Exhibit 4
Plan of Reorganization
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of this _____
day of _______, 2006, by Hartford HLS Series Fund II, Inc., a Maryland
corporation ("Company"), with its principal place of business at
________________, on behalf of the Hartford Blue Chip Stock HLS Fund ("Acquiring
Fund"), a separate series of the Company, and the Hartford Capital Opportunities
HLS Fund ("Acquired Fund"), also a separate series of the Company.
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1) of the United States
Internal Revenue Code of 1986, as amended ("Code"). The reorganization and
liquidation will consist of (1) the sale, assignment, conveyance, transfer and
delivery of all of the property and assets of the Acquired Fund to the Acquiring
Fund in exchange solely for shares of common stock of Class IA of the Acquiring
Fund ("Acquiring Fund Shares") corresponding to the class of outstanding shares
of common stock of the Acquired Fund ("Acquired Fund Shares"), as described
herein, (2) the assumption by the Acquiring Fund of all liabilities of the
Acquired Fund, and (3) the distribution of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in complete liquidation of the Acquired Fund,
as provided herein ("Reorganization"), all upon the terms and conditions
hereinafter set forth in this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are each a series of the
Company, a registered investment company classified as a management company of
the open-end type, and the Acquired Fund owns securities that generally are
assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Directors of the Company have determined, with respect to the
Acquiring Fund, that the sale, assignment, conveyance, transfer and delivery of
all of the property and assets of the Acquired Fund for Acquiring Fund Shares
and the assumption of all liabilities of the Acquired Fund by the Acquiring Fund
is in the best interests of the Acquiring Fund and that the interests of the
existing shareholders of the Acquiring Fund would not be diluted as a result of
this transaction; and
WHEREAS, the Directors of the Company also have determined, with respect to the
Acquired Fund, that the sale, assignment, conveyance, transfer and delivery of
all of the property and assets of the Acquired Fund for Acquiring Fund Shares
and the assumption of all liabilities of the Acquired Fund by the Acquiring Fund
is in the best interests of the Acquired Fund and that the interests of the
existing shareholders of the Acquired Fund would not be diluted as a result of
this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the requisite approval of the Acquired Fund shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund agrees to
sell, assign, convey, transfer and deliver all of the property and assets of the
Acquired Fund, as set forth in paragraph 1.2 herein, to the Acquiring Fund, and
the Acquiring Fund agrees in exchange therefor: (i) to deliver to the Acquired
Fund the number of full and fractional Class IA Acquiring Fund Shares determined
by dividing the value of the Acquired Fund's net assets with respect to the
corresponding class of Acquired Fund Shares, computed in the manner and as of
the time and date set forth in paragraph 2.1 herein, by the net asset value of
one Acquiring Fund Share of the corresponding class, computed in the manner and
as of the time and date set forth in paragraph 2.2 herein; and (ii) to assume
all liabilities of the Acquired Fund, as set forth in paragraph 1.3 herein. Such
transactions shall take place on the date of the closing provided for in
paragraph 3.1 herein ("Closing Date").
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1.2. The property and assets of the Company attributable to the Acquired
Fund to be acquired by the Acquiring Fund shall consist of all property and
assets, including, without limitation, all rights, cash, securities, commodities
and futures interests and dividends or interests receivable that are owned by
the Acquired Fund and any deferred or prepaid expenses shown as an asset on the
books of the Acquired Fund on the Valuation Date as defined in paragraph 2.1
(collectively, "Assets"). The Acquired Fund will sell, assign, convey, transfer
and deliver to the Acquiring Fund any rights, stock dividends, or other
securities received by the Acquired Fund after the Closing Date as stock
dividends or other distributions on or with respect to the property and assets
transferred, which rights, stock dividends, and other securities shall be deemed
included in the property and assets transferred to the Acquiring Fund at the
Closing Date and shall not be separately valued, in which case any such
distribution that remains unpaid as of the Closing Date shall be included in the
determination of the value of the assets of the Acquired Fund acquired by the
Acquiring Fund.
1.3. The Acquired Fund will make reasonable efforts to discharge all of its
known liabilities and obligations prior to the Valuation Date. The Acquiring
Fund shall assume all of the liabilities of the Acquired Fund, whether accrued
or contingent, known or unknown, existing at the Valuation Date (collectively,
"Liabilities"). On or as soon as practicable prior to the Closing Date, the
Acquired Fund will declare and pay to its shareholders of record one or more
dividends and/or other distributions so that it will have distributed
substantially all (and in no event less than 98%) of its investment company
taxable income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
1.4. Immediately following the actions contemplated by paragraph 1.1
herein, the Company shall take such actions necessary to complete the
liquidation of the Acquired Fund. To complete the liquidation, the Company, on
behalf of the Acquired Fund, shall (a) distribute to the Acquired Fund's
shareholders of record with respect to each class of its shares as of the
Closing as defined in paragraph 3.1 herein ("Acquired Fund Shareholders"), on a
PRO RATA basis within the class, the Acquiring Fund Shares of the corresponding
class received by the Acquired Fund pursuant to paragraph 1.1 herein, and (b)
completely liquidate. Such distribution and liquidation will be accomplished by
the transfer of the Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund to open accounts on the share
records of the Acquiring Fund in the names of the Acquired Fund Shareholders.
The aggregate net asset value of Class IA Acquiring Fund Shares to be so
credited to the Class IA Acquired Fund Shareholders, respectively, shall, with
respect to the class, be equal to the aggregate net asset value of the Acquired
Fund Shares of the corresponding class owned by Acquired Fund Shareholders on
the Closing Date. All issued and outstanding Acquired Fund Shares will
simultaneously be canceled on the books of the Acquired Fund, although shares
certificates representing interests in Class IA Acquired Fund Shares will
thereafter represent interests in the corresponding class of Acquiring Fund
Shares after the Closing Date, as determined in accordance with Section 2.3. The
Acquiring Fund shall not issue certificates representing the Class IA Acquiring
Fund Shares in connection with the Reorganization.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's Transfer Agent, as defined in paragraph 3.3 herein.
1.6. Any reporting responsibility of the Acquired Fund, including, but not
limited to, the responsibility for filing regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission ("Commission"), any
state securities commission, and any Federal, state or local tax authorities or
any other relevant regulatory authority, is and shall remain the responsibility
of the Acquired Fund.
2. VALUATION
2.1. The value of the Assets shall be the value of such Assets as of the
close of business of the New York Stock Exchange and after the declaration of
any dividends on the Closing Date (such time and date being hereinafter called
the "Valuation Date"), computed using the valuation procedures set forth in the
then-current prospectus and statement of additional information with respect to
the Acquired Fund and valuation procedures established by the Company's Board of
Directors.
2.2. The net asset value of each Class IA Acquiring Fund Share shall be the
net asset value per share computed with respect to that class as of the
Valuation Date, using the valuation procedures set forth in the
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Acquiring Fund's then-current prospectus and statement of additional
information, and valuation procedures established by the Company's Board of
Directors.
2.3. The number of the Class IA Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's Assets
shall be determined by dividing the value of the net assets with respect to the
Class IA Acquired Fund Shares, as the case may be, determined using the same
valuation procedures referred to in paragraph 2.1 herein, by the net asset value
of the corresponding class of Acquiring Fund Shares, determined in accordance
with paragraph 2.2 herein.
2.4. All computations of value shall be made by [ ], in its capacity as [ ]
for the Company[, and shall be subject to confirmation by the Company's
----------- ].
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be [February 5, 2007], or such other date as
the parties may agree. All acts taking place at the closing of the transactions
provided for in this Agreement ("Closing") shall be deemed to take place
simultaneously as of the close of business on the Closing Date unless otherwise
agreed to by the parties. The close of business on the Closing Date shall be as
of 4:00 p.m., Eastern Time. The Closing shall be held at the offices of the
Company.
3.2. The Company shall direct [ ], as custodian for the Acquired Fund
("Custodian"), to deliver to the Company at the Closing a certificate of an
authorized officer of the Custodian stating that (i) the Assets of the Acquired
Fund have been delivered in proper form to the Acquiring Fund within two
business days prior to or on the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets, including all applicable Federal and
state stock transfer stamps, if any, have been paid or provision for payment has
been made. The Acquired Fund's portfolio securities represented by a certificate
or other written instrument shall be presented by the Custodian to those persons
at the Custodian who have primary responsibility for the safekeeping of the
assets of the Acquiring Fund, as the Custodian also serves as the custodian for
the Acquiring Fund. Such presentation shall be made for examination no later
than five business days preceding the Closing Date, and such certificates and
other written instruments shall be transferred and delivered by the Acquired
Fund as of the Closing Date for the account of the Acquiring Fund duly endorsed
in proper form for transfer in such condition as to constitute good delivery
thereof. The Custodian shall deliver to those persons at the Custodian who have
primary responsibility for the safekeeping of the assets of the Acquiring Fund
as of the Closing Date by book entry, in accordance with the customary practices
of the Custodian and of each securities depository, as defined in Rule 17f-4
under the Investment Company Act of 1940, as amended ("1940 Act"), in which the
Acquired Fund's Assets are deposited, the Acquired Fund's Assets deposited with
such depositories. The cash to be transferred by the Acquired Fund shall be
delivered by wire transfer of Federal funds on the Closing Date.
3.3. The Company shall direct Hartford Investor Services Company, LLC, in
its capacity as transfer agent for the Company ("Transfer Agent"), to deliver to
the Company at the Closing a certificate of an authorized officer of the
Transfer Agent stating that its records contain the names and addresses of the
Acquired Fund Shareholders and the number and percentage ownership of
outstanding Class IA shares owned by each such shareholder immediately prior to
the Closing. The Secretary of the Company shall confirm that (a) the appropriate
number of Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund pursuant to paragraph 1.1 herein
prior to the actions contemplated by paragraph 1.4 herein and (b) the
appropriate number of Acquiring Fund Shares have been credited to the accounts
of the Acquired Fund Shareholders on the books of the Acquiring Fund pursuant to
paragraph 1.4 herein. At the Closing the Company shall execute such bills of
sale, checks, assignments, share certificates, if any, receipts or other
documents as necessary to effect the Reorganization.
3.4. In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio securities of the
Acquiring Fund or the Acquired Fund (each, an "Exchange") shall be closed to
trading or trading thereupon shall be restricted, or (b) trading or the
reporting of trading on such Exchange or elsewhere shall be disrupted so that,
in the judgment of the Board of Directors of the Company, accurate appraisal of
the value of the net assets of the Acquiring Fund or the Acquired Fund is
impracticable, the Closing Date shall be
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postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. Except as has been fully disclosed to the Acquiring Fund prior to the
date of this Agreement in a written instrument executed by an officer of the
Company, the Company, on behalf of the Acquired Fund, represents and warrants to
the Acquiring Fund as follows:
(a) The Acquired Fund is duly organized as a series of the
Company, which is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland, with power under the Company's
Articles of Incorporation, as amended from time to time ("Charter"), to own all
of its Assets and to carry on its business as it is now being conducted;
(b) The Company is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
the Class IA Acquired Fund Shares under the Securities Act of 1933, as amended
("1933 Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court
or governmental authority is required for the consummation by the Acquired Fund
of the transactions contemplated herein, except such as may be required under
the 1933 Act, the Securities Exchange Act of 1934, as amended ("1934 Act"), the
1940 Act and state securities laws;
(d) The current prospectus and statement of additional
information of the Acquired Fund and each prospectus and statement of additional
information of the Acquired Fund used at all times prior to the date of this
Agreement conforms or conformed at the time of its use in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder; and does not or did not at the
time of its use include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not materially misleading;
(e) On the Valuation Date, the Company, on behalf of the
Acquired Fund, will have good and marketable title to the Assets of the Acquired
Fund and full right, power, and authority to sell, assign, transfer and deliver
such Assets hereunder free of any liens or other encumbrances, and upon delivery
and payment for such Assets, the Company, on behalf of the Acquiring Fund, will
acquire good and marketable title thereto, subject to no restrictions on the
full transfer thereof, including such restrictions as might arise under the 1933
Act;
(f) The Acquired Fund is not engaged currently, and the
execution, delivery and performance of this Agreement will not result, in (i) a
material violation of the Company's Charter or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Company, on behalf of the Acquired Fund, is a party or by which it is bound, or
(ii) the acceleration of any material obligation, or the imposition of any
material penalty, under any agreement, indenture, instrument, contract, lease,
judgment or decree to which the Company, on behalf of the Acquired Fund, is a
party or by which it is bound;
(g) All material contracts or other commitments of the
Acquired Fund (other than this Agreement and certain investment contracts
including options, futures, and forward contracts) will terminate without
liability to the Acquired Fund on or prior to the Closing Date;
(h) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or, to the Company's knowledge, threatened against the Company, with respect to
the Acquired Fund or any of its properties or assets, that, if adversely
determined, would materially and adversely affect its financial condition or the
conduct of its business. The Company, on behalf of the Acquired Fund, knows of
no facts which might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein contemplated;
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(i) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets, and Schedule of Investments of the
Acquired Fund at December 31, 2005 have been audited by Ernst & Young LLP,
independent registered public accounting firm, and are in accordance with
accounting principles generally accepted in the United States of America
("GAAP") consistently applied, and such statements present fairly, in all
material respects, the financial condition of the Acquired Fund as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(j) Since December 31, 2005, there has not been any material
adverse change in the Acquired Fund's financial condition, assets, liabilities
or business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness other than in the ordinary
course in accordance with the Acquired Fund's investment restrictions. For the
purposes of this subparagraph (j), a decline in net asset value per share of
Acquired Fund Shares due to declines in market values of securities held by the
Acquired Fund, the discharge of Acquired Fund liabilities, or the redemption of
Acquired Fund Shares by shareholders of the Acquired Fund shall not constitute a
material adverse change;
(k) On the Closing Date, all Federal and other tax returns,
dividend reporting forms, and other tax-related reports of the Acquired Fund
required by law to have been filed by such date (including any extensions) shall
have been filed and are or will be correct in all material respects, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof and, to the best knowledge of the Company, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the
taxable year ending on the Closing Date), the Acquired Fund has met (or will
meet) the requirements of Subchapter M of the Code for qualification as a
regulated investment company, has been (or will be) eligible to and has computed
(or will compute) its Federal income tax under Section 852 of the Code, and will
have distributed all of its investment company taxable income (computed without
regard to any deduction for dividends paid) and net capital gain (as defined in
the Code) that has accrued through the Closing Date, and before the Closing Date
will have declared dividends sufficient to distribute all of its investment
company taxable income (computed without regard to any deduction for dividends
paid) and net capital gain (after reduction for any available capital loss
carryover) for the period ending on the Closing Date;
(m) All issued and outstanding Acquired Fund Shares are, and
on the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Company and have been offered and sold in every state,
territory and the District of Columbia in compliance in all material respects
with applicable registration requirements of the 1933 Act and other securities
laws. All of the issued and outstanding Acquired Fund Shares will, at the time
of Closing, be held by the persons and in the amounts set forth in the records
of the Transfer Agent, on behalf of the Acquired Fund, as provided in paragraph
3.3 herein. The Acquired Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any of the Acquired Fund Shares, nor
is there outstanding any security convertible into any of the Acquired Fund
Shares;
(n) The execution, delivery and performance of this Agreement
and the transactions contemplated herein have been duly authorized by all
necessary action, if any, on the part of the Directors of the Company, on behalf
of the Acquired Fund, and, subject to the approval of the shareholders of the
Acquired Fund, this Agreement constitutes a valid and binding obligation of the
Company, on behalf of the Acquired Fund, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(o) The information to be furnished by the Acquired Fund for
use in registration statements, proxy materials and other documents filed or to
be filed with any Federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto;
and
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(p) The combined proxy statement and prospectus ("Proxy
Statement") to be included in the Registration Statement referred to in
paragraph 5.5 herein, insofar as it relates to the Acquired Fund, will, on the
effective date of the Registration Statement and on the Closing Date (i) not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not materially
misleading, provided, however, that the representations and warranties of this
subparagraph (p) shall not apply to statements in or omissions from the Proxy
Statement and the Registration Statement made in reliance upon and in conformity
with information that was furnished by the Acquiring Fund for use therein, and
(ii) comply in all material respects with the provisions of the 1933 Act, the
1934 Act, and the 1940 Act and the rules and regulations thereunder.
4.2. Except as has been fully disclosed to the Acquired Fund prior to the
date of this Agreement in a written instrument executed by an officer of the
Company, the Company, on behalf of the Acquiring Fund, represents and warrants
to the Acquired Fund as follows:
(a) The Acquiring Fund is duly organized as a series of the
Company, which is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Maryland, with power under the Company's
Charter to own all of its properties and assets and to carry on its business as
it is now being conducted;
(b) The Company is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
the Class IA Acquiring Fund Shares under the 1933 Act, is in full force and
effect;
(c) No consent, approval, authorization, or order of any court
or governmental authority is required for the consummation by the Acquiring Fund
of the transactions contemplated herein, except such as may be required under
the 1933 Act, the 1934 Act, the 1940 Act and state securities laws;
(d) The current prospectus and statement of additional
information of the Acquiring Fund and each prospectus and statement of
additional information of the Acquiring Fund used at all times prior to the date
of this Agreement conforms or conformed at the time of its use in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act and the
rules and regulations of the Commission thereunder and does not or did not at
the time of its use include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not materially misleading;
(e) The Acquiring Fund is not engaged currently, and the
execution, delivery and performance of this Agreement will not result, in (i) a
material violation of the Company's Charter or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Company, on behalf of the Acquiring Fund, is a party or by which it is bound, or
(ii) the acceleration of any material obligation, or the imposition of any
material penalty, under any agreement, indenture, instrument, contract, lease,
judgment or decree to which the Company, on behalf of the Acquiring Fund, is a
party or by which it is bound;
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or, to its knowledge, threatened against the Company, with respect to the
Acquiring Fund or any of the Acquiring Fund's properties or assets, that, if
adversely determined, would materially and adversely affect the Acquiring Fund's
financial condition or the conduct of its business. The Company, on behalf of
the Acquiring Fund, knows of no facts which might form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects the Acquiring Fund's business or its
ability to consummate the transactions herein contemplated;
(g) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets and Schedule of Investments of the
Acquiring Fund at December 31, 2005 have been audited by Ernst & Young LLP,
independent registered public accounting firm, and are in accordance with GAAP
consistently applied, and such statements present fairly, in all material
respects, the financial condition of the Acquiring Fund as of such date in
accordance with GAAP, and there are no known contingent liabilities of the
Acquiring Fund required to be
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reflected on a balance sheet (including the notes thereto) in accordance with
GAAP as of such date not disclosed therein;
(h) Since December 31, 2005, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities
or business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness other than in the ordinary
course in accordance with the Acquiring Fund's investment restrictions. For
purposes of this subparagraph (h), a decline in net asset value per share of the
Acquiring Fund Shares due to declines in market values of securities held by the
Acquiring Fund, the discharge of Acquiring Fund liabilities, or the redemption
of Acquiring Fund Shares by shareholders of the Acquiring Fund, shall not
constitute a material adverse change;
(i) On the Closing Date, all Federal and other tax returns,
dividend reporting forms, and other tax-related reports of the Acquiring Fund
required by law to have been filed by such date (including any extensions) shall
have been filed and are or will be correct in all material respects, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof, and to the best knowledge of the Company no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(j) For each taxable year of its operation (including the
taxable year that includes the Closing Date), the Acquiring Fund has met (or
will meet) the requirements of Subchapter M of the Code for qualification as a
regulated investment company, has been eligible to (or will be eligible to) and
has computed (or will compute) its Federal income tax under Section 852 of the
Code;
(k) All issued and outstanding Acquiring Fund Shares are, and
on the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Company and have been offered and sold in every state,
territory and the District of Columbia in compliance in all material respects
with applicable registration requirements of the 1933 Act and other securities
laws. The Acquiring Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any Acquiring Fund Shares, nor is
there outstanding any security convertible into any Acquiring Fund Shares;
(l) The execution, delivery and performance of this Agreement
and the transactions contemplated herein, have been duly authorized by all
necessary action, if any, on the part of the Directors of the Company, on behalf
of the Acquiring Fund, and this Agreement constitutes a valid and binding
obligation of the Company, on behalf of the Acquiring Fund, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(m) The Class IA Acquiring Fund Shares to be issued and
delivered to the Acquired Fund, for the account of the Acquired Fund
Shareholders, pursuant to the terms of this Agreement, will on the Closing Date
have been duly authorized and, when so issued and delivered, will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and non-assessable
by the Acquiring Fund; and
(n) The information to be furnished by the Acquiring Fund for
use in the registration statements, proxy materials and other documents that may
be necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(o) The Proxy Statement to be included in the Registration
Statement referred to in paragraph 5.5 herein (and any amendment or supplement
thereto), insofar as it relates to the Acquiring Fund and the Acquiring Fund
Shares, will, from the effective date of the Registration Statement through the
date of the meeting of shareholders of the Acquired Fund contemplated therein
and on the Closing Date (i) not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements were made, not materially misleading, provided, however, that the
representations and warranties of this subparagraph (o) shall not apply to
statements in or omissions from the Proxy Statement and the Registration
Statement made in reliance upon and in conformity with
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information that was furnished by the Acquired Fund for use therein, and (ii)
comply in all material respects with the provisions of the 1933 Act, the 1934
Act, and the 1940 Act and the rules and regulations thereunder.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, and any other
distribution that may be advisable.
5.2. The Company will call a meeting of the shareholders of the Acquired
Fund to consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated herein.
5.3. The Acquired Fund covenants that the Class IA Acquiring Fund Shares to
be issued hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms of this Agreement.
5.4. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.5. The Company, on behalf of the Acquired Fund, will prepare and file a
Proxy Statement (referred to in paragraph 4.1(o) herein) to be included in a
Registration Statement on Form N-14 ("Registration Statement"), in compliance
with the 1933 Act, the 1934 Act and the 1940 Act. The Acquired Fund will provide
to the Acquiring Fund such information regarding the Acquired Fund as may be
reasonably necessary for the preparation of the Registration Statement
5.6. The Acquiring Fund and the Acquired Fund shall each use its reasonable
best efforts to fulfill or obtain the fulfillment of the conditions precedent to
effect the transactions contemplated by this Agreement as promptly as
practicable.
5.7. The Company, on behalf of the Acquired Fund, shall execute and deliver
or cause to be executed and delivered all such assignments and other
instruments, and will take or cause to be taken such further action as may be
necessary or desirable in order to (1) vest in and confirm (a) the title and
possession of the Company, on behalf of the Acquired Fund, of the Acquiring Fund
Shares to be delivered hereunder and (b) the title and possession of the
Company, on behalf of the Acquiring Fund, of all the Assets and (2) otherwise to
carry out the intent and purpose of this Agreement.
5.8. The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Company, on behalf of the Acquired Fund, to
consummate the transactions provided for herein shall be subject, at the
Company's election, to the performance by the Company, on behalf of the
Acquiring Fund, of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Company, on behalf of the
Acquiring Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
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6.2. The Company, on behalf of the Acquiring Fund, shall have delivered to
the Acquired Fund a certificate executed by the Company's President or Vice
President and its Treasurer or Assistant Treasurer, and dated as of the Closing
Date, to the effect that the representations and warranties of the Company, on
behalf of the Acquiring Fund, made in this Agreement are true and correct at and
as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement;
6.3. The Company, on behalf of the Acquiring Fund, shall have performed all
of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Company, on behalf of the
Acquiring Fund, on or before the Closing Date; and
6.4. The number of full and fractional Acquiring Fund Shares to be issued
in connection with the Reorganization shall have been calculated in accordance
with paragraph 1.1 herein.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Company, on behalf of the Acquiring Fund, to
complete the transactions provided for herein shall be subject, at the Company's
election, to the performance by the Company, on behalf of the Acquired Fund, of
all of the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Company, on behalf of the
Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
7.2. The Company shall have delivered to the Acquiring Fund a statement of
the Acquired Fund's Assets and Liabilities, as of the Closing Date, certified by
the Treasurer of the Company;
7.3. The Company, on behalf of the Acquired Fund, shall have delivered to
the Acquiring Fund a certificate executed in the name of the Acquired Fund by
its President or Vice President and its Treasurer or Assistant Treasurer and
dated as of the Closing Date to the effect that the representations and
warranties of the Company, on behalf of the Acquired Fund, made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement;
7.4. The Company, on behalf of the Acquired Fund, shall have performed all
of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Company, on behalf of the
Acquired Fund, on or before the Closing Date;
7.5. The number of full and fractional Acquiring Fund Shares to be issued
in connection with the Reorganization shall have been calculated in accordance
with paragraph 1.1 herein; and
7.6. The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing Date; and (ii) any undistributed investment
company taxable income and net realized capital gains from any period to the
extent not otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to the Company, on behalf of the Acquired
Fund, or the Company, on behalf of the Acquiring Fund, the Company may, at its
option, refuse to consummate the transactions contemplated by this Agreement:
8.1. The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of the
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Company's Charter and By-Laws, applicable Maryland law and the 1940 Act, and
certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, the Company may not waive the conditions set forth in this paragraph
8.1;
8.2. On the Closing Date no action, suit or other proceeding shall be
pending or, to the Company's knowledge, threatened before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Agreement or the transactions
contemplated herein;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Company to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the Acquiring Fund or the
Acquired Fund;
8.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and
8.5. The Company shall have received the opinion of counsel to the Company
addressed to the Company substantially to the effect that, based upon certain
facts, assumptions, and representations, the transaction contemplated by this
Agreement shall constitute a tax-free reorganization for Federal income tax
purposes. The delivery of such opinion is conditioned upon receipt by counsel to
the Company of representations it shall request of the Company. Notwithstanding
anything herein to the contrary, the Company may not consummate such
transactions contemplated by the Agreement if this condition is not satisfied.
9. INDEMNIFICATION
9.1. The Company, out of the Acquiring Fund's assets and property
(including any amounts paid to the Acquiring Fund pursuant to any applicable
liability insurance policies or indemnification agreements), agrees to indemnify
and hold harmless the Acquired Fund from and against any and all losses, claims,
damages, liabilities or expenses (including, without limitation, the payment of
reasonable legal fees and reasonable costs of investigation) to which the
Acquired Fund may become subject, insofar as such loss, claim, damage, liability
or expense (or actions with respect thereto) arises out of or is based on any
breach by the Acquiring Fund of any of its representations, warranties,
covenants or agreements set forth in this Agreement, provided that such
indemnification by the Acquiring Fund is not in violation of any applicable law.
9.2. The Company, out of the Acquired Fund's assets and property (including
any amounts paid to the Acquired Fund pursuant to any applicable liability
insurance policies or indemnification agreements), agrees to indemnify and hold
harmless the Acquiring Fund from and against any and all losses, claims,
damages, liabilities or expenses (including, without limitation, the payment of
reasonable legal fees and reasonable costs of investigation) to which the
Acquiring Fund may become subject, insofar as such loss, claim, damage,
liability or expense (or actions with respect thereto) arises out of or is based
on any breach by the Acquired Fund of any of its representations, warranties,
covenants or agreements set forth in this Agreement, provided that such
indemnification by the Acquired Fund is not in violation of any applicable law.
10. BROKERAGE FEES AND EXPENSES
10.1. The Company, on behalf of the Acquiring Fund and on behalf of the
Acquired Fund, represents and warrants that there are no brokers or finders
entitled to receive any payments in connection with the transactions provided
for herein.
10.2. The expenses relating to the proposed Reorganization will be borne
solely by HL Investment Advisors, LLC. No such expenses shall be borne by the
Acquired Fund or the Acquiring Fund, except for brokerage fees and expenses
incurred in connection with the Reorganization. The costs of the Reorganization
shall include, but not be limited to, costs associated with obtaining any
necessary order of exemption from the 1940 Act, if any,
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preparation of the Registration Statement, printing and distributing the Proxy
Statement, legal fees, accounting fees, securities registration fees, and
expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by another person of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Company has not made any representation, warranty or covenant, on
behalf of either the Acquired Fund or the Acquiring Fund, not set forth herein,
and this Agreement constitutes the entire agreement between the Acquiring Fund
and Acquired Fund with respect to the Reorganization.
11.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquired Fund and Acquiring Fund in Sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned by resolution of the Company's Board of Directors, at any time
prior to the Closing Date, if circumstances should develop that, in its opinion,
make proceeding with the Agreement inadvisable.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be deemed necessary or advisable by the authorized officers of the Company;
provided, however, that following the meeting of the shareholders of the
Acquired Fund called by the Company pursuant to paragraph 5.2 herein, no such
amendment may have the effect of changing the provisions for determining the
number of Class IA Acquiring Fund Shares to be issued to the Class IA Acquired
Fund Shareholders, respectively, under this Agreement to the detriment of such
shareholders without their further approval.
14. HEADINGS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement shall be governed by and construed in accordance with
the laws of the State of [Maryland] without regard to its principles of
conflicts of laws.
14.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President.
HARTFORD HLS SERIES FUND II, INC., ON
BEHALF OF ITS HARTFORD CAPITAL
OPPORTUNITIES HLS FUND
By: /s/ ________________________________
Title: _________________________________
HARTFORD HLS SERIES FUND II, INC., ON
BEHALF OF ITS HARTFORD BLUE CHIP STOCK
HLS FUND
By: /s/ ________________________________
Title: _________________________________
WITH RESPECT TO SECTION 10.2 OF THIS
AGREEMENT, ACCEPTED AND ACKNOWLEDGED BY:
HL INVESTMENT ADVISORS, LLC
By: /s/ ________________________________
Title: _________________________________
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