ITEM 77Q1(G)
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made as of this
14th day of April, 2003, by and between Monarch Funds ("Monarch"), a
Massachusetts business trust, for itself and on behalf of its series listed in
the Acquiring Funds column below (each an "Acquiring Fund") and Monarch Funds
(the "Trust"), a Delaware statutory trust, for itself and on behalf of its
series listed in the Target Funds column below (each a "Target Fund").
---------------------------------------------------------- -------------------------------------------------------
Acquiring Funds
TARGET FUNDS
---------------------------------------------------------- -------------------------------------------------------
---------------------------------------------------------- -------------------------------------------------------
Daily Assets Treasury Fund Treasury Cash Fund
---------------------------------------------------------- -------------------------------------------------------
Daily Assets Government Fund Government Cash Fund
---------------------------------------------------------- -------------------------------------------------------
Daily Assets Cash Fund Cash Fund
---------------------------------------------------------- -------------------------------------------------------
WHEREAS, the parties desire that each Acquiring Fund acquire the assets and
assume the liabilities of the Target Fund listed opposite the Acquiring Fund
("Corresponding Target Fund") in exchange for shares of equal value of the
Acquiring Fund and the distribution of the shares of the Acquiring Fund to the
shareholders of the Corresponding Target Fund in connection with the dissolution
and liquidation of the Corresponding Target Fund (each a "REORGANIZATION"); and
WHEREAS, the parties, for convenience, have structured this Plan so that it
generally refers to a single Reorganization between a single Acquiring Fund and
its Corresponding Target Fund, but intend for this Plan and its terms and
conditions to apply to each Reorganization; and
WHEREAS, the parties intend that each Reorganization qualify as a
"reorganization," within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE"), and that the Acquiring Fund and the
Corresponding Target Fund each be a "party to a reorganization," within the
meaning of Section 368(b) of the Code, with respect to the Reorganization;
NOW, THEREFORE, in accordance with the mutual promises described herein,
the parties agree as follows:
1. DEFINITIONS.
The following terms shall have the following meanings:
1940 ACT The Investment Company Act of 1940, as amended.
ACQUIRING CLASS The class of the Acquiring Fund whose shares that Monarch will issue to the
shareholders of the Corresponding Target Class set forth in Schedule A.
ASSETS All property and assets of any kind and all interests, rights, privileges and
powers of or attributable to the Target Fund whether or not determinable at the
Effective Time and wherever located. Assets include all cash, cash equivalents,
securities, claims (whether absolute or contingent, Known or unknown, accrued or
unaccrued or conditional or unmatured), contract rights and receivables (including
dividend and interest receivables) owned by or attributed to the Target Fund and
any deferred or prepaid expense shown as an asset on the Target Fund's books.
ASSETS LIST A list of securities and other Assets and Known Liabilities of or attributable to the
Target Fund as of the date provided to Monarch.
CLOSING DATE April 17, 2003, or such other date as the parties may agree to in writing.
CORRESPONDING TARGET CLASS The Target Fund share class set forth opposite the Acquiring Class in Schedule A.
EFFECTIVE TIME 9:00 a.m. Eastern time on the business day following the Closing Date, or such other
time as the parties may agree to in writing.
FUND The Acquiring Fund or the Target Fund as the context may require.
KNOW, KNOWN OR KNOWLEDGE Known after reasonable inquiry.
LIABILITIES All liabilities of, allocated or attributable to the Target Fund, whether Known or
unknown, accrued or unaccrued, absolute, or contingent or conditional or unmatured,
including any runoff insurance for the Trust's Board of Trustees.
NET VALUE OF ASSETS Value of Assets net of Liabilities.
REORGANIZATION DOCUMENTS Such bills of sale, assignments and other instruments as desirable for the Target Fund
to transfer to the Acquiring Fund all right and title to and interest in the Target
Fund's Assets and for the Acquiring Fund to assume the Target Fund's Liabilities.
SCHEDULE A Schedule A to this Plan.
TARGET FINANCIAL STATEMENTS The audited financial statements of the Target Fund for its most recently completed
fiscal year and, if applicable, the unaudited financial statements of the Target Fund
for its most recently completed semi-annual period.
VALUATION TIME The time on the Closing Date, the business day immediately preceding the Closing Date
if the Closing Date is not a business day, or such other date as the parties may agree
to in writing, that Monarch determines the net asset value of the shares of the Acquiring
Fund and determines the net value of the Assets of or attributable to the Target Fund.
Unless otherwise agreed to in writing, the Valuation Time shall be at the time of day then
set forth in the Target Fund's Registration Statement on Form N-1A as the time of day at
which net asset value is calculated.
2. REGULATORY FILINGS AND SHAREHOLDER ACTION.
(a) On the Closing Date, Monarch shall file an amendment to the
Trust's registration statement (the "Registration Statement")
adopting the Registration Statement as its own while making
certain other necessary amendments. The Trust and Monarch shall
promptly prepare and file any other appropriate regulatory
filings, including, without limitation, filings with federal,
state or foreign securities regulatory authorities.
(b) The parties shall seek an order of the SEC, if appropriate,
providing them with any necessary relief from Section 17 of the
1940 Act to permit them to consummate the transactions
contemplated by this Plan.
3. TRANSFER OF ASSETS. The Trust and Monarch shall take the following
steps with respect to the Reorganization:
(a) On or prior to the Closing Date, the Trust shall endeavor to pay
or make reasonable provision to pay out of the Assets all of the
Liabilities, expenses, costs and charges of or attributable to
the Target Fund that are Known to the Target Fund and that are
due and payable as of the Closing Date.
-2-
(b) At the Effective Time, the Target Fund shall assign, transfer, deliver and
convey all of the Assets to the Acquiring Fund, subject to all of the
Liabilities. The Acquiring Fund shall then accept the Assets and assume the
Liabilities such that at and after the Effective Time (i) all of the Assets
at or after the Effective Time shall become and be the assets of the
Acquiring Fund and (ii) all of the Liabilities at the Effective Time shall
attach to the Acquiring Fund, enforceable against the Acquiring Fund to the
same extent as if initially incurred by the Acquiring Fund.
(c) The Target Fund shall assign, transfer, deliver and convey the Assets to
the Acquiring Fund at the Effective Time on the following bases:
(1) In exchange for the transfer of the Assets, the
Acquiring Fund shall simultaneously issue and deliver
to the Target Fund full and fractional shares of
beneficial interest of each Acquiring Class. Monarch
shall determine the number of shares of the Acquiring
Class to be issued by dividing the Net Value of Assets
of the Corresponding Target Class by the net asset
value of one Acquiring Class share. Based on this
calculation, Monarch shall issue shares of beneficial
interest of each Acquiring Class with an aggregate net
asset value equal to the Net Value of the Assets of the
Corresponding Target Class.
(2) The parties shall determine, as of the Valuation Time,
the net asset value of the Acquiring Fund shares to be
delivered and the net asset value of the Assets to be
conveyed, substantially in accordance with the Trust's
current valuation procedures. The parties shall make
all computations to the fourth decimal place or such
other decimal place as the parties may agree to in
writing.
(3) The Trust, on behalf of the Target Fund, shall transfer
the Assets with good and marketable title to Monarch
for the benefit of the Acquiring Fund. The Trust, on
behalf of the Target Fund, shall transfer all cash in
the form of immediately available funds payable to the
order of Monarch for the benefit of the Acquiring Fund.
The Trust shall transfer any of the Assets of the
Target Fund that were not transferred to Monarch for
the benefit of the Acquiring Fund at the Effective Time
to Monarch at the earliest practicable date thereafter.
(d) Promptly after the Closing Date, the Trust will deliver to
Monarch a Statement of Assets and Liabilities of the Target
Fund as of the Closing Date (usually within one week).
4. DISSOLUTION AND LIQUIDATION OF THE TRUST, REGISTRATION OF SHARES
AND ACCESS TO RECORDS. The Trust and Monarch also shall take the
following steps in connection with the Reorganization:
(a) At or as soon as reasonably practical after the Effective Time, the Trust
shall dissolve and liquidate by transferring to shareholders of record of
each Corresponding Target Class full and fractional shares of beneficial
interest of the Acquiring Class equal in value to the shares of the
Corresponding Target Class held by the shareholder. Each Corresponding
Target Class shareholder also shall have the right to receive any unpaid
dividends or other distributions that the Target Fund declared with respect
to the shareholder's Corresponding Target Class shares before the Effective
Time. Monarch shall record on its books the ownership by the shareholders
of the respective Acquiring class' shares; the Trust shall simultaneously
redeem and cancel on its books all of its issued and outstanding shares of
each Corresponding Target Class. The Trust shall then wind up its affairs
and dissolve as soon as is reasonably possible after the Effective Time and
in accordance with all applicable laws and regulations.
(b) If a Target Fund shareholder requests a change in the registration of the
shareholder's Acquiring Fund shares to a person other than the shareholder,
the Acquiring Fund shall require the shareholder to (i) furnish the
Acquiring Fund with an instrument of transfer properly endorsed,
accompanied by any required signature guarantees and otherwise in proper
form for transfer; (ii) if any of the shares are outstanding in certificate
form, deliver to the Acquiring Fund the certificate representing such
shares; and (iii) pay to the Acquiring Fund any transfer or other taxes
required by
-3-
reason of such registration or establish to the reasonable satisfaction of
the Acquiring Fund that such tax has been paid or does not apply.
(c) At and after the Closing Date, the Trust shall provide Monarch and its
transfer agent with immediate access to: (i) all records containing the
names, addresses and taxpayer identification numbers of all of the Target
Fund shareholders and the number and percentage ownership of the
outstanding shares of the Corresponding Target Classes owned by each
shareholder as of the Effective Time and (ii) all original documentation
(including all applicable Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Target Fund
shareholders' taxpayer identification numbers and their liability for or
exemption from back-up withholding. The Trust shall preserve and maintain,
or shall direct its service providers to preserve and maintain, its records
as required by Section 31 of and Rules 31a-1 and 31a-2 under the 1940 Act.
5. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST.
The Trust, on behalf of itself and, as appropriate, the Target
Fund, represents and warrants to, and agrees with, Monarch as
follows:
(a) The Trust is a statutory trust, validly existing and in good standing under
the laws of the State of Delaware. The Trust's Board of Trustees duly
established and designated each class of the Target Fund as a class of the
Target Fund. The Trust is registered with the SEC as an open-end management
investment company under the 1940 Act, and such registration is in full
force and effect.
(b) The Trust has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and Assets,
to carry on its business as now being conducted and described in its
currently effective Registration Statement on Form N-1A, to enter into this
Plan and to consummate the transactions contemplated herein.
(c) The Trust's Board of Trustees has duly authorized the
execution and delivery of the Plan and the transactions
contemplated herein. Duly authorized officers of the Trust
have executed and delivered the Plan. The Plan represents a
valid and binding contract, enforceable in accordance with
its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium, and
other similar laws of general applicability relating to or
affecting creditors' rights and to general equity
principles. The execution and delivery of this Plan does
not, and, the consummation of the transactions contemplated
by this Plan will not, violate the Trust's Trust Instrument
or By-Laws. The Trust does not need to take any other action
to authorize its officers to effectuate this Plan and the
transactions contemplated herein.
(d) The Target Fund has qualified as a regulated investment company under Part
I of Subchapter M of Subtitle A, Chapter 1, of the Code, in respect of each
taxable year since the commencement of its operations and qualifies and
shall continue to qualify as a regulated investment company for its taxable
year which includes the Effective Time.
(e) The Trust has duly authorized and validly issued all of its issued and
outstanding shares and all of the shares are validly outstanding, fully
paid and non-assessable, and are offered for sale and sold in conformity
with the registration requirements of all applicable federal and state
securities laws. There are no outstanding options, warrants, or other
rights to subscribe for or purchase the Target Fund shares, nor are there
any securities convertible into Target Fund shares.
(f) The Trust shall operate the business of the Target Fund in the ordinary
course between the date hereof and the Effective Time, it being agreed that
such ordinary course of business will include the declaration and payment
of customary dividends and distributions and any other dividends and
distributions deemed advisable in anticipation of the Reorganization.
(g) At the Effective Time, the Target Fund will have good and marketable title
to the Assets and full right, power and authority to assign, transfer,
deliver and convey the Assets.
-4-
(h) The Target Financial Statements, copies of which have been previously
delivered to Monarch, fairly present the financial position of the Target
Fund as of the Target Fund's most recent fiscal year-end and the results of
the Target Fund's operations and changes in its net Assets for the periods
indicated. The Target Financial Statements are in accordance with generally
accepted accounting principles consistently applied.
(i) To the Knowledge of the Trust, the Target Fund has no
liabilities, whether or not determined or determinable,
other than the Liabilities disclosed or provided for in the
Target Financial Statements or Liabilities incurred in the
ordinary course of business subsequent to the date of the
Target Financial Statements, and Liabilities set forth in
the Assets List.
(j) The Trust does not Know of any claims, actions, suits, investigations or
proceedings of any type pending or threatened against the Target Fund or
the Assets or businesses. The Trust does not Know of any facts that it
currently has reason to believe are likely to form the basis for the
institution of any such claim, action, suit, investigation or proceeding
against the Target Fund. For purposes of this provision, investment
underperformance or negative investment performance shall not be deemed to
constitute such facts, provided all required performance disclosures have
been made. The Target Fund is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body that
adversely affects, or is reasonably likely to adversely affect, its
financial condition, results of operations, business, properties or the
Assets or its ability to consummate the transactions contemplated by the
Plan.
(k) Except for contracts, agreements, franchises, licenses, or permits entered
into or granted in the ordinary course of its business in each case under
which no material default exists, the Trust is not a party to or subject to
any material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever on behalf of
the Target Fund.
(l) The Trust has filed its federal income tax returns of the Target Fund,
copies of which have been previously delivered to the Trust, for all
taxable years to and including the Target Fund's most recent taxable year,
and has paid all taxes payable pursuant to such returns. No such return is
currently under audit and no assessment has been asserted with respect to
such returns.
(m) Since the date of the Target Financial Statements, there has been no
material adverse change in the financial condition, results of operations,
business, properties or Assets of the Target Fund. For all purposes under
this Plan, investment underperformance, negative investment performance
and/or investor redemptions shall not be considered material adverse
changes, provided all required performance disclosures have been made.
6. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MONARCH.
Monarch, on behalf of itself and, as appropriate, the Acquiring
Fund, represents and warrants to, and agrees with the Trust as
follows:
(a) Monarch is organized as a business trust duly created, validly existing and
in good standing under the laws of the State of Massachusetts. The Board of
Trustees of Monarch has duly established and designated the Acquiring Fund
as a series of Monarch and each Acquiring Class as a class of the Acquiring
Fund. Monarch is not registered with the SEC as an open-end management
company under the 1940 Act. On the Closing Date, Monarch will file an
amendment to the Trust's Registration Statement adopting it as its own.
(b) Monarch has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and assets,
to enter into this Plan and to consummate the transactions contemplated
herein.
(c) The Board of Trustees of Monarch has duly authorized the execution and
delivery of the Plan and the transactions contemplated herein. Duly
authorized officers of Monarch have executed and delivered the Plan. The
Plan represents a valid and binding contract, enforceable in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The execution and delivery of this Plan does not, and
the consummation of the transactions contemplated by this Plan will not,
violate Monarch's Agreement and Declaration of Trust or By-Laws. Monarch
does not need to take any other action to authorize its officers to
effectuate the Plan and the transactions contemplated herein.
-5-
(d) There shall be no issued and outstanding shares of the Acquiring Fund or
any Acquiring Class prior to the Closing Date other than shares issued to
Forum Financial Group, LLC or its affiliates in order to approve certain
Acquiring Class start-up matters. Monarch shall duly authorize the
Acquiring Fund shares to be issued and delivered to the Corresponding
Target Fund as of the Effective Time. When issued and delivered, the
Acquiring Fund shares shall be duly and validly issued, fully paid and
non-assessable, and no shareholder of the Acquiring Fund shall have any
preemptive right of subscription or purchase in respect of them. There are
no outstanding options, warrants, or other rights to subscribe for or
purchase the Acquiring Fund shares, nor are there any securities
convertible into Acquiring Fund shares.
(e) Monarch will not commence the operations of the Acquiring Fund or any
Acquiring Class prior to the Effective Time.
(f) Monarch does not Know of any claims, actions, suits, investigations or
proceedings of any type pending or threatened against the Acquiring Fund or
its assets or businesses. There are no facts that Monarch currently has
reason to believe are likely to form the basis for the institution of any
such claim, action, suit, investigation or proceeding against it. The
Acquiring Fund is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that adversely
affects, or is reasonably likely to adversely affect, its financial
condition, results of operations, business, properties or assets or its
ability to consummate the transactions contemplated herein.
(g) Except for contracts, agreements, franchises, licenses or permits entered
into or granted in the ordinary course of its business, in each case under
which no material default exists, Monarch is not a party to or subject to
any material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever on behalf of
the Acquiring Fund.
(h) Monarch has made all state filings to register each Acquiring Class in each
jurisdiction that the Corresponding Target Class is currently registered
and all necessary steps have been taken under all relevant jurisdictions'
securities laws to consummate the Reorganization.
7. CONDITIONS TO THE TRUST'S OBLIGATIONS. The obligations of the
Trust with respect to the Reorganization shall be subject to the
following conditions precedent:
(a) Monarch shall have duly executed and delivered the
applicable Reorganization Documents to the Trust.
(b) Monarch shall have delivered to the Trust a certificate dated as of the
Closing Date and executed in its name by the Secretary or Assistant
Secretary of Monarch, in a form reasonably satisfactory to the Trust,
stating that the representations and warranties of Monarch in this Plan
that apply to the Reorganization are true and correct in all material
respects at and as of the Valuation Time.
(c) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it
is sought to restrain or prohibit, or obtain damages or
other relief in connection with the Reorganization.
(d) The SEC shall not have issued any unfavorable advisory report under Section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganization under Section 25(c) of the 1940 Act.
(e) Monarch has performed and complied in all material respects with each of
its agreements and covenants required by this Plan to be performed or
complied with by it prior to or at the Reorganization's Valuation Time and
Effective Time.
(f) The Trust shall have received from Monarch a duly executed instrument
whereby the Acquiring Fund assumes all of the Liabilities of or
attributable to the Target Fund.
(g) Neither party shall have terminated this Plan with respect to the
Reorganization pursuant to Section 10 of this Plan.
-6-
(h) The parties shall have received any necessary order of the SEC exempting
the parties from the prohibitions of Section 17 of the 1940 Act or any
similar relief necessary to permit the Reorganization.
(i) The parties shall have received a certificate from Forum Financial Group,
LLC stating that it will pay all audit, legal, and proxy solicitation costs
incurred by the Target Fund and the Trust in connection with the
Reorganization.
8. CONDITIONS TO MONARCH'S OBLIGATIONS. The obligations of Monarch
with respect to the Reorganization shall be subject to the
following conditions precedent:
(a) The Trust shall have duly executed and delivered its applicable
Reorganization Documents to Monarch.
(b) The Trust shall have delivered to Monarch a certificate dated as of the
Closing Date and executed in its name by its Secretary or Assistant
Secretary, in a form reasonably satisfactory to Monarch, stating that the
representations and warranties of the Trust in this Plan that apply to the
Reorganization are true and correct in all material respects at and as of
the Valuation Time.
(c) No action, suit or other proceeding shall be threatened or pending before
any court or governmental agency in which it is sought to restrain or
prohibit or obtain damages or other relief in connection with the
Reorganization.
(d) The SEC shall not have issued any unfavorable advisory report under Section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganization under Section 25(c) of the 1940 Act.
(e) The Trust shall have performed and complied in all material
respects with each of its agreements and covenants required
by this Plan to be performed or complied with by it prior to
or at the Valuation Time and Effective Time.
(f) Neither party shall have terminated this Plan with respect to the
Reorganization pursuant to Section 10 of this Plan.
(g) The parties shall have received any necessary order of the SEC exempting
the parties from the prohibitions of Section 17 of the 1940 Act or any
similar relief necessary to permit the Reorganization.
(h) The parties shall have received a certificate from Forum
Financial Group, LLC stating that it will pay all audit,
legal, and proxy solicitation costs incurred by the
Acquiring Fund and the Target Fund in connection with the
Reorganization.
(i) The Board of Trustees of Monarch shall have determined that
the Acquiring Fund's participation in the Reorganization is
in the best interests of the Acquiring Fund.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties hereto shall survive the completion of the
transactions contemplated herein.
10. TERMINATION OF PLAN. A majority of a party's Board of Trustees may
terminate this Plan with respect to the Acquiring Fund or Target Fund,
as appropriate, at any time before the applicable Effective Time if:
(i) the party's conditions precedent set forth in Sections 7 or 8, as
appropriate, are not satisfied or (ii) the Board of Trustees
determines that the consummation of the Reorganization is not in the
best interests of shareholders and gives notice to the other party.
11. GOVERNING LAW. This Plan and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the laws
of the State of Delaware, except to the extent preempted by federal
law, without regard to conflicts of law principles.
12. BROKERAGE FEES. Each party represents and warrants that there are no
brokers or finders entitled to receive any payments in connection with
the transactions provided for in the Plan.
13. AMENDMENTS. The parties may, by agreement in writing authorized by its
respective Boards of
-7-
Trustees amend this Plan at anytime. The parties shall not deem this
Section to preclude them from changing the Closing Date or the
Effective Time by mutual agreement.
14. WAIVERS. At any time prior to the Closing Date, either party may by
written instrument signed by it (i) waive the effect of any
inaccuracies in the representations and warranties made to it
contained herein and (ii) waive compliance with any of the agreements,
covenants or conditions made for its benefit contained herein. The
parties agree that any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any other or
future inaccuracy or lack of compliance.
15. COOPERATION AND FURTHER ASSURANCES. Each party will cooperate with the
other in fulfilling its obligations under this Plan and will provide
such information and documentation as is reasonably requested by the
other in carrying out this Plan's terms. Each party will provide such
further assurances concerning the performance of obligations under
this Plan and the consummation of the Reorganization as the other
shall deem necessary, advisable or appropriate.
16. LIMITATION ON LIABILITIES. The obligations of the Trust and the Target
Fund or Monarch and the Acquiring Fund shall not bind any of their
respective Trustees, shareholders, nominees, officers, agents, or
employees of the Trust or Monarch personally, but shall bind only the
assets and property of the Target Fund and Acquiring Fund,
respectively. The execution and delivery of this Plan by the parties'
officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the Assets and the property of the Acquiring Fund or
Target Fund, as appropriate.
17. NOTICES. Any notice, report, statement, certificate or demand required
or permitted by any provision of this Plan shall be in writing and
shall be given by prepaid telegraph, telecopy, certified mail or
overnight express courier to:
For the Trust:
Xxxxxxx X. Xxxxxxxx, Esq.
Forum Financial Group, LLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
With copies to:
R. Xxxxxxx Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000-0000
For Monarch:
Xxxxxxx X. Xxxxxxxx, Esq.
Forum Financial Group, LLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
With copies to:
R. Xxxxxxx Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000-0000
-8-
18. GENERAL. This Plan supersedes all prior agreements between the
parties (written or oral), is intended as a complete and
exclusive statement of the terms of the agreement between the
parties and may not be changed or terminated orally. The parties
may execute this Plan in counterparts, which shall be considered
one and the same agreement, and shall become effective when the
counterparts have been executed by and delivered to both parties.
The headings contained in this Plan are for reference only and
shall not affect in any way the meaning or interpretation of this
Plan. Nothing in this Plan, expressed or implied, confers upon
any other person any rights or remedies under or by reason of
this Plan. Neither party may assign or transfer any right or
obligation under this Plan without the written consent of the
other party.
-9-
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers designated below to execute this Plan as of the date first written
above.
MONARCH FUNDS, A DELAWARE BUSINESS TRUST,
FOR ITSELF AND ON BEHALF OF EACH OF ITS SERIES
ATTEST:
____________________________________________ By: ______________________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
MONARCH FUNDS, A MASSACHUSETTS BUSINESS TRUST,
FOR ITSELF AND ON BEHALF OF EACH OF ITS SERIES
ATTEST:
____________________________________________ By: ______________________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
-10-
SCHEDULE A
CORRESPONDING CLASS TABLE
------------------------------------- -------------------------------- ------------------------------ ---------------------
CORRESPONDING TARGET CLASS
ACQUIRING CLASS
------------------------------------- -------------------------------- ------------------------------ ---------------------
------------------------------------- -------------------------------- ------------------------------ ---------------------
Daily Assets Treasury Fund Institutional Service Shares Treasury Cash Fund Institutional Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Universal Shares Universal Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Preferred Shares Preferred Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Investor Shares Investor Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
------------------------------------- -------------------------------- ------------------------------ ---------------------
Daily Assets Government Fund Institutional Shares Government Cash Fund Institutional Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Universal Shares Universal Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Preferred Shares Preferred Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Investor Shares Investor Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
------------------------------------- -------------------------------- ------------------------------ ---------------------
Daily Assets Cash Fund Institutional Shares Cash Fund Institutional Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Universal Shares Universal Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Preferred Shares Preferred Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
Investor Shares Investor Shares
------------------------------------- -------------------------------- ------------------------------ ---------------------
------------------------------------- -------------------------------- ------------------------------ ---------------------
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made as of this
23rd day of April, 2003, by and between Monarch Funds (the "Trust"), a
Massachusetts business trust, for itself and on behalf of its series listed in
the Acquiring Funds column below (each an "Acquiring Fund") and Forum Funds
("Forum"), a Delaware statutory trust, for itself and on behalf of its series
listed in the Target Funds column below (each a "Target Fund").
------------------------------------ --------------------------------------------- ---------------------------------
Acquiring Funds TARGET FUNDS MASTER FUNDS
------------------------------------ --------------------------------------------- ---------------------------------
------------------------------------ --------------------------------------------- ---------------------------------
Daily Assets Treasury Fund Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
------------------------------------ --------------------------------------------- ---------------------------------
Daily Assets Government Fund Daily Assets Government Obligations Fund Government Cash Portfolio
------------------------------------ --------------------------------------------- ---------------------------------
Daily Assets Cash Fund Daily Assets Cash Fund Cash Portfolio
------------------------------------ --------------------------------------------- ---------------------------------
WHEREAS, the parties desire that each Acquiring Fund acquire the assets and
assume the liabilities of the Target Fund listed opposite the Acquiring Fund
above ("Corresponding Target Fund") in exchange for shares of equal value of the
Acquiring Fund and the distribution of those shares of the Acquiring Fund to the
shareholders of the Corresponding Target Fund in connection with the dissolution
and liquidation of the Corresponding Target Fund (each a "Reorganization"); and
WHEREAS, each Acquiring Fund and each Target Fund (each a "Fund") is a
feeder fund in a "master/feeder fund structure," pursuant to which each
Acquiring Fund and its Corresponding Target Fund invest substantially all of
their respective net investable assets in the subtrust of Core Trust (Delaware),
a Delaware statutory trust registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act") ("Core
Trust"), listed in the Master Funds column above (each such subtrust a
"Corresponding Portfolio") and are the only interestholders therein, and each
Corresponding Portfolio is classified for federal tax purposes as a partnership;
and
WHEREAS, the parties, for convenience, have structured this Plan so that it
generally refers to a single Reorganization between a single Acquiring Fund and
its Corresponding Target Fund, but intend for this Plan and its terms and
conditions to apply to each Reorganization; and
WHEREAS, the parties intend that the Reorganization qualify as a
"reorganization" (as defined in Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code")), that the Acquiring Fund and the Target Fund each
be a "party to a reorganization," within the meaning of Section 368(b) of the
Code, with respect to the Reorganization, and that this Plan be, and they adopt
it as, a "plan of reorganization" within the meaning of the regulations under
the Code ("Regulations").
NOW, THEREFORE, in accordance with the mutual promises described herein,
the parties agree as follows:
1. DEFINITIONS.
In addition to the terms defined above, the following terms shall have
the following meanings:
1933 ACT The Securities Act of 1933, as amended.
ACQUIRING CLASS The class of voting shares of the Acquiring Fund that the Trust will issue to the
shareholders of the Corresponding Target Class set forth in Schedule A.
-12-
ASSETS All property and assets of any kind the Target Fund owns at the Effective Time and
all interests, rights, privileges and powers of or attributable to the Target Fund
at that time, wherever located. Assets include all cash, cash equivalents, securities
(including the Target Fund's interest in its Corresponding Portfolio), claims (whether
absolute or contingent, Known or unknown, accrued or unaccrued or conditional or
unmatured), contract rights and receivables (including dividend and interest receivables)
owned by or attributed to the Target Fund and any deferred or prepaid expense shown as an
asset on the Target Fund's books.
ASSETS LIST A list of securities and other Assets and Known Liabilities of or attributable to the
Target Fund as of the date provided to the Trust.
BUSINESS DAY Each weekday except Federal holidays and other days that the Federal Reserve Bank of San
Francisco is closed.
CLOSING DATE June 6, 2003.
CORRESPONDING TARGET CLASS The Target Fund share class set forth opposite the Acquiring Class in Schedule A.
EFFECTIVE TIME 9:00 a.m. Eastern time on the Business Day following the Closing Date, or such other time as
the parties may agree to in writing.
FUND The Acquiring Fund or the Target Fund, as the context may require.
KNOW, KNOWN OR KNOWLEDGE Known after reasonable inquiry.
LIABILITIES All liabilities of, allocated or attributable to the Target Fund, whether Known or unknown,
accrued or unaccrued, absolute or contingent or conditional or unmatured.
N-14 REGISTRATION STATEMENT The Trust's Registration Statement on Form N-14 under the 1940 Act that will register the
shares of the Acquiring Fund to be issued in the Reorganization and will include the proxy
materials necessary for shareholders of the Target Fund to consider approving the
Reorganization.
NET VALUE OF ASSETS Value of Assets, determined in accordance with Section 3(a)(2), net of Liabilities.
REORGANIZATION DOCUMENTS Such bills of sale, assignments, assumptions, and other instruments as desirable for the
Target Fund to transfer to the Acquiring Fund all right and title to and interest in the
Assets and for the Acquiring Fund to assume the Liabilities.
SCHEDULE A Schedule A to this Plan.
TARGET FINANCIAL STATEMENTS The audited financial statements of the Target Fund for its most recently completed fiscal
year and, if applicable, the unaudited financial statements of the Target Fund for its most
recently completed semi-annual period.
VALUATION TIME The time on the Closing Date, the Business Day immediately preceding the Closing Date if the
Closing Date is not a Business Day, or such other date as the parties may agree to in writing,
that the Trust determines the net asset value of the shares of the Acquiring Fund and the Net
Value of Assets. Unless otherwise agreed to in writing, the Valuation Time shall be at the time
of day then set forth in the Target Fund's Registration Statement on Form N-1A as the time of
day at which net asset value is calculated.
-13-
2. REGULATORY FILINGS AND SHAREHOLDER ACTION.
(c) The Trust shall promptly prepare and file the N-14 Registration
Statement with the SEC. The Trust and Forum shall promptly
prepare and file any other appropriate regulatory filings,
including, without limitation, filings with federal, state or
foreign securities regulatory authorities.
(d) The parties shall seek an order of the SEC, if appropriate,
providing them with any necessary relief from Section 17 of the
1940 Act to permit them to consummate the transactions
contemplated by this Plan.
(e) As soon as practicable after the effective date of the N-14
Registration Statement, the Target Fund shall hold a shareholder
meeting to consider and approve this Plan and such other matters
as Forum's Board of Trustees may determine.
3. TRANSFER OF ASSETS AND RELATED TRANSACTIONS. The Trust and Forum shall
take the following steps with respect to the Reorganization:
(b) On or prior to the Closing Date, (i) Forum shall endeavor to pay
or make reasonable provision to pay all of the Liabilities,
expenses, costs and charges of or attributable to the Target Fund
that are Known to the Target Fund and that are due and payable as
of the Closing Date, and (ii) the Target Fund shall declare and
pay to its shareholders a dividend and/or other distribution in
an amount large enough so that it will have distributed
substantially all (and in any event not less than 90%) of its
"investment company taxable income" (as defined in section
852(b)(2) of the Code, computed without regard to any deduction
for dividends paid) and substantially all of its "net capital
gain," if any (as defined in section 1222(11)) for the current
taxable year through the Effective Time.
(b) At the Effective Time, Forum shall assign, transfer, deliver and convey all
of the Assets to the Acquiring Fund, subject to all of the Liabilities. The
Trust shall then accept the Assets and assume the Liabilities such that at
and after the Effective Time (i) all of the Assets at or after the
Effective Time shall become and be the assets of the Acquiring Fund and
(ii) all of the Liabilities at the Effective Time shall attach to the
Acquiring Fund, enforceable against the Acquiring Fund to the same extent
as if initially incurred by the Acquiring Fund. As a result of such
transfer of Assets (including the Target Fund's interest in its
Corresponding Portfolio), the Acquiring Fund will become the sole
interestholder in such subtrust, whereupon such subtrust will distribute
its assets in kind to the Acquiring Fund and will be terminated as a
subtrust of Core Trust.
(c) Forum shall assign, transfer, deliver and convey the Assets to the
Acquiring Fund at the Effective Time on the following bases:
(1) In exchange for the transfer of the Assets, the Trust shall
simultaneously issue and deliver to the Target Fund full and
fractional shares of beneficial interest of each Acquiring
Class. The Trust shall determine the number of shares of
each Acquiring Class to be issued by dividing the Net Value
of Assets attributable to the Corresponding Target Class by
the net asset value of one Acquiring Class share. Based on
this calculation, the Trust shall issue shares of beneficial
interest of each Acquiring Class with an aggregate net asset
value equal to the Net Value of Assets attributable to the
Corresponding Target Class.
-14-
(2) The parties shall determine, as of the Valuation Time, the
net asset value of the Acquiring Fund shares to be delivered
and the Net Value of Assets to be conveyed, substantially in
accordance with the Trust's current valuation procedures.
The parties shall make all computations to the fourth
decimal place or such other decimal place as the parties may
agree to in writing.
(3) Forum shall transfer the Assets with good and marketable
title to the Trust for the benefit the Acquiring Fund. Forum
shall transfer all cash in the form of immediately available
funds payable to the order of the Trust for the benefit of
the Acquiring Fund. Forum shall transfer any of the Assets
that were not transferred to the Trust at the Effective Time
to the Trust at the earliest practicable date thereafter.
(d) The foregoing steps, together with all other related acts
necessary to consummate the Reorganization, shall occur at the
Trust's principal office on the Closing Date, or at such other
place as the parties may agree on. All steps and acts shall be
deemed to take place simultaneously at the Effective Time.
(e) Promptly after the Closing Date (usually within one week), Forum
will deliver to the Trust a Statement of Assets and Liabilities
of the Target Fund as of the Closing Date.
4. DISSOLUTION AND LIQUIDATION OF THE TARGET FUND, REGISTRATION OF SHARES
AND ACCESS TO RECORDS. The Trust and Forum also shall take the
following steps in connection with the Reorganization:
(a) At or as soon as reasonably practical after the Effective Time, the Target
Fund shall dissolve and liquidate by transferring to shareholders of record
as of the Effective Time of each Corresponding Target Class full and
fractional shares of beneficial interest of the Acquiring Class equal in
value to the shares of the Corresponding Target Class held by the
shareholder. Each Corresponding Target Class shareholder also shall have
the right to receive any unpaid dividends or other distributions that the
Target Fund declared with respect to the shareholder's Corresponding Target
Class shares at or before the Effective Time. The Trust shall record on the
Acquiring Fund's books the ownership by the shareholders of the respective
Acquiring Fund shares, certificates for which will not be issued; the
Target Fund shall simultaneously redeem and cancel on its books all of its
issued and outstanding shares of each Corresponding Target Class. The
Target Fund shall then wind up its affairs and dissolve as soon as is
reasonably possible, but in no event more than six (6) months after the
Effective Time, and in accordance with all applicable laws and regulations.
(b) If a Target Fund shareholder requests a change in the registration of the
shareholder's Acquiring Fund shares to a person other than the shareholder,
the Acquiring Fund shall require the shareholder to (i) furnish the
Acquiring Fund with an instrument of transfer properly endorsed,
accompanied by any required signature guarantees and otherwise in proper
form for transfer; (ii) if any of the shares is outstanding in certificate
form, deliver to the Acquiring Fund the certificate representing such
shares; and (iii) pay to the Acquiring Fund any transfer or other taxes
required by reason of such registration or establish to the reasonable
satisfaction of the Acquiring Fund that such tax has been paid or does not
apply.
(c) At and after the Closing Date, Forum shall provide the Trust and its
transfer agent with immediate access to: (i) all records containing the
names, addresses and taxpayer identification numbers of all of the Target
Fund shareholders and the number and percentage ownership of the
outstanding shares of the Corresponding Target Classes owned by each
shareholder as of the Effective Time and (ii) all original documentation
(including all applicable Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Target Fund
shareholders' taxpayer identification numbers and their liability for or
exemption from back-up withholding. The Target Fund shall preserve and
maintain, or shall direct its service providers to preserve and maintain,
its records as required by Section 31 of and Rules 31a-1 and 31a-2 under
the 1940 Act.
-15-
5. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FORUM. Forum, on
behalf of itself and, as appropriate, the Target Fund, represents and
warrants to, and agrees with, the Trust as follows:
(a) Forum is a statutory trust, validly existing and in good standing
under the laws of the State of Delaware. Forum's Board of
Trustees has duly established and designated the Target Fund as a
series of Forum and each Corresponding Target Class as a class of
the Target Fund. Forum is registered with the SEC as an open-end
management investment company under the 1940 Act, and such
registration is in full force and effect. Before January 1, 1997,
Forum "claimed" classification for federal tax purposes as an
association taxable as a corporation and has not elected
otherwise since.
(b) Forum has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and assets,
to carry on its business as now being conducted and described in its
currently effective Registration Statement on Form N-1A, and to enter into
this Plan and to consummate the transactions contemplated herein.
(d) Forum's Board of Trustees has duly authorized the execution and
delivery of this Plan and the transactions contemplated herein.
Duly authorized officers of Forum have executed and delivered
this Plan. Assuming due execution and delivery of this Plan by
the Trust, this Plan represents a valid and binding contract,
enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles. The execution and delivery of this
Plan does not, and, subject to the approval of shareholders
referenced in Section 2(c), the consummation of the transactions
contemplated by this Plan will not, violate Forum's Trust
Instrument or By-Laws. Except for obtaining the approval of
Target Fund shareholders, Forum does not need to take any other
action to authorize its officers to effectuate this Plan and the
transactions contemplated herein.
(e) The Target Fund is a "fund" (as defined in Section 851(g)(2) of
the Code); it has qualified for treatment as a regulated
investment company under Part I of Subchapter M of Subtitle A,
Chapter 1, of the Code ("RIC") for each taxable year since the
commencement of its operations and qualifies and shall continue
to qualify for treatment as a RIC for its taxable year which
includes the Effective Time; it will invest its assets at all
times through the Effective Time in a manner that ensures
compliance with the foregoing; and it has no earnings and profits
accumulated in any taxable year in which the provisions of such
Subchapter M did not apply to it.
(f) The materials included within the N-14 Registration Statement
when filed with the SEC, when Part A of the N-14 Registration
Statement is distributed to shareholders, at the time of the
Target Fund shareholder meeting and at the Effective Time,
insofar as they relate to Forum and the Target Fund (i) shall
comply in all material respects with the applicable provisions of
the 1933 Act and the 1940 Act, the rules and regulations
thereunder and state securities laws, and (ii) shall 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 made therein not misleading.
(f) Forum has duly authorized and validly issued all of its issued and
outstanding shares and all of the shares are validly outstanding, fully
paid and non-assessable, and are offered for sale and sold in conformity
with the registration requirements of all applicable federal and state
securities laws. There are no outstanding options, warrants or other rights
to subscribe for or purchase Target Fund shares, nor are there any
securities convertible into Target Fund shares.
-16-
(g) Forum shall operate the business of the Target Fund in the ordinary course
between the date hereof and the Effective Time, it being agreed that such
ordinary course of business will include the declaration and payment of
customary dividends and other distributions and any other distributions
deemed advisable in anticipation of the Reorganization (including
distributions pursuant to Section 3(a)(2) hereof). From the date it
commenced operations through the Effective Time, the Target Fund shall
conduct its "historic business" (within the meaning of section
1.368-1(d)(2) of the Regulations) in a substantially unchanged manner; and
before the Effective Time the Target Fund will not (a) dispose of and/or
acquire any assets (i) for the purpose of satisfying the Acquiring Fund's
investment objective or policies or (ii) for any other reason except in the
ordinary course of its business as a RIC, or (b) otherwise change its
historic investment policies.
(h) At the Effective Time, the Target Fund will have good and marketable title
to the Assets and full right, power and authority to assign, transfer,
deliver and convey the Assets.
(i) The Target Financial Statements, copies of which have been previously
delivered to the Trust, fairly present the financial position of the Target
Fund as of its most recent fiscal year-end and the results of its
operations and changes in its net assets for the periods indicated. The
Target Financial Statements are in accordance with generally accepted
accounting principles consistently applied.
(j) To the Knowledge of the Trust, the Target Fund has no liabilities, whether
or not determined or determinable, other than the Liabilities disclosed or
provided for in the Target Financial Statements or Liabilities incurred in
the ordinary course of business subsequent to the date of the Target
Financial Statements, and Liabilities set forth in the Assets List.
(k) Forum does not Know of any claims, actions, suits, investigations or
proceedings of any type pending or threatened against the Target Fund or
the Assets or its businesses. Forum does not Know of any facts that it
currently has reason to believe are likely to form the basis for the
institution of any such claim, action, suit, investigation or proceeding
against the Target Fund. For purposes of this provision, investment
underperformance or negative investment performance shall not be deemed to
constitute such facts, provided all required performance disclosures have
been made. The Target Fund is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body that
adversely affects, or is reasonably likely to adversely affect, its
financial condition, results of operations, business, properties or the
Assets or its ability to consummate the transactions contemplated by the
Plan.
(l) Except for contracts, agreements, franchises, licenses, or permits entered
into or granted in the ordinary course of its business, in each case under
which no material default exists, Forum is not a party to or subject to any
material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever on behalf of
the Target Fund.
(m) Forum has filed federal income tax returns of the Target Fund, copies of
which have been previously delivered to the Trust, for all completed
taxable years, and has paid all taxes payable pursuant to such returns. No
such return is currently under audit and no assessment has been asserted
with respect to such returns.
(n) Since the date of the Target Financial Statements, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Target Fund. For all purposes under
this Plan, investment underperformance, negative investment performance
and/or investor redemptions shall not be considered material adverse
changes, provided all required performance disclosures have been made.
(o) The Target Fund incurred the Liabilities in the ordinary
course of its business.
(p) The Target Fund is not under the jurisdiction of a court in
a "title 11 or similar case" (as defined in section
368(a)(3)(A) of the Code).
(q) During the five-year period ending at the Effective Time,
(a) neither the Target Fund nor any person "related" (within
the meaning of section 1.368-1(e)(3) of the Regulations) to
it will have acquired Target Fund shares, either directly or
through any transaction, agreement, or arrangement with any
other person, with consideration other than
-17-
Acquiring Fund shares or Target Fund shares, except for
shares redeemed in the ordinary course of the Target Fund's
business as a series of an open-end investment company as
required by section 22(e) of the 1940 Act, and (b) no
distributions will have been made with respect to Target
Fund shares, other than normal, regular dividend
distributions made pursuant to the Target Fund's historic
dividend-paying practice and other distributions that
qualify for the deduction for dividends paid (within the
meaning of section 561 of the Code) referred to in sections
852(a)(1) and 4982(c)(1)(A) of the Code.
(r) Not more than 25% of the value of the Target Fund's total
assets (excluding cash, cash items and U.S. government
securities) is invested in the stock and securities of any
one issuer, and not more than 50% of the value of such
assets is invested in the stock and securities of five or
fewer issuers.
6. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The
Trust, on behalf of itself and, as appropriate, the Acquiring Fund,
represents and warrants to, and agrees with Forum as follows:
(a) The Trust is organized as a business trust duly created, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts.
The Trust's Board of Trustees has duly established and designated the
Acquiring Fund as a series of the Trust and each Acquiring Class as a class
of the Acquiring Fund. The Trust is registered with the SEC as an open-end
management investment company under the 1940 Act, and such registration is
in full force and effect. Before January 1, 1997, the Trust "claimed"
classification for federal tax purposes as an association taxable as a
corporation and has not elected otherwise since.
(b) The Trust has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and assets,
to carry on its business as now being conducted and described in its
currently effective Registration Statement on Form N-1A, and to enter into
this Plan and to consummate the transactions contemplated herein.
(c) The Trust's Board of Trustees has duly authorized the execution and
delivery of this Plan and the transactions contemplated herein. Duly
authorized officers of the Trust have executed and delivered this Plan.
Assuming due execution and delivery of this Plan by the Trust, this Plan
represents a valid and binding contract, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated by this Plan will not,
violate the Trust's Trust Instrument or By-Laws. The Trust does not need to
take any other action to authorize its officers to effectuate the Plan and
the transactions contemplated herein.
(f) The Acquiring Fund is a "fund" (as defined in Section
851(g)(2) of the Code); it has qualified for treatment as a
RIC for each taxable year since the commencement of its
operations and qualifies and shall continue to qualify for
treatment as a RIC for its taxable year which includes the
Effective Time; it will invest its assets at all times
through the Effective Time in a manner that ensures
compliance with the foregoing; and it has no earnings and
profits accumulated in any taxable year in which the
provisions of such Subchapter M did not apply to it.
(e) The materials included within the N-14 Registration Statement when filed
with the SEC, when Part A of the N-14 Registration Statement is distributed
to shareholders, at the time of the Target Fund shareholder meeting and at
the Effective Time of the Reorganization, insofar as they relate to the
Trust and the Acquiring Fund (i) shall comply in all material respects with
the applicable provisions of the 1933 Act and the 1940 Act, the rules and
regulations thereunder and state securities laws, and (ii) shall 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 made
therein not misleading.
(f) The Trust shall duly authorize the Acquiring Fund shares to be issued and
delivered to the Target Fund as of the Effective Time. When issued and
delivered, the Acquiring Fund shares shall be duly and validly issued,
fully paid and non-assessable, and no shareholder of the Acquiring Fund
shall have any preemptive right of subscription or
-18-
purchase in respect of them. There are no outstanding options, warrants or
other rights to subscribe for or purchase Acquiring Fund shares, nor are
there any securities convertible into Acquiring Fund shares.
(g) The Trust does not Know of any claims, actions, suits, investigations or
proceedings of any type pending or threatened against the Acquiring Fund or
its assets or businesses. There are no facts that the Trust currently has
reason to believe are likely to form the basis for the institution of any
such claim, action, suit, investigation or proceeding against it. The
Acquiring Fund is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that adversely
affects, or is reasonably likely to adversely affect, its financial
condition, results of operations, business, properties or assets or its
ability to consummate the transactions contemplated herein.
(h) Except for contracts, agreements, franchises, licenses or permits entered
into or granted in the ordinary course of its business, in each case under
which no material default exists, the Trust is not a party to or subject to
any material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever on behalf of
the Acquiring Fund.
(i) The Trust has filed federal income tax returns of the Acquiring Fund,
copies of which have been previously delivered to Forum, for all completed
taxable years, and has paid all taxes payable pursuant to such returns. No
such return is currently under audit and no assessment has been asserted
with respect to such returns.
(j) The Trust has made all state filings to register each
Acquiring Class in each jurisdiction that the Corresponding
Target Class is currently registered and all necessary steps
have been taken under all relevant jurisdictions' securities
laws to consummate the Reorganization.
(k) Since August 31, 2002, there has been no material adverse
change in the financial condition, business, properties or
assets of the Acquiring Fund. For all purposes under this
Plan, investment underperformance, negative investment
performance and/or investor redemptions shall not be
considered material adverse changes, provided all required
performance disclosures have been made.
(l) No consideration other than Acquiring Fund shares (and the
Acquiring Fund's assumption of the Liabilities) will be
issued in exchange for the Assets in the Reorganization.
(m) The Acquiring Fund has no plan or intention to issue
additional Acquiring Fund shares following the
Reorganization except for shares issued in the ordinary
course of its business as a series of an open-end investment
company; nor does the Acquiring Fund, or any person
"related" (within the meaning of section 1.368-1(e)(3) of
the Regulations) to it, have any plan or intention to
acquire -- during the five-year period beginning at the
Effective Time, either directly or through any transaction,
agreement, or arrangement with any other person -- with
consideration other than Acquiring Fund shares, any
Acquiring Fund shares issued to the Target Fund's
shareholders pursuant to the Reorganization, except for
redemptions in the ordinary course of such business as
required by section 22(e) of the 1940 Act.
(n) Following the Reorganization, the Acquiring Fund (a) will
continue the Target Fund's "historic business" (within the
meaning of section 1.368-1(d)(2) of the Regulations) and (b)
will use a significant portion of the Target Fund's
"historic business assets" (within the meaning of section
1.368-1(d)(3) of the Regulations) in a business; in
addition, the Acquiring Fund (c) has no plan or intention to
sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business
and dispositions necessary to maintain its status as a RIC
and (d) expects to retain substantially all the Assets in
the same form as it receives them in the Reorganization,
unless and until subsequent investment circumstances suggest
the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status.
-19-
(o) There is no plan or intention for the Acquiring Fund to be
dissolved or merged into another business trust or a
corporation or any "fund" thereof (as defined in section
851(g)(2) of the Code) following the Reorganization.
(p) Immediately after the Reorganization, (a) not more than 25%
of the value of the Acquiring Fund's total assets (excluding
cash, cash items and U.S. government securities) will be
invested in the stock and securities of any one issuer and
(b) not more than 50% of the value of such assets will be
invested in the stock and securities of five or fewer
issuers.
(q) The Acquiring Fund does not directly or indirectly own, nor
at the Effective Time will it directly or indirectly own,
nor has it directly or indirectly owned at any time during
the past five years, any shares of the Target Fund.
(r) During the five-year period ending at the Effective Time, neither the
Acquiring Fund nor any person "related" (within the meaning of section
1.368-1(e)(3) of the Regulations) to it will have acquired Target Fund
shares with consideration other than Acquiring Fund shares.
6A. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF EACH FUND.
Forum, on behalf of itself and, as appropriate, the Target Fund,
represents and warrants to, and agrees with, the Trust, and the Trust,
on behalf of itself and, as appropriate, the Acquiring Fund,
represents and warrants to, and agrees with, Forum, as follows:
(a) The fair market value of the Acquiring Fund shares each Target
Fund shareholder receives will be approximately equal to the fair
market value of the Target Fund shares it constructively
surrenders in exchange therefor.
(b) Its management (a) is unaware of any plan or intention of the
Target Fund's shareholders to redeem, sell or otherwise dispose
of (i) any portion of their Target Fund shares before the
Reorganization to any person "related" (within the meaning of
section 1.368-1(e)(3) of the Regulations) to either Fund or (ii)
any portion of the Acquiring Fund shares they receive in the
Reorganization to any person "related" (within such meaning) to
the Acquiring Fund, (b) does not anticipate dispositions of those
Acquiring Fund shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of
dispositions of shares of the Target Fund as a series of an
open-end investment company, (c) expects that the percentage of
Target Fund shareholder interests, if any, that will be disposed
of as a result of or at the time of the Reorganization will be DE
MINIMIS, and (d) does not anticipate that there will be
extraordinary redemptions of Target Fund shares immediately
following the Reorganization.
(c) Each Target Fund shareholder will pay his or her own expenses
(including fees of personal investment or tax advisors for advice
regarding the Reorganization), if any, he or she incurs in
connection with the Reorganization.
(d) The fair market value of the Assets on a going concern basis will
equal or exceed the Liabilities to be assumed by the Acquiring
Fund and those to which the Assets are subject.
(e) There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount.
(f) Pursuant to the Reorganization, the Target Fund will transfer to
the Acquiring Fund, and the Acquiring Fund will acquire, at least
90% of the fair market value of the net assets, and at least 70%
of the fair market value of the gross assets, the Target Fund
held immediately before the Reorganization. For the purposes of
the foregoing, any amounts the Target Fund uses to pay its
Reorganization expenses and to make redemptions and
-20-
distributions immediately before the Reorganization (except (a)
redemptions in the ordinary course of its business required by
section 22(e) of the 1940 Act and (b) regular, normal dividend
distributions made to conform to its policy of distributing all
or substantially all of its income and gains to avoid the
obligation to pay federal income tax and/or the excise tax under
section 4982 of the Code) will be included as assets held thereby
immediately before the Reorganization.
(g) None of the compensation received by any Target Fund shareholder
who is an employee of or service provider to the Target Fund will
be separate consideration for, or allocable to, any of the Target
Fund shares that shareholder held; none of the Acquiring Fund
shares any such shareholder receives will be separate
consideration for, or allocable to, any employment agreement,
investment advisory agreement or other service agreement; and the
consideration paid to any such shareholder will be for services
actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
(h) Immediately after the Reorganization, the Target Fund's
shareholders will not own shares constituting "control" (as
defined in section 304(c) of the Code) of the Acquiring Fund.
(i) Neither Fund will be reimbursed for any expenses incurred by it
or on its behalf in connection with the Reorganization unless
those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set
forth in Rev. Rul. 73-54, 1973-1 C.B. 187).
(j) The aggregate value of the acquisitions, redemptions and distributions
limited by Sections 5(q), 6(m) and 6(r) will not exceed 50% of the value
(without giving effect to such acquisitions, redemptions, and
distributions) of the proprietary interest in the Target Fund at the
Effective Time.
7. CONDITIONS TO FORUM'S OBLIGATIONS. The obligations of Forum set forth
herein shall be subject to the following conditions precedent:
(a) The Trust shall have duly executed and delivered its applicable
Reorganization Documents to Forum.
(b) The Target Fund's shareholders shall have approved this Plan in the manner
required by Forum's Trust Instrument and applicable law. If the Target Fund
shareholders fail to approve this Plan, that failure shall release Forum's
obligations with respect to the Target Fund under this Plan.
(c) The Trust shall have delivered to Forum a certificate dated as of the
Closing Date and executed in its name by the Secretary or Assistant
Secretary of the Trust, in a form reasonably satisfactory to Forum, stating
that the representations and warranties of the Trust in this Plan are true
and correct in all material respects at and as of the Effective Time.
(e) Forum shall have received an opinion of Xxxxxxxxxxx & Xxxxxxxx
LLP with respect to the tax matters specified in Section 8(d)
addressed to Forum and the Trust in form and substance reasonably
satisfactory to them, and dated as of the Closing Date.
(f) The N-14 Registration Statement shall have become effective under
the 1933 Act as to the Acquiring Fund's shares, and the SEC shall
not have instituted or, to the Knowledge of the Trust,
contemplated instituting, any stop order suspending the
effectiveness of the N-14 Registration Statement.
(f) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief
in connection with the Reorganization.
-21-
(g) The SEC shall not have issued any unfavorable advisory report under Section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganization under Section 25(c) of the 1940 Act.
(h) The Trust shall have performed and complied in all material respects with
each of its agreements and covenants required by this Plan to be performed
or complied with by it prior to or at the Valuation Time and Effective
Time.
(i) Forum shall have received from the Trust a duly executed instrument whereby
the Acquiring Fund assumes all of the Liabilities of or attributable to the
Target Fund.
(j) Neither party shall have terminated this Plan pursuant to Section 10 of
this Plan.
(k) The parties shall have received any necessary order of the SEC exempting
the parties from the prohibitions of Section 17 of the 1940 Act or any
similar relief necessary to permit consummation of the Reorganization.
(l) The parties shall have received a certificate from Forum Financial Group,
LLC stating that it and/or its affiliates will pay all audit, legal and
proxy solicitation costs incurred by the Funds in connection with the
Reorganization.
(m) Forum's Board of Trustees, including a majority of the trustees who are not
"interested persons" (as that term is defined in section 2(a)(19) of the
0000 Xxx) of Forum or the Trust ("Independent Trustees"), shall have
determined that the Target Fund's participation in the Reorganization is in
the best interests of the Target Fund and that the interests of its
existing shareholders will not be diluted as a result of the
Reorganization.
(n) The Parties shall have received such assurances as they deem
appropriate with respect to the audited and PRO FORMA
financial information of the Funds contained in the N-14
Registration Statement.
8. CONDITIONS TO THE TRUST'S OBLIGATIONS. The obligations of the Trust
set forth herein shall be subject to the following conditions
precedent:
(a) Forum shall have duly executed and delivered its applicable Reorganization
Documents to the Trust.
(b) The Target Fund's shareholders shall have approved this Plan in
the manner required by Forum's Trust Instrument and applicable
law. If the Target Fund shareholders fail to approve this Plan,
that failure shall release the Trust's obligations with respect
to the Acquiring Fund under this Plan.
(c) Forum shall have delivered to the Trust a certificate dated as of
the Closing Date executed in its name by its Secretary or
Assistant Secretary, in a form reasonably satisfactory to the
Trust, stating that the representations and warranties of Forum
in this Plan are true and correct in all material respects at and
as of the Effective Time.
(d) The Trust shall have received an opinion of Xxxxxxxxxxx &
Xxxxxxxx LLP addressed to the Trust and Forum in form and
substance reasonably satisfactory to them, dated as of the
Closing Date, as to the federal income tax consequences mentioned
below ("Tax Opinion"). In rendering the Tax Opinion, such counsel
may rely as to factual matters, exclusively and without
independent verification, on the representations and warranties
made in this Plan, which such counsel may treat as
representations and warranties made to it, and in separate
letters addressed to such counsel and certificates delivered
pursuant to this Plan. The Tax Opinion shall be substantially to
the effect that, based on the facts and assumptions stated
therein and conditioned on consummation of the Reorganization in
accordance with this Plan, for federal income tax purposes:
(1) The Reorganization will qualify as a "reorganization" (as
defined in Code Section 368(a)) and each Fund will be a
"party to a reorganization" (within the meaning of Code
Section 368(b)).
-22-
(2) The Target Fund shareholders will recognize no gain or loss
on their receipt of Acquiring Fund shares constructively in
exchange for their Target Fund shares pursuant to the
Reorganization.
(3) The Target Fund will recognize no gain or loss on the
transfer of all of the Assets to the Acquiring Fund solely
in exchange for Acquiring Fund shares and the assumption by
the Acquiring Fund of the Liabilities pursuant to the
Reorganization or on its distribution of those shares to its
shareholders pursuant to its liquidation in constructive
exchange for their Target Fund shares.
(4) The Acquiring Fund will recognize no gain or loss on its
acquisition of all of the Assets in exchange solely for
Acquiring Fund shares and its assumption of the Liabilities.
(5) The aggregate tax basis in the Acquiring Fund shares
received by each Target Fund shareholder pursuant to the
Reorganization will equal the aggregate tax basis in the
Target Fund shares surrendered in exchange therefor, and the
shareholder's holding period for the Acquiring Fund shares
will include the period that the shareholder held the Target
Fund shares exchanged therefor, provided that the
shareholder held such Target Fund shares as a capital asset
at the Effective Time.
(6) The Acquiring Fund's basis in the Assets will equal the
Target Fund's basis in the Assets immediately before the
Reorganization, and the Acquiring Fund's holding period for
the Assets will include the period during which the Target
Fund held the Assets.
(7) The Acquiring Fund will succeed to and take into account the
items of the Target Fund described in Code Section 381(c),
including the earnings and profits, or deficit in earnings
and profits, of the Target Fund as of the Effective Time.
The Acquiring Fund will take these items into account
subject to the conditions and limitations specified in Code
Sections 381, 382, 383 and 384 and applicable regulations
thereunder.
(e) The N-14 Registration Statement shall have become effective under
the 1933 Act as to the Acquiring Fund's shares, and the SEC shall
not have instituted or, to the Knowledge of the Trust,
contemplated instituting, any stop order suspending the
effectiveness of the N-14 Registration Statement.
(f) No action, suit or other proceeding shall be threatened or pending before
any court or governmental agency in which it is sought to restrain or
prohibit or obtain damages or other relief in connection with the
Reorganization.
(g) The SEC shall not have issued any unfavorable advisory report under Section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganization under Section 25(c) of the 1940 Act.
(h) Forum shall have performed and complied in all material respects
with each of its agreements and covenants required by this Plan
to be performed or complied with by it prior to or at the
Valuation Time and Effective Time.
(i) Neither party shall have terminated this Plan pursuant to Section 10 of
this Plan.
(j) The parties shall have received any necessary order of the SEC exempting
the parties from the prohibitions of Section 17 of the 1940 Act or any
similar relief necessary to permit consummation of the Reorganization.
(k) The parties shall have received a certificate from Forum
Financial Group, LLC stating that it and/or its affiliates will
pay all audit, legal and proxy solicitation costs incurred by
-23-
the Funds in connection with the Reorganization.
(l) The Board of Trustees of the Trust, including its Independent
Trustees, shall have determined that the Acquiring Fund's
participation in the Reorganization is in the best interests of
the Acquiring Fund and that the interests of its existing
shareholders will not be diluted as a result of the
Reorganization.
(m) The Parties shall have received such assurances as they deem
appropriate with respect to the audited and PRO FORMA financial
information of the Funds contained in the N-14 Registration
Statement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties hereto shall survive the completion of the
transactions contemplated herein.
10. TERMINATION OF PLAN. A majority of a party's Board of Trustees may
terminate this Plan, by giving notice to the other party, at any time
before the Effective Time if: (i) the party's conditions precedent set
forth in Sections 7 or 8, as appropriate, are not satisfied or (ii)
the Board of Trustees determines that the consummation of the
Reorganization is not in the best interests of shareholders.
11. GOVERNING LAW. This Plan and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the laws
of the State of Delaware, except to the extent preempted by federal
law, without regard to conflicts of law principles.
12. BROKERAGE FEES. Each party represents and warrants that there are no
brokers or finders entitled to receive any payments in connection with
the transactions provided for in this Plan.
13. AMENDMENTS. The parties may, by agreement in writing authorized by its
respective Boards of Trustees, amend this Plan at any time before or
after the Target Fund's shareholders approve this Plan. However, after
the Target Fund's shareholders have approved this Plan, the parties
may not amend this Plan in a manner that materially alters the
obligations of either party with respect to the Reorganization. The
parties shall not deem this Section to preclude them from changing the
Closing Date or the Effective Time by mutual agreement.
14. WAIVERS. At any time prior to the Closing Date, either party may by
written instrument signed by it (i) waive the effect of any
inaccuracies in the representations and warranties made to it
contained herein and (ii) waive compliance with any of the agreements,
covenants or conditions made for its benefit contained herein. The
parties agree that any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any other or
future inaccuracy or lack of compliance.
15. COOPERATION AND FURTHER ASSURANCES. Each party will cooperate with the
other in fulfilling its obligations under this Plan and will provide
such information and documentation as is reasonably requested by the
other in carrying out this Plan's terms. Each party will provide such
further assurances concerning the performance of obligations under
this Plan and the consummation of the Reorganization, as the other
shall deem necessary, advisable or appropriate.
16. UPDATING OF N-14 REGISTRATION STATEMENT. If at any time prior to the
Effective Date, a party becomes aware of any material information that
is not reflected in the N-14 Registration Statement, the party
discovering the information shall promptly notify the other party and
the parties shall cooperate in promptly preparing, filing and clearing
with the SEC, and, if appropriate, distributing to shareholders
appropriate disclosure with respect to the information.
-24-
17. LIMITATION ON LIABILITIES. The obligations of Forum and the Target
Fund or the Trust and the Acquiring Fund shall not bind any of their
respective Trustees, shareholders, nominees, officers, agents, or
employees of Forum or the Trust personally, but shall bind only the
assets and property of the Target Fund and Acquiring Fund,
respectively. The execution and delivery of this Plan by the parties'
officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the Assets and the property of the Target Fund or the
Acquiring Fund, as appropriate.
18. NOTICES. Any notice, report, statement, certificate or demand required
or permitted by any provision of this Plan shall be in writing and
shall be given by prepaid telegraph, telecopy, certified mail or
overnight express courier to:
For Forum:
Xxxxxx X. Xxxxx
Forum Financial Group, LLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
With copies to:
Xxxxxxx X.X. Xxxxxx, Esq.
Xxxxxx & Xxxxxx LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
For Monarch:
Xxxxxxx X. Xxxxxxxx
Forum Financial Group, LLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
With copies to:
Xxxxxx X. Xxxx, Esq.
Xxxxxxxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000-0000
19. GENERAL. This Plan supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement
of the terms of the agreement between the parties and may not be
changed or terminated orally. The parties may execute this Plan in
counterparts, which shall be considered one and the same agreement,
and shall become effective when the counterparts have been executed by
and delivered to both parties. The headings contained in this Plan are
for reference only and shall not affect in any way the meaning or
interpretation of this Plan. Nothing in this Plan, expressed or
implied, confers upon any other person any rights or remedies under or
by reason of this Plan. Neither party may assign or transfer any right
or obligation under this Plan without the written consent of the other
party.
THE REMAINDER OF THIS PAGE
WAS INTENTIONALLY LEFT BLANK
-25-
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers designated below to execute this Plan as of the date first written
above.
FORUM FUNDS,
for itself and on behalf of each of Daily Assets
Treasury Obligations Fund, Daily Assets Government
Obligations Fund, and Daily Assets Cash Fund
ATTEST:
____________________________________________ By: ______________________________________________
Name: Name: Xxxx X. Xxxxxx
Title: Title: President
MONARCH FUNDS,
for itself and on behalf of each of Daily Assets Treasury
Fund, Daily Assets Government Fund, and Daily Assets
Cash Fund
ATTEST:
____________________________________________ By: ______________________________________________
Name: Name: Xxxxxx X. Xxxxxxx
Title: Title: Vice President
-26-
SCHEDULE A
Corresponding Class Table
-------------------------------- ------------------------------ ------------------------------ -----------------------------
CORRESPONDING CORRESPONDING
ACQUIRING FUND ACQUIRING CLASS TARGET FUND TARGET CLASS
-------------------------------- ------------------------------ ------------------------------ -----------------------------
DAILY ASSETS TREASURY FUND Universal Shares DAILY ASSETS TREASURY Institutional Shares
Institutional Service Shares OBLIGATIONS FUND Institutional Service Shares
-------------------------------- ------------------------------ ------------------------------ -----------------------------
DAILY ASSETS Universal Shares DAILY ASSETS GOVERNMENT Institutional Shares
GOVERNMENT FUND Institutional Service Shares OBLIGATIONS FUND Institutional Service Shares
Investor Shares Investor Shares
-------------------------------- ------------------------------ ------------------------------ -----------------------------
DAILY ASSETS CASH FUND Universal Shares DAILY ASSETS CASH FUND Institutional Shares
Institutional Service Shares Institutional Service Shares
Investor Shares Investor Shares
-------------------------------- ------------------------------ ------------------------------ -----------------------------
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made as of this
10th day of June, 2003, by and between Monarch Funds (the "Trust"), a
Massachusetts business trust, for itself and on behalf of the Daily Assets
Government Obligations Fund (the "Acquiring Fund") and Forum Funds ("Forum"), a
Delaware statutory trust, for itself and on behalf of the Daily Assets
Government Fund (the "Target Fund").
WHEREAS, the parties desire that the Acquiring Fund acquire the assets and
assume the liabilities of the Target Fund in exchange for shares of equal value
of the Acquiring Fund and the distribution of those shares of the Acquiring Fund
to the shareholders of the Target Fund in connection with the dissolution and
liquidation of the Target Fund (the "Reorganization"); and
WHEREAS, the parties intend that the Reorganization qualify as a
"reorganization" (as defined in Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code")), that the Acquiring Fund and the Target Fund each
be a "party to a reorganization," within the meaning of Section 368(b) of the
Code, with respect to the Reorganization, and that this Plan be, and they adopt
it as, a "plan of reorganization" within the meaning of the regulations under
the Code ("Regulations").
NOW, THEREFORE, in accordance with the mutual promises described herein,
the parties agree as follows:
1. DEFINITIONS.
In addition to the terms defined above, the following terms shall have
the following meanings:
1933 ACT The Securities Act of 1933, as amended.
ACQUIRING CLASS The class of voting shares of the Acquiring Fund that the Trust will issue to the
shareholders of the Target Fund set forth in Schedule A.
ASSETS All property and assets of any kind the Target Fund owns at the Effective Time and all
interests, rights, privileges and powers of or attributable to the Target Fund at that
time, wherever located. Assets include all cash, cash equivalents, securities, claims
(whether absolute or contingent, Known or unknown, accrued or unaccrued or conditional
or unmatured), contract rights and receivables (including dividend and interest
receivables) owned by or attributed to the Target Fund and any deferred or prepaid expense
shown as an asset on the Target Fund's books.
ASSETS LIST A list of securities and other Assets and Known Liabilities of or attributable to the Target
Fund as of the date provided to the Trust.
BUSINESS DAY Each weekday except Federal holidays and other days that the Federal Reserve Bank of San
Francisco is closed.
CLOSING DATE July 15, 2003.
EFFECTIVE TIME 9:00 a.m. Eastern time on the Business Day following the Closing Date, or such other time as
the parties may agree to in writing.
FUND The Acquiring Fund or the Target Fund, as the context may require.
KNOW, KNOWN OR KNOWLEDGE Known after reasonable inquiry.
LIABILITIES All liabilities of, allocated or attributable to the Target Fund, whether Known or
-28-
unknown, accrued or unaccrued, absolute or contingent or conditional or unmatured.
NET VALUE OF ASSETS Value of Assets, determined in accordance with Section 3(a)(2), net of Liabilities.
REORGANIZATION DOCUMENTS Such bills of sale, assignments, assumptions, and other instruments as desirable for the
Target Fund to transfer to the Acquiring Fund all right and title to and interest in the
Assets and for the Acquiring Fund to assume the Liabilities.
SCHEDULE A Schedule A to this Plan.
TARGET CLASS The class of voting shares of the Target Fund set forth in Schedule A.
TARGET FINANCIAL STATEMENTS The audited financial statements of the Target Fund for its most recently completed fiscal
year and, if applicable, the unaudited financial statements of the Target Fund for its most
recently completed semi-annual period.
VALUATION TIME The time on the Closing Date, the Business Day immediately preceding the Closing Date if the
Closing Date is not a Business Day, or such other date as the parties may agree to in writing,
that the Trust determines the net asset value of the shares of the Acquiring Fund and the Net
Value of Assets. Unless otherwise agreed to in writing, the Valuation Time shall be at the time
of day then set forth in the Target Fund's Registration Statement on Form N-1A as the time of
day at which net asset value is calculated.
2. REGULATORY FILINGS AND SHAREHOLDER ACTION.
(g) The Trust and Forum shall promptly prepare and file all
appropriate regulatory filings, including, without limitation,
filings with federal, state or foreign securities regulatory
authorities.
(h) The parties shall seek an order of the SEC, if appropriate,
providing them with any necessary relief from Section 17 of the
1940 Act to permit them to consummate the transactions
contemplated by this Plan.
(i) Prior to the Closing Date, the Target Fund shall hold a
shareholder meeting to consider and approve this Plan and such
other matters as Forum's Board of Trustees may determine.
3. TRANSFER OF ASSETS AND RELATED TRANSACTIONS. The Trust and Forum shall
take the following steps with respect to the Reorganization:
(c) On or prior to the Closing Date, (i) Forum shall endeavor to pay
or make reasonable provision to pay all of the Liabilities,
expenses, costs and charges of or attributable to the Target Fund
that are Known to the Target Fund and that are due and payable as
of the Closing Date, and (ii) the Target Fund shall declare and
pay to its shareholders a dividend and/or other distribution in
an amount large enough so that it will have distributed
substantially all (and in any event not less than 90%) of its
"investment company taxable income" (as defined in section
852(b)(2) of the Code, computed without regard to any deduction
for dividends paid) and substantially all of its "net capital
gain," if any (as defined in section 1222(11)) for the current
taxable year through the Effective Time.
(b) At the Effective Time, Forum shall assign, transfer, deliver and convey all
of the Assets to the Acquiring Fund, subject to all of the Liabilities. The
Trust shall then accept the Assets and assume the Liabilities such that at
and after the Effective Time (i) all of the Assets at or after the
Effective Time shall become and be the assets of the Acquiring Fund and
(ii) all of the Liabilities at the Effective Time shall attach to the
Acquiring Fund, enforceable against the Acquiring Fund to the same extent
as if initially incurred by the Acquiring Fund.
-29-
(c) Forum shall assign, transfer, deliver and convey the Assets to the
Acquiring Fund at the Effective Time on the following bases:
(1) In exchange for the transfer of the Assets, the Trust
shall simultaneously issue and deliver to the Target
Fund full and fractional shares of beneficial interest
of each Acquiring Class. The Trust shall determine the
number of shares of each Acquiring Class to be issued
by dividing the Net Value of Assets attributable to the
Target Class by the net asset value of one Acquiring
Class share. Based on this calculation, the Trust shall
issue shares of beneficial interest of each Acquiring
Class with an aggregate net asset value equal to the
Net Value of Assets attributable to the Target Class.
(2) The parties shall determine, as of the Valuation Time,
the net asset value of the Acquiring Fund shares to be
delivered and the Net Value of Assets to be conveyed,
substantially in accordance with the Trust's current
valuation procedures. The parties shall make all
computations to the fourth decimal place or such other
decimal place as the parties may agree to in writing.
(3) Forum shall transfer the Assets with good and
marketable title to the Trust for the benefit the
Acquiring Fund. Forum shall transfer all cash in the
form of immediately available funds payable to the
order of the Trust for the benefit of the Acquiring
Fund. Forum shall transfer any of the Assets that were
not transferred to the Trust at the Effective Time to
the Trust at the earliest practicable date thereafter.
(d) The foregoing steps, together with all other related acts
necessary to consummate the Reorganization, shall occur at the
Trust's principal office on the Closing Date, or at such other
place as the parties may agree on. All steps and acts shall be
deemed to take place simultaneously at the Effective Time.
(e) Promptly after the Closing Date (usually within one week), Forum
will deliver to the Trust a Statement of Assets and Liabilities
of the Target Fund as of the Closing Date.
4. DISSOLUTION AND LIQUIDATION OF THE TARGET FUND, REGISTRATION OF SHARES
AND ACCESS TO RECORDS. The Trust and Forum also shall take the
following steps in connection with the Reorganization:
(a) At or as soon as reasonably practical after the Effective Time, the Target
Fund shall dissolve and liquidate by transferring to shareholders of record
as of the Effective Time of the Target Class full and fractional shares of
beneficial interest of the Acquiring Class equal in value to the shares of
the Target Class held by the shareholder. The Target Class shareholder also
shall have the right to receive any unpaid dividends or other distributions
that the Target Fund declared with respect to the shareholder's Target
Class shares at or before the Effective Time. The Trust shall record on the
Acquiring Fund's books the ownership by the shareholders of the respective
Acquiring Fund shares, certificates for which will not be issued; the
Target Fund shall simultaneously redeem and cancel on its books all of its
issued and outstanding shares of the Target Class. The Target Fund shall
then wind up its affairs and dissolve as soon as is reasonably possible,
but in no event more than six (6) months after the Effective Time, and in
accordance with all applicable laws and regulations.
(b) If the Target Fund shareholder requests a change in the registration of the
shareholder's Acquiring Fund shares to a person other than the shareholder,
the Acquiring Fund shall require the shareholder to (i) furnish the
Acquiring Fund with an instrument of transfer properly endorsed,
accompanied by any required signature guarantees and otherwise in proper
form for transfer; (ii) if any of the shares is outstanding in certificate
form, deliver to the Acquiring Fund the certificate representing such
shares; and (iii) pay to the Acquiring Fund any transfer or other taxes
required by reason of such registration or establish to the reasonable
satisfaction of the Acquiring Fund that such tax has been paid or does not
apply.
-30-
(c) At and after the Closing Date, Forum shall provide the Trust and its
transfer agent with immediate access to: (i) all records containing the
names, addresses and taxpayer identification numbers of all of the Target
Fund shareholders and the number and percentage ownership of the
outstanding shares of the Target Classes owned by each shareholder as of
the Effective Time and (ii) all original documentation (including all
applicable Internal Revenue Service forms, certificates, certifications and
correspondence) relating to the Target Fund shareholders' taxpayer
identification numbers and their liability for or exemption from back-up
withholding. The Target Fund shall preserve and maintain, or shall direct
its service providers to preserve and maintain, its records as required by
Section 31 of and Rules 31a-1 and 31a-2 under the 1940 Act.
5. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FORUM.
Forum, on behalf of itself and, as appropriate, the Target Fund,
represents and warrants to, and agrees with, the Trust as
follows:
(a) Forum is a statutory trust, validly existing and in good
standing under the laws of the State of Delaware. Forum's
Board of Trustees has duly established and designated the
Target Fund as a series of Forum and the Target Class as a
class of the Target Fund. Forum is registered with the SEC
as an open-end management investment company under the 1940
Act, and such registration is in full force and effect.
Before January 1, 1997, Forum "claimed" classification for
federal tax purposes as an association taxable as a
corporation and has not elected otherwise since.
(b) Forum has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and assets,
to carry on its business as now being conducted and described in its
currently effective Registration Statement on Form N-1A, and to enter into
this Plan and to consummate the transactions contemplated herein.
(g) Forum's Board of Trustees has duly authorized the execution
and delivery of this Plan and the transactions contemplated
herein. Duly authorized officers of Forum have executed and
delivered this Plan. Assuming due execution and delivery of
this Plan by the Trust, this Plan represents a valid and
binding contract, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency,
reorganization, arrangement, moratorium, and other similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The
execution and delivery of this Plan does not, and, subject
to the approval of shareholders referenced in Section 2(c),
the consummation of the transactions contemplated by this
Plan will not, violate Forum's Trust Instrument or By-Laws.
Except for obtaining the approval of Target Fund
shareholders, Forum does not need to take any other action
to authorize its officers to effectuate this Plan and the
transactions contemplated herein.
(h) The Target Fund is a "fund" (as defined in Section 851(g)(2)
of the Code); it has qualified for treatment as a regulated
investment company under Part I of Subchapter M of Subtitle
A, Chapter 1, of the Code ("RIC") for each taxable year
since the commencement of its operations and qualifies and
shall continue to qualify for treatment as a RIC for its
taxable year which includes the Effective Time; it will
invest its assets at all times through the Effective Time in
a manner that ensures compliance with the foregoing; and it
has no earnings and profits accumulated in any taxable year
in which the provisions of such Subchapter M did not apply
to it.
(e) Forum has duly authorized and validly issued all of its issued and
outstanding shares and all of the shares are validly outstanding, fully
paid and non-assessable, and are offered for sale and sold in conformity
with the registration requirements of all applicable federal and state
securities laws. There are no outstanding options, warrants or other rights
to subscribe for or purchase Target Fund shares, nor are there any
securities convertible into Target Fund shares.
-31-
(f) Forum shall operate the business of the Target Fund in the ordinary course
between the date hereof and the Effective Time, it being agreed that such
ordinary course of business will include the declaration and payment of
customary dividends and other distributions and any other distributions
deemed advisable in anticipation of the Reorganization (including
distributions pursuant to Section 3(a)(2) hereof). From the date it
commenced operations through the Effective Time, the Target Fund shall
conduct its "historic business" (within the meaning of section
1.368-1(d)(2) of the Regulations) in a substantially unchanged manner; and
before the Effective Time the Target Fund will not (a) dispose of and/or
acquire any assets (i) for the purpose of satisfying the Acquiring Fund's
investment objective or policies or (ii) for any other reason except in the
ordinary course of its business as a RIC, or (b) otherwise change its
historic investment policies.
(g) At the Effective Time, the Target Fund will have good and marketable title
to the Assets and full right, power and authority to assign, transfer,
deliver and convey the Assets.
(h) The Target Fund's Financial Statements, copies of which have been
previously delivered to the Trust, fairly present the financial position of
the Target Fund as of its most recent fiscal year-end and the results of
its operations and changes in its net assets for the periods indicated. The
Target Fund's Financial Statements are in accordance with generally
accepted accounting principles consistently applied.
(i) To the Knowledge of the Trust, the Target Fund has no liabilities, whether
or not determined or determinable, other than the Liabilities disclosed or
provided for in the Target Financial Statements or Liabilities incurred in
the ordinary course of business subsequent to the date of the Target
Financial Statements, and Liabilities set forth in the Assets List.
(j) Forum does not Know of any claims, actions, suits, investigations or
proceedings of any type pending or threatened against the Target Fund or
the Assets or its businesses. Forum does not Know of any facts that it
currently has reason to believe are likely to form the basis for the
institution of any such claim, action, suit, investigation or proceeding
against the Target Fund. For purposes of this provision, investment
underperformance or negative investment performance shall not be deemed to
constitute such facts, provided all required performance disclosures have
been made. The Target Fund is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body that
adversely affects, or is reasonably likely to adversely affect, its
financial condition, results of operations, business, properties or the
Assets or its ability to consummate the transactions contemplated by the
Plan.
(k) Except for contracts, agreements, franchises, licenses, or permits entered
into or granted in the ordinary course of its business, in each case under
which no material default exists, Forum is not a party to or subject to any
material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever on behalf of
the Target Fund.
(l) Forum has filed federal income tax returns of the Target Fund, copies of
which have been previously delivered to the Trust, for all completed
taxable years, and has paid all taxes payable pursuant to such returns. No
such return is currently under audit and no assessment has been asserted
with respect to such returns.
(m) Since the date of the Target Fund's Financial Statements, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Target Fund. For all purposes under
this Plan, investment underperformance, negative investment performance
and/or investor redemptions shall not be considered material adverse
changes, provided all required performance disclosures have been made.
(n) The Target Fund incurred the Liabilities in the ordinary
course of its business.
(o) The Target Fund is not under the jurisdiction of a court in
a "title 11 or similar case" (as defined in section
368(a)(3)(A) of the Code).
(p) During the five-year period ending at the Effective Time,
(a) neither the Target Fund nor any person "related" (within
the meaning of section 1.368-1(e)(3) of the Regulations) to
it will have acquired Target Fund shares, either directly or
through any transaction, agreement, or arrangement with any
other person, with consideration other than
-32-
Acquiring Fund shares or Target Fund shares, except for
shares redeemed in the ordinary course of the Target Fund's
business as a series of an open-end investment company as
required by section 22(e) of the 1940 Act, and (b) no
distributions will have been made with respect to Target
Fund shares, other than normal, regular dividend
distributions made pursuant to the Target Fund's historic
dividend-paying practice and other distributions that
qualify for the deduction for dividends paid (within the
meaning of section 561 of the Code) referred to in sections
852(a)(1) and 4982(c)(1)(A) of the Code.
(q) Not more than 25% of the value of the Target Fund's total
assets (excluding cash, cash items and U.S. government
securities) is invested in the stock and securities of any
one issuer, and not more than 50% of the value of such
assets is invested in the stock and securities of five or
fewer issuers.
6. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The
Trust, on behalf of itself and, as appropriate, the Acquiring Fund,
represents and warrants to, and agrees with Forum as follows:
(a) The Trust is organized as a business trust duly created, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts.
The Trust's Board of Trustees has duly established and designated the
Acquiring Fund as a series of the Trust and the Acquiring Class as a class
of the Acquiring Fund. The Trust is registered with the SEC as an open-end
management investment company under the 1940 Act, and such registration is
in full force and effect. Before January 1, 1997, the Trust "claimed"
classification for federal tax purposes as an association taxable as a
corporation and has not elected otherwise since.
(b) The Trust has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and assets,
to carry on its business as now being conducted and described in its
currently effective Registration Statement on Form N-1A, and to enter into
this Plan and to consummate the transactions contemplated herein.
(c) The Trust's Board of Trustees has duly authorized the execution and
delivery of this Plan and the transactions contemplated herein. Duly
authorized officers of the Trust have executed and delivered this Plan.
Assuming due execution and delivery of this Plan by the Trust, this Plan
represents a valid and binding contract, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated by this Plan will not,
violate the Trust's Trust Instrument or By-Laws. The Trust does not need to
take any other action to authorize its officers to effectuate the Plan and
the transactions contemplated herein.
(j) The Acquiring Fund is a "fund" (as defined in Section
851(g)(2) of the Code); it has qualified for treatment as a
RIC for each taxable year since the commencement of its
operations and qualifies and shall continue to qualify for
treatment as a RIC for its taxable year which includes the
Effective Time; it will invest its assets at all times
through the Effective Time in a manner that ensures
compliance with the foregoing; and it has no earnings and
profits accumulated in any taxable year in which the
provisions of such Subchapter M did not apply to it.
(e) The Trust shall duly authorize the Acquiring Fund shares to be issued and
delivered to the Target Fund as of the Effective Time. When issued and
delivered, the Acquiring Fund shares shall be duly and validly issued,
fully paid and non-assessable, and no shareholder of the Acquiring Fund
shall have any preemptive right of subscription or purchase in respect of
them. There are no outstanding options, warrants or other rights to
subscribe for or purchase Acquiring Fund shares, nor are there any
securities convertible into Acquiring Fund shares.
(f) The Trust does not Know of any claims, actions, suits, investigations or
proceedings of any type pending or threatened against the Acquiring Fund or
its assets or businesses. There are no facts that the Trust currently has
reason to believe are likely to form the basis for the institution of any
such claim, action, suit, investigation or proceeding against it. The
Acquiring Fund is not a party to or subject to the provisions of any order,
decree or
-33-
judgment of any court or governmental body that adversely affects, or is
reasonably likely to adversely affect, its financial condition, results of
operations, business, properties or assets or its ability to consummate the
transactions contemplated herein.
(g) Except for contracts, agreements, franchises, licenses or permits entered
into or granted in the ordinary course of its business, in each case under
which no material default exists, the Trust is not a party to or subject to
any material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever on behalf of
the Acquiring Fund.
(h) The Trust has filed federal income tax returns of the Acquiring Fund,
copies of which have been previously delivered to Forum, for all completed
taxable years, and has paid all taxes payable pursuant to such returns. No
such return is currently under audit and no assessment has been asserted
with respect to such returns.
(i) The Trust has made all state filings to register the
Acquiring Class in each jurisdiction that the Target Class
is currently registered and all necessary steps have been
taken under all relevant jurisdictions' securities laws to
consummate the Reorganization.
(j) Since August 31, 2002, there has been no material adverse
change in the financial condition, business, properties or
assets of the Acquiring Fund. For all purposes under this
Plan, investment underperformance, negative investment
performance and/or investor redemptions shall not be
considered material adverse changes, provided all required
performance disclosures have been made.
(k) No consideration other than Acquiring Fund shares (and the
Acquiring Fund's assumption of the Liabilities) will be
issued in exchange for the Assets in the Reorganization.
(l) The Acquiring Fund has no plan or intention to issue
additional Acquiring Fund shares following the
Reorganization except for shares issued in the ordinary
course of its business as a series of an open-end investment
company; nor does the Acquiring Fund, or any person
"related" (within the meaning of section 1.368-1(e)(3) of
the Regulations) to it, have any plan or intention to
acquire -- during the five-year period beginning at the
Effective Time, either directly or through any transaction,
agreement, or arrangement with any other person -- with
consideration other than Acquiring Fund shares, any
Acquiring Fund shares issued to the Target Fund's
shareholders pursuant to the Reorganization, except for
redemptions in the ordinary course of such business as
required by section 22(e) of the 1940 Act.
(m) Following the Reorganization, the Acquiring Fund (a) will
continue the Target Fund's "historic business" (within the
meaning of section 1.368-1(d)(2) of the Regulations) and (b)
will use a significant portion of the Target Fund's
"historic business assets" (within the meaning of section
1.368-1(d)(3) of the Regulations) in a business; in
addition, the Acquiring Fund (c) has no plan or intention to
sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business
and dispositions necessary to maintain its status as a RIC
and (d) expects to retain substantially all the Assets in
the same form as it receives them in the Reorganization,
unless and until subsequent investment circumstances suggest
the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status.
(n) There is no plan or intention for the Acquiring Fund to be
dissolved or merged into another business trust or a
corporation or any "fund" thereof (as defined in section
851(g)(2) of the Code) following the Reorganization.
(o) Immediately after the Reorganization, (a) not more than 25%
of the value of the Acquiring Fund's total assets (excluding
cash, cash items and U.S. government securities) will be
invested in the stock and securities of any one issuer and
(b) not more
-34-
than 50% of the value of such assets will be invested in the
stock and securities of five or fewer issuers.
(p) The Acquiring Fund does not directly or indirectly own, nor
at the Effective Time will it directly or indirectly own,
nor has it directly or indirectly owned at any time during
the past five years, any shares of the Target Fund.
(q) During the five-year period ending at the Effective Time, neither the
Acquiring Fund nor any person "related" (within the meaning of section
1.368-1(e)(3) of the Regulations) to it will have acquired Target Fund
shares with consideration other than Acquiring Fund shares.
6A. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF EACH FUND.
Forum, on behalf of itself and, as appropriate, the Target Fund,
represents and warrants to, and agrees with, the Trust, and the Trust,
on behalf of itself and, as appropriate, the Acquiring Fund,
represents and warrants to, and agrees with, Forum, as follows:
(a) The fair market value of the Acquiring Fund shares each Target
Fund shareholder receives will be approximately equal to the fair
market value of the Target Fund shares it constructively
surrenders in exchange therefor.
(b) Its management (a) is unaware of any plan or intention of the
Target Fund's shareholders to redeem, sell or otherwise dispose
of (i) any portion of their Target Fund shares before the
Reorganization to any person "related" (within the meaning of
section 1.368-1(e)(3) of the Regulations) to either Fund or (ii)
any portion of the Acquiring Fund shares they receive in the
Reorganization to any person "related" (within such meaning) to
the Acquiring Fund, (b) does not anticipate dispositions of those
Acquiring Fund shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of
dispositions of shares of the Target Fund as a series of an
open-end investment company, (c) expects that the percentage of
Target Fund shareholder interests, if any, that will be disposed
of as a result of or at the time of the Reorganization will be DE
MINIMIS, and (d) does not anticipate that there will be
extraordinary redemptions of Target Fund shares immediately
following the Reorganization.
(c) Each Target Fund shareholder will pay his or her own expenses
(including fees of personal investment or tax advisors for advice
regarding the Reorganization), if any, he or she incurs in
connection with the Reorganization.
(d) The fair market value of the Assets on a going concern basis will
equal or exceed the Liabilities to be assumed by the Acquiring
Fund and those to which the Assets are subject.
(e) There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount.
(f) Pursuant to the Reorganization, the Target Fund will transfer to
the Acquiring Fund, and the Acquiring Fund will acquire, at least
90% of the fair market value of the net assets, and at least 70%
of the fair market value of the gross assets, the Target Fund
held immediately before the Reorganization. For the purposes of
the foregoing, any amounts the Target Fund uses to pay its
Reorganization expenses and to make redemptions and distributions
immediately before the Reorganization (except (a) redemptions in
the ordinary course of its business required by section 22(e) of
the 1940 Act and (b) regular, normal dividend distributions made
to conform to its policy of distributing all or substantially all
of its income and gains to avoid the obligation to pay federal
income tax and/or the excise tax under section 4982 of the Code)
will be included as assets held thereby immediately before the
Reorganization.
-35-
(g) None of the compensation received by any Target Fund shareholder
who is an employee of or service provider to the Target Fund will
be separate consideration for, or allocable to, any of the Target
Fund shares that shareholder held; none of the Acquiring Fund
shares any such shareholder receives will be separate
consideration for, or allocable to, any employment agreement,
investment advisory agreement or other service agreement; and the
consideration paid to any such shareholder will be for services
actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
(h) Immediately after the Reorganization, the Target Fund's
shareholders will not own shares constituting "control" (as
defined in section 304(c) of the Code) of the Acquiring Fund.
(i) Neither Fund will be reimbursed for any expenses incurred by it
or on its behalf in connection with the Reorganization unless
those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set
forth in Rev. Rul. 73-54, 1973-1 C.B. 187).
(j) The aggregate value of the acquisitions, redemptions and distributions
limited by Sections 5(q), 6(m) and 6(r) will not exceed 50% of the value
(without giving effect to such acquisitions, redemptions, and
distributions) of the proprietary interest in the Target Fund at the
Effective Time.
7. CONDITIONS TO FORUM'S OBLIGATIONS. The obligations of Forum set forth
herein shall be subject to the following conditions precedent:
(a) The Trust shall have duly executed and delivered its applicable
Reorganization Documents to Forum.
(b) The Target Fund's shareholders shall have approved this Plan in the manner
required by Forum's Trust Instrument and applicable law. If the Target Fund
shareholders fail to approve this Plan, that failure shall release Forum's
obligations with respect to the Target Fund under this Plan.
(c) The Trust shall have delivered to Forum a certificate dated as of the
Closing Date and executed in its name by the Secretary or Assistant
Secretary of the Trust, in a form reasonably satisfactory to Forum, stating
that the representations and warranties of the Trust in this Plan are true
and correct in all material respects at and as of the Effective Time.
(d) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief
in connection with the Reorganization.
(e) The SEC shall not have issued any unfavorable advisory report under Section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganization under Section 25(c) of the 1940 Act.
(f) The Trust shall have performed and complied in all material respects with
each of its agreements and covenants required by this Plan to be performed
or complied with by it prior to or at the Valuation Time and Effective
Time.
(g) Forum shall have received from the Trust a duly executed instrument whereby
the Acquiring Fund assumes all of the Liabilities of or attributable to the
Target Fund.
(h) Neither party shall have terminated this Plan pursuant to Section 10 of
this Plan.
(i) The parties shall have received any necessary order of the SEC exempting
the parties from the prohibitions of Section 17 of the 1940 Act or any
similar relief necessary to permit consummation of the Reorganization.
(j) The parties shall have received a certificate from Forum Financial Group,
LLC stating that it and/or its affiliates will pay all audit, legal and
proxy solicitation costs incurred by the Funds in connection with the
Reorganization.
-36-
(k) Forum's Board of Trustees, including a majority of the trustees who are not
"interested persons" (as that term is defined in section 2(a)(19) of the
0000 Xxx) of Forum or the Trust ("Independent Trustees"), shall have
determined that the Target Fund's participation in the Reorganization is in
the best interests of the Target Fund and that the interests of its
existing shareholders will not be diluted as a result of the
Reorganization.
8. CONDITIONS TO THE TRUST'S OBLIGATIONS. The obligations of the Trust
set forth herein shall be subject to the following conditions
precedent:
(a) Forum shall have duly executed and delivered its applicable Reorganization
Documents to the Trust.
(b) The Target Fund's shareholders shall have approved this Plan in
the manner required by Forum's Trust Instrument and applicable
law. If the Target Fund shareholders fail to approve this Plan,
that failure shall release the Trust's obligations with respect
to the Acquiring Fund under this Plan.
(c) Forum shall have delivered to the Trust a certificate dated as of
the Closing Date executed in its name by its Secretary or
Assistant Secretary, in a form reasonably satisfactory to the
Trust, stating that the representations and warranties of Forum
in this Plan are true and correct in all material respects at and
as of the Effective Time.
(d) No action, suit or other proceeding shall be threatened or pending before
any court or governmental agency in which it is sought to restrain or
prohibit or obtain damages or other relief in connection with the
Reorganization.
(e) The SEC shall not have issued any unfavorable advisory report under Section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganization under Section 25(c) of the 1940 Act.
(f) Forum shall have performed and complied in all material respects
with each of its agreements and covenants required by this Plan
to be performed or complied with by it prior to or at the
Valuation Time and Effective Time.
(g) Neither party shall have terminated this Plan pursuant to Section
10 of this Plan.
(h) The parties shall have received any necessary order of the SEC exempting
the parties from the prohibitions of Section 17 of the 1940 Act or any
similar relief necessary to permit consummation of the Reorganization.
(i) The parties shall have received a certificate from Forum
Financial Group, LLC stating that it and/or its affiliates will
pay all audit, legal and proxy solicitation costs incurred by the
Funds in connection with the Reorganization.
(j) The Board of Trustees of the Trust, including its Independent
Trustees, shall have determined that the Acquiring Fund's
participation in the Reorganization is in the best interests of
the Acquiring Fund and that the interests of its existing
shareholders will not be diluted as a result of the
Reorganization.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties hereto shall survive the completion of the
transactions contemplated herein.
10. TERMINATION OF PLAN. A majority of a party's Board of Trustees may
terminate this Plan, by giving notice to the other party, at any time
before the Effective Time if: (i) the party's conditions precedent set
forth in Sections 7 or 8, as appropriate, are not satisfied or (ii)
the Board of Trustees determines that the consummation of the
Reorganization is not in the best interests of shareholders.
11. GOVERNING LAW. This Plan and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the laws
of the State of Delaware, except to the extent preempted
-37-
by federal law, without regard to conflicts of law principles.
12. BROKERAGE FEES. Each party represents and warrants that there are no
brokers or finders entitled to receive any payments in connection with
the transactions provided for in this Plan.
13. AMENDMENTS. The parties may, by agreement in writing authorized by its
respective Boards of Trustees, amend this Plan at any time before or
after the Target Fund's shareholders approve this Plan. However, after
the Target Fund's shareholders have approved this Plan, the parties
may not amend this Plan in a manner that materially alters the
obligations of either party with respect to the Reorganization. The
parties shall not deem this Section to preclude them from changing the
Closing Date or the Effective Time by mutual agreement.
14. WAIVERS. At any time prior to the Closing Date, either party may by
written instrument signed by it (i) waive the effect of any
inaccuracies in the representations and warranties made to it
contained herein and (ii) waive compliance with any of the agreements,
covenants or conditions made for its benefit contained herein. The
parties agree that any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any other or
future inaccuracy or lack of compliance.
15. COOPERATION AND FURTHER ASSURANCES. Each party will cooperate with the
other in fulfilling its obligations under this Plan and will provide
such information and documentation as is reasonably requested by the
other in carrying out this Plan's terms. Each party will provide such
further assurances concerning the performance of obligations under
this Plan and the consummation of the Reorganization, as the other
shall deem necessary, advisable or appropriate.
16. LIMITATION ON LIABILITIES. The obligations of Forum and the Target
Fund or the Trust and the Acquiring Fund shall not bind any of their
respective Trustees, shareholders, nominees, officers, agents, or
employees of Forum or the Trust personally, but shall bind only the
assets and property of the Target Fund and Acquiring Fund,
respectively. The execution and delivery of this Plan by the parties'
officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the Assets and the property of the Target Fund or the
Acquiring Fund, as appropriate.
17. NOTICES. Any notice, report, statement, certificate or demand required
or permitted by any provision of this Plan shall be in writing and
shall be given by prepaid telegraph, telecopy, certified mail or
overnight express courier to:
For Forum:
Xxxxxx X. Xxxxx
Forum Financial Group, LLC
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
With copies to:
Xxxxxxx X.X. Xxxxxx, Esq.
Xxxxxx & Xxxxxx LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
For Monarch:
Xxxxxxx X. Xxxxxxxx
Forum Financial Group, LLC
Two Xxxxxxxx Xxxxxx
-00-
Xxxxxxxx, XX 00000
With copies to:
R. Xxxxxxx Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000-0000
18. GENERAL. This Plan supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement of the
terms of the agreement between the parties and may not be changed or terminated
orally. The parties may execute this Plan in counterparts, which shall be
considered one and the same agreement, and shall become effective when the
counterparts have been executed by and delivered to both parties. The headings
contained in this Plan are for reference only and shall not affect in any way
the meaning or interpretation of this Plan. Nothing in this Plan, expressed or
implied, confers upon any other person any rights or remedies under or by reason
of this Plan. Neither party may assign or transfer any right or obligation under
this Plan without the written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers designated below to execute this Plan as of the date first written
above.
FORUM FUNDS,
for itself and on behalf of the Daily Assets
Government Fund
ATTEST:
____________________________________________ By: ______________________________________________
Name: Name: Xxxxx X. Xxxxxxxxx
Title: Title: President
MONARCH FUNDS,
for itself and on behalf the Daily Assets Government
Obligations Fund
ATTEST:
____________________________________________ By: ______________________________________________
Name: Name: Xxxx X. Xxxxxx
Title: Title: Vice President
THE REMAINDER OF THIS PAGE
WAS INTENTIONALLY LEFT BLANK
-39-
SCHEDULE A
Corresponding Class Table
-------------------------------- ------------------------------ ------------------------------ -----------------------------
CORRESPONDING CORRESPONDING
ACQUIRING FUND ACQUIRING CLASS TARGET FUND TARGET CLASS
-------------------------------- ------------------------------ ------------------------------ -----------------------------
DAILY ASSETS GOVERNMENT Universal Shares DAILY ASSETS GOVERNMENT FUND Institutional Shares
OBLIGATIONS FUND
-------------------------------- ------------------------------ ------------------------------ -----------------------------
