this Agreement and the
transactions contemplated hereby; and |
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6.5. |
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FFTW Funds shall have received at the Closing a
favorable opinion as to the due authorization of this Agreement by the
Acquiring Trust and related matters of Dechert LLP, dated as of the
Closing Date, in a form reasonably satisfactory to FFTW
Funds. |
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| 7. |
|
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE ACQUIRING FUNDS |
The
obligations of each of the Acquiring Funds to complete the transactions provided
for herein shall be, at its election, subject to the performance by each
Acquired 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, unless waived by the Acquiring Fund in writing:
| |
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7.1. |
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All
representations and warranties of FFTW Funds on behalf of the Acquired
Funds contained in this Agreement shall be true and correct 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; |
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7.2. |
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Each
Acquired Fund shall have delivered to the corresponding Acquiring Fund the
Statement of Assets and Liabilities of the Acquired Fund pursuant to
Paragraph 5.7, together with a list of its portfolio securities showing
the federal income tax bases and holding periods of such securities, as of
the Closing Date, certified by FFTW Funds’ Treasurer or Assistant
Treasurer; |
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7.3. |
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FFTW
Funds shall have delivered to the Acquiring Trust on the Closing Date a
certificate of FFTW Funds on behalf of each Acquired Fund executed in its
name by its President or Vice President and a Treasurer or Assistant
Treasurer, in form and substance reasonably satisfactory to the Acquiring
Trust and dated as of the Closing Date, to the effect that the
representations and warranties of FFTW Funds contained 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, that each of
the conditions to Closing in this Article 7 have been met, and as to such
other matters as the Acquiring Trust shall reasonably
request; |
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7.4. |
|
FFTW
Funds on behalf of each of the Acquired Funds shall have delivered to the
Acquiring Trust and Dechert LLP an Acquired Fund Tax Representation
Certificate, satisfactory to the Acquiring Trust and Dechert LLP,
substantially in the form attached to this Agreement as Annex B,
concerning certain tax-related matters with respect to the Acquired
Funds; |
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7.5. |
|
The Acquiring Trust shall have received at the Closing a
favorable opinion as to the due authorization of this Agreement by FFTW
Funds and related matters of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP,
dated as of the Closing Date, in a form reasonably satisfactory to the
Acquiring Trust; and |
| |
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7.6. |
|
With respect to the Acquired Funds, the Board of
Directors of FFTW Funds shall have determined that the Reorganization is
in the best interests of the Acquired Fund and, based upon such
determination, shall have approved this Agreement and the transactions
contemplated hereby. |
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| 8. |
|
FURTHER CONDITIONS
PRECEDENT |
If any of
the conditions set forth below does not exist on or before the Closing Date with
respect to any Acquiring Fund and its corresponding Acquired Fund, neither party
to this Agreement shall, be required to consummate any of the transactions
contemplated by this Agreement:
| |
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8.1. |
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This
Agreement and the transactions contemplated herein with respect to any
Acquiring Fund and its corresponding Acquired Fund shall have been
approved by the requisite vote of the Acquired Fund’s shareholders in
accordance with the provisions of FFTW Funds’ Articles of Incorporation
and By-Laws, and certified copies of the resolutions evidencing such
approval by the Acquired Fund’s shareholders shall have been delivered by
the Acquired Funds to the Acquiring Funds. Notwithstanding anything herein
to the contrary, neither party hereto may waive the conditions set forth
in this Paragraph 8.1; |
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8.2. |
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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; |
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8.3. |
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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 either party hereto 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 either party hereto, provided that either party may waive
any such conditions for itself; |
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8.4. |
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The
Acquiring Trust’s Registration Statement on behalf of each Acquiring Fund
and any post-effective amendments registering shares of the Acquiring
Trust shall have become effective under the Securities Act and no stop
orders suspending the effectiveness of such Registration Statement or
post-effective amendments 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 Securities Act; |
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|
8.5. |
|
The parties
shall have received an opinion of Dechert LLP addressed to both of the
parties, satisfactory to FFTW Funds and the Acquiring Trust and subject to
customary assumptions and qualifications, substantially to the effect that
for federal income tax purposes (a) the acquisition by each Acquiring Fund
of the Acquired Assets of its corresponding Acquired Fund solely in
exchange for the issuance of Acquiring Fund Shares to the corresponding
Acquired Fund and the assumption of the Known Liabilities, followed by the
distribution by each Acquired Fund, in liquidation of the Acquired Fund,
of Acquiring Fund Shares to its Acquired Fund Shareholders in exchange for
their Acquired Funds Shares and the termination of the Acquired Fund, will
constitute a “reorganization” within the meaning of Section 368(a) of the
Code and each of the Acquired Fund and the Acquiring Fund will 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 Acquired Assets in exchange solely for Acquiring Fund Shares and
the assumption by the Acquiring Fund of the Known Liabilities; (c) no gain
or loss will be recognized by the Acquired Fund upon the transfer of the
Acquired Assets to the Acquiring Fund in exchange solely for Acquiring
Fund Shares and the assumption by the Acquiring Fund of the Known
Liabilities or upon the distribution of Acquiring Fund Shares to Acquired
Fund Shareholders in exchange for their shares of the Acquired Fund in
liquidation of the Acquired Fund; (d) no gain or loss will be recognized
by Acquired Fund Shareholders upon the exchange of their Acquired Fund
Shares for Acquiring Fund Shares; (e) the aggregate tax basis for the
Acquiring Fund Shares received by each Acquired Fund Shareholder will be
the same as the aggregate tax basis of the Acquired Fund Shares held by
such Acquired Fund Shareholder immediately prior to the Reorganization,
and the holding period of the Acquiring Fund Shares received by each
Acquired Fund Shareholder will include the period during which the
Acquired Fund Shares exchanged therefore were held by such Acquired Fund
Shareholder (provided the Acquired Fund Shares were held as capital assets
on the date of the exchange); and (f) the tax basis of each Acquired Asset
acquired by the Acquiring Fund will be the same as the tax basis of that
Asset to the Acquired Fund immediately prior to the Reorganization, and
the holding period of each Acquired Asset in the hands of the Acquiring
Fund will include the period during which such Asset was held by the
Acquired Fund. Notwithstanding anything herein to the contrary, neither
party may waive the condition set forth in this paragraph 8.5;
and |
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8.6. |
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Each
Acquired Fund shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for dividends
paid under Section 561 of the Code, all of its investment company taxable
income (as defined in Section 852(b)(2) of the Code determined without
regard to Section 852(b)(2)(D) of the Code) for its taxable year ending on
the Closing Date, all of the excess of (i) its interest income excludable
from gross income under Section 103(a) of the Code over (ii) its
deductions disallowed under Sections 265 and 171(a)(2) of the Code for its
taxable year ending on the Closing Date, and all of its net capital gain
(as such term is used in Sections 852(b)(3)(A) and (C) of the Code), after
reduction by any available capital loss carry forward, for its taxable
year ending on the Closing Date. |
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| 9. |
|
BROKERAGE FEES AND EXPENSES |
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9.1. |
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Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for
herein. |
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9.2. |
|
The parties have been informed by
Xxxxxxx Xxxxxxx Trees & Xxxxx and the Acquiring Fund Adviser, and the
parties have entered into this Agreement in reliance on such information,
that the Acquiring Fund Adviser will pay all proxy statement and
solicitation costs of the Funds associated with the Reorganization
including, but not limited to, the expenses associated with the
preparation, printing and mailing of any and all shareholder notices,
communications, proxy statements, and necessary filings with the SEC or
any other governmental authority in connection with the transactions
contemplated by this Agreement and the fees and expenses of any proxy
solicitation firm retained in connection with the Reorganization. Except
for the foregoing, ________________ shall bear the expenses of any fees
and or services provided by Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
LLP. |
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| 10. |
|
ENTIRE AGREEMENT; SURVIVAL OF
WARRANTIES |
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10.1. |
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The Acquiring Trust and the FFTW Funds
each agrees that neither party has made any representation, warranty or
covenant not set forth herein or referred to in Paragraphs 4.1 or 4.2
hereof and that this Agreement constitutes the entire agreement between
the parties. |
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10.2. |
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The representations and warranties
contained in this Agreement or in any document delivered pursuant hereto
or in connection herewith shall not survive the consummation of the
transactions contemplated hereunder. |
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| 11. |
|
TERMINATION |
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11.1. |
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This Agreement may be terminated by the
mutual agreement of the Acquiring Trust and the FFTW Funds In addition,
either party, on behalf of an individual Acquiring Fund or Acquired Fund,
may at its option terminate this Agreement at or prior to the Closing
Date: |
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11.1.a. |
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because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or
prior to the Closing Date; |
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11.1.b. |
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because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met; |
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11.1.c. |
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by resolution of the Acquiring Trust’s Board of Trustees if
circumstances should develop that, in the good faith opinion of such
Board, make proceeding with the Agreement not in the best interests of the
Acquiring Fund’s shareholders; |
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11.1.d. |
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by resolution of the FFTW Funds’ Board of Directors if
circumstances should develop that, in the good faith opinion of such
Board, make proceeding with the Agreement not in the best interests of the
Acquired Funds’ shareholders; or |
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11.1.e. |
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if the transactions contemplated by this Agreement shall not have
occurred on or prior to _____________________, 2008 or such other date as
the parties may mutually agree upon in writing. |
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11.2. |
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In the event of any such termination,
there shall be no liability for damages on the part of the Acquiring
Funds, the Acquiring Trust, or the Trustees or officers of the Acquiring
Trust, the FFTW Funds, the Acquired Funds, or the Directors or officers of
the FFTW Funds, but, subject to Paragraph 9.2, each party shall bear the
expenses incurred by it incidental to the preparation and carrying out of
this Agreement. |
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 FFTW Funds and
the Acquiring Trust; provided, however, that following the meeting of the
Acquired Fund’s shareholders called by the FFTW Funds pursuant to Paragraph 5.2
of this Agreement, no such amendment may have the effect of changing the
provisions regarding the method for determining the number of Acquiring Fund
Shares to be received by the Acquired Fund Shareholders under this Agreement to
their detriment without their further approval; provided that nothing contained
in this Section 12 shall be construed to prohibit the parties from amending this
Agreement to change the Closing Date.
Any
notice, report, statement or demand required or permitted by any provisions of
this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquired Fund, c/o Xxxxxxx Xxxxxxx
Trees & Xxxxx with copies to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, attention: Xxx X. Xxxxx, and to the
Acquiring Funds, c/o American Independence Financial Services, LLC, 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx, XX 00000, attention Xxxxxxx Xxxxxxx, with copies to
Dechert LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX.
| 14. |
|
HEADINGS;
COUNTERPARTS; GOVERNING LAW; ASSIGNMENT |
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14.1. |
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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. |
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14.2. |
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This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original. |
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14.3. |
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This
Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware, without giving effect to conflict
of laws principles (other than Delaware Code Title 6 ss. 2708); provided
that, in the case of any conflict between those laws and the federal
securities laws, the latter shall govern. |
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14.4. |
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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 either
party without the prior written consent of the other party hereto. Nothing
herein expressed or implied is intended or shall be construed to confer
upon or give any person, firm or corporation, or other entity, other than
the parties hereto and their respective successors and assigns, any rights
or remedies under or by reason of this
Agreement. |
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14.5. |
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It is expressly agreed that the
obligations of the Acquiring Trust and the FFTW Funds shall not be binding
upon any of their respective trustees, shareholders, nominees, officers,
agents or employees personally, but bind only to the property of the
Acquiring Funds or the Acquired Funds, as the case may be, as provided in
the trust instruments of the Acquiring Trust and the Articles of
Incorporation of the FFTW Funds, respectively. The execution and delivery
of this Agreement have been authorized by the trustees of the Acquiring
Trust and of the directors of the FFTW Funds and this Agreement has been
executed by authorized officers of the Acquiring Trust and the FFTW Funds,
acting as such, and neither such authorization by such trustees nor such
execution and delivery by such officers shall be deemed to have been made
by any of them individually or to imposed any liability on any of them
personally, but shall bind only the property of the Acquiring Funds and
the Acquired Funds, as the case may be, as provided in the trust
instruments of the Acquiring Trust and the Articles of Incorporation of
the FFTW Funds, respectively. |
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first set forth above by its President or Vice President
and attested by its Secretary or Assistant Secretary.
|
Attest: FFTW Funds, Inc. |
|
on
behalf of each of the Funds of FFTW |
|
Funds,
Inc. as set forth on Schedule ___, |
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By: |
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Name: |
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Title:
Secretary |
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By:
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Name: |
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Title:
President |
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Attest: AMERICAN INDEPENDENCE FUNDS TRUST
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on
behalf each of the Funds of AMERICAN |
|
INDEPENDENCE FUNDS TRUST as set |
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forth
on Schedule |
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By:
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Name: |
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Title:
Secretary |
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By:
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Name |
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Title:
President |
