AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF
REORGANIZATION (the Agreement ) is made as of this
11th day of August, 2010, by and between Seasons Series
Trust, a Massachusetts business trust (the Trust ), on behalf
of the Focus Growth Portfolio (the Acquiring Fund ), and the
Trust, on behalf of the Focus Growth and Income Portfolio
(the Target Fund, and together with the Acquiring Fund, the
Funds ). Each of the Acquiring Fund and Target Fund is
designated as a legally separate series of the Trust.
This Agreement is intended to be, and is adopted as, a
plan of reorganization within the meaning of Section 368(a) of
the United States Internal Revenue Code of 1986, as amended
(the Code ), and the Treasury Regulations promulgated
thereunder. The reorganization will consist of: (i) the transfer
of all of the assets of the Target Fund in exchange for Class 2
and Class 3 shares of the Acquiring Fund, as applicable
( Acquiring Fund Shares ); (ii) the assumption by the
Acquiring Fund of the Assumed Liabilities (as defined in
paragraph 1.3) of the Target Fund; (iii) the distribution, after
the Closing Date (as defined in paragraph 3.1), of the
Acquiring Fund Shares to the shareholders of the Target
Fund; and (iv) the complete liquidation of the Target Fund, all
upon the terms and conditions set forth in this Agreement (the
Reorganization ).
WHEREAS, the Trust is an open-end, registered
management investment company within the meaning of the
Investment Company Act of 1940, as amended (the 1940
Act ), and the Target Fund owns securities that are assets of
the character in which the Acquiring Fund is permitted to
invest;
WHEREAS, each of the Acquiring Fund and the Target
Fund is treated properly as a regulated investment company
under Subchapter M of the Code;
WHEREAS, the Trust, on behalf of the Acquiring Fund,
is authorized to issue its shares of beneficial interest;
WHEREAS, the Board of Trustees of the Trust has
determined that the Reorganization is in the best interests of
the Acquiring Fund and that the interests of the existing
shareholders of the Acquiring Fund will not be diluted as a
result of the Reorganization; and
WHEREAS, the Board of Trustees of the Trust has
determined that the Reorganization is in the best interests of
the Target Fund, the interests of the existing shareholders of
the Target Fund will not be diluted as a result of the
Reorganization and the Reorganization is advisable and
directed that the Reorganization be submitted for
consideration at a special meeting of the Target Fund
Shareholders (as defined in paragraph 1.5);
NOW, THEREFORE, in consideration of the premises
and of the covenants and agreements hereinafter set forth, the
parties hereto covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE TARGET FUND IN
EXCHANGE FOR ACQUIRING FUND SHARES AND
THE ASSUMPTION OF THE TARGET FUND S
LIABILITIES AND LIQUIDATION OF THE TARGET
FUND
1.1 THE EXCHANGE. Subject to the terms and
conditions contained herein and on the basis of the
representations and warranties contained herein, the Trust, on
behalf of the Target Fund, agrees to convey, transfer and
deliver the assets of the Target Fund described in paragraph
1.2 to the Acquiring Fund free and clear of all liens,
encumbrances and claims whatsoever. In exchange, the Trust,
on behalf of the Acquiring Fund, agrees: (a) to deliver to the
Target Fund the number of full and fractional shares of each
corresponding class of the Acquiring Fund, determined by
dividing: (i) the aggregate value of the Target Fund s assets,
net of liabilities of the Target Fund, attributable to each share
class of the Target Fund (as set forth below), computed in the
manner and as of the time and date set forth in paragraph 2.1,
by (ii) the net asset value of one Acquiring Fund Share of the
corresponding class (as set forth below) computed in the
manner and as of the time and date set forth in paragraph 2.2;
and (b) to assume the liabilities of the Target Fund as
described in paragraph 1.3. Such transactions shall take place
at the closing (the Closing ) provided for in paragraph 3.1.
The classes of shares of the Acquiring Fund correspond
to the classes of shares of the Target Fund as follows: Class 2
shares of the Acquiring Fund correspond to Class 2 shares of
the Target Fund; and Class 3 shares of the Acquiring Fund
correspond to Class 3 shares of the Target Fund, each as
applicable.
1.2 ASSETS TO BE ACQUIRED. The assets of the
Target Fund to be acquired by the Acquiring Fund shall
consist of all property owned by the Target Fund, including,
without limitation, all cash, securities, commodities, interests
in futures and other financial instruments, claims (whether
absolute or contingent, known or unknown), receivables
(including dividends, interest, principal, subscriptions and
other receivables), goodwill and other intangible property, all
books and records belonging to the Target Fund, any deferred
or prepaid expenses shown as an asset on the books of the
Target Fund on the Closing Date, and all interests, rights,
privileges and powers, other than cash in an amount necessary
to pay dividends and distributions as provided in paragraph
7.3 and other than the Target Fund s rights under this
Agreement (the Assets ).
The Target Fund will, within 7 days prior to the Closing
Date, furnish the Acquiring Fund with a list of the Target
Fund s portfolio securities and other investments.
1.3 LIABILITIES TO BE ASSUMED. The Target Fund
will endeavor to identify and discharge, to the extent
practicable, all of its liabilities and obligations, including all
liabilities relating to operations, before the Closing Date. The
Acquiring Fund shall assume all liabilities of, allocated or
attributable to, the Target Fund, whether known or unknown,
accrued or unaccrued, absolute or contingent or conditional or
unmatured except for all expenses that 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)
borne by SunAmerica Asset Management Corp., each Fund s
investment adviser (the Adviser ), pursuant to Article IX (the
Assumed Liabilities ).
1.4 STATE FILINGS. Prior to the Closing Date, the
Trust, on behalf of the Acquiring Fund, shall make any filings
with the Commonwealth of Massachusetts that are required
under the laws of the Commonwealth of Massachusetts to be
made prior to the Closing Date. Prior to the Closing Date, the
Trust, on behalf of the Target Fund, shall make any filings
with the Commonwealth of Massachusetts that are required
under the laws of the Commonwealth of Massachusetts to be
made prior to the Closing Date.
1.5 LIQUIDATION AND DISTRIBUTION. On or as
soon as practicable after the Closing Date, the Target Fund
will distribute in complete liquidation of the Target Fund, pro
rata to its shareholders of record, determined as of the close of
business on the Closing Date (the Target Fund
Shareholders ), all of the Acquiring Fund Shares received by
the Target Fund. Upon completion of the distribution of all of
the Acquiring Fund Shares in accordance with the prior
sentence, the Target Fund will thereupon proceed to liquidate
and terminate as set forth in paragraph 1.9 below. Such
distribution will be accomplished by the transfer on the books
of the Trust of Acquiring Fund Shares credited to the account
of the Target Fund to open accounts on the share records of
the Acquiring Fund in the name of the Target Fund
Shareholders, and representing the respective pro rata number
of each class of Acquiring Fund Shares due Target Fund
Shareholders holding the corresponding class of the Target
Fund s shares. All issued and outstanding shares of the Target
Fund will, simultaneously with the liquidation, be cancelled
on the books of the Target Fund and will be null and void. The
Trust shall not issue certificates representing Acquiring Fund
Shares in connection with such transfer.
1.6 OWNERSHIP OF SHARES. Ownership of
Acquiring Fund Shares will be shown on the books of the
Acquiring Fund s transfer agent.
1.7 TRANSFER TAXES. Any transfer taxes payable
upon the issuance of Acquiring Fund Shares in a name other
than the registered holder of the Target Fund shares on the
books of the Trust as of that time shall, as a condition of such
transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.8 REPORTING RESPONSIBILITY. Any reporting
responsibility of the Target Fund, including, without
limitation, the responsibility for filing of regulatory reports,
tax returns or other documents with the Securities and
Exchange Commission (the Commission ), any state
securities commission, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Target Fund, or the Trust
on behalf of the Target Fund. The Trust shall fully cooperate
to the extent necessary or desirable for these responsibilities to
be discharged.
1.9 TERMINATION. The Target Fund shall be
terminated as a series of the Trust promptly following all
distributions made pursuant to paragraph 1.5 in accordance
with the laws of the Commonwealth of Massachusetts and the
federal securities laws.
1.10 BOOKS AND RECORDS. Concurrently with the
Closing, the share transfer books relating to the Target Fund
shall be closed and no transfer of shares shall thereafter be
made on such books. All books and records relating to the
Target Fund, including all books and records required to be
maintained under the 1940 Act and the rules and regulations
thereunder transferred to the Acquiring Fund, shall be made
available to the Acquiring Fund from and after the Closing
Date at the Acquiring Fund s cost of producing such books
and records until at least the date through which such books
and records must be maintained under applicable law.
1.11 ACTION BY TRUST. All actions expressed herein
as being the obligations of the Acquiring Fund or the Target
Fund will be taken by the Trust, on behalf of the Acquiring
Fund or the Target Fund, respectively.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The gross value of the
Assets to be acquired by the Acquiring Fund hereunder shall
be the gross value of such Assets as of the close of regular
trading on the New York Stock Exchange ( NYSE ) on the
business day immediately preceding the Closing Date (the
Valuation Time ), after the payment of the dividends
pursuant to Section 7.3, using the Trust s valuation procedures
or such other valuation procedures as shall be mutually agreed
upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per
share of each class of the Acquiring Fund Shares shall be the
net asset value per share for that class computed at the
Valuation Time, using the Trust s valuation procedures or
such other valuation procedures as shall be mutually agreed
upon by the parties.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. Subject to the terms and
conditions set forth herein, the Closing shall occur on
October 4, 2010, or such other date and time as the parties
may agree to in writing (the Closing Date ). Unless
otherwise provided, all acts taking place at the Closing shall
be deemed to take place as of immediately prior to the
commencement of business on the Closing Date. The Closing
shall be held at the offices of the Adviser, or at such other time
and/or place as the parties may agree.
3.2 CUSTODIAN S CERTIFICATE. The Target Fund
shall instruct its custodian, State Street Bank and Trust
Company ( SSB&T or the Custodian ), to deliver at the
Closing a certificate of an authorized officer stating that:
(a) the Assets have been delivered in proper form to the
Acquiring Fund on the Closing Date; and (b) all necessary
taxes including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment shall
have been made, in conjunction with the delivery of portfolio
securities by the Target Fund. The Target Fund s portfolio
securities represented by a certificate or other written
instrument shall be presented by the Custodian to the
custodian for the Acquiring Fund, SSB&T, for examination no
later than five (5) business days preceding the Closing Date
and transferred and delivered by the Target 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 free and clear of all liens,
encumbrances and claims whatsoever, in accordance with the
custom of brokers. The Target Fund s securities and
instruments deposited with a securities depository (as defined
in Rule 17f-4 under the 0000 Xxx) or other permitted
counterparties or a futures commission merchant (as defined
in Rule 17f-6 under the 0000 Xxx) shall be transferred to or for
the account of the Acquiring Fund as of the Closing Date by
book entry in accordance with the customary practices of such
depositories and futures commission merchants and the
Custodian. The cash to be transferred by the Target Fund shall
be transferred and delivered by the Target Fund as of the
Closing Date for the account of the Acquiring Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the
event that, on the business day immediately preceding the
Closing Date, either: (a) the NYSE or another primary
exchange on which the portfolio securities of the Acquiring
Fund or the Target Fund are purchased or sold shall be closed
to trading or trading on such exchange shall be restricted; or
(b) trading or the reporting of trading on the NYSE or
elsewhere shall be disrupted so that accurate appraisal of the
value of the net assets of the Acquiring Fund or the Target
Fund is impracticable, the Closing shall be postponed until the
first business day after the day when trading is fully resumed
and reporting is restored or such other date as the parties may
agree to.
3.4 TRANSFER AGENT S CERTIFICATE. The Target
Fund shall instruct its transfer agent, SSB&T, to deliver at the
Closing a certificate of an authorized officer stating that its
records contain the names and addresses of the Target Fund
Shareholders as of the Closing Date, and the number and
percentage ownership (to four decimal places) of each
outstanding class of shares of the Target Fund owned by each
Target Fund Shareholder immediately prior to the Closing.
The Acquiring Fund shall issue and deliver, or instruct its
transfer agent to issue and deliver, a confirmation evidencing
Acquiring Fund Shares to be credited on the Closing Date to
the Target Fund, or provide evidence reasonably satisfactory
to the Target Fund that such Acquiring Fund Shares have been
credited to the relevant Target Fund s account on the books of
the Acquiring Fund.
3.5 DELIVERY OF ADDITIONAL ITEMS. At the
Closing, each party shall deliver to the other such bills of sale,
checks, assignments, assumptions of liabilities, receipts and
other documents, if any, as such other party or its counsel may
reasonably request.
3.6 FAILURE TO DELIVER ASSETS. If the Target
Fund is unable to make delivery pursuant to paragraph 3.2
hereof to the Acquiring Fund s custodian of any of the Assets
of the Target Fund for the reason that any of such Assets have
not yet been delivered to it by the Target Fund s broker, dealer
or other counterparty, then, in lieu of such delivery, the Target
Fund shall deliver, with respect to said Assets, executed copies
of an agreement of assignment and due bills executed on
behalf of said broker, dealer or other counterparty, together
with such other documents as may be required by the
Acquiring Fund or its custodian, including brokers
confirmation slips.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE TRUST AND THE
TARGET FUND. The Trust, on behalf of the Target Fund,
represents and warrants to the Acquiring Fund as follows:
(a) The Trust is a trust that is duly organized, validly
existing and in good standing under laws of the
Commonwealth of Massachusetts. The Target Fund has been
validly designated as a separate series of the Trust. The Trust
is duly authorized to transact business in the Commonwealth
of Massachusetts and is qualified to do business in all
jurisdictions in which it is required to be so qualified, except
jurisdictions in which the failure to so qualify would not have
a material adverse effect on the Target Fund. The Trust, on
behalf of the Target Fund, has all material federal, state and
local authorizations necessary to own all of the properties and
the Assets and to carry on its business as now being
conducted, except authorizations which the failure to so obtain
would not have a material adverse effect on the Target Fund.
(b) The Trust is registered as an open-end management
investment company under the 1940 Act, and its registration
with the Commission as an investment company under the
1940 Act is in full force and effect. The Trust is in compliance
in all material respects with the 1940 Act and the rules and
regulations thereunder with respect to the Target Fund.
(c) If applicable, the Registration Statement on Form N-
14 and the Combined Prospectus/Proxy Statement contained
therein as so amended or supplemented (the N-14
Registration Statement ), as of the effective date of the N-14
Registration Statement and at all times subsequent thereto up
to and including the Closing Date, conforms and will conform,
as it relates to the Trust and the Target Fund, in all material
respects to the requirements of the federal and state securities
laws and the rules and regulations thereunder and does not and
will not include, as it relates to the Trust and the Target Fund,
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading. Any written
information furnished by the Trust with respect to itself and
the Target Fund for use in the N-14 Registration Statement or
any other materials provided in connection with the
Reorganization, as of the effective date of the N-14
Registration Statement and at all times subsequent thereto up
to and including the Closing Date, does not and will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated or necessary to make the
statements, in light of the circumstances under which such
statements were made, not misleading.
(d) The Target Fund s prospectus, statement of
additional information and shareholder reports, each to the
extent included or incorporated by reference in the N-14
Registration Statement, are accurate and complete in all
material respects and comply in all material respects with
federal securities and other laws and regulations, and do not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated or necessary to make the
statements, in light of the circumstances in which such
statements were made, not misleading.
(e) The Target Fund is not in violation of, and the
execution, delivery and performance of this Agreement in
accordance with its terms by the Trust, on behalf of the Target
Fund, will not result in the violation of Massachusetts law or
any provision of the Trust s declaration of trust or by-laws or
of any material agreement, indenture, note, mortgage,
instrument, contract, lease or other undertaking to which the
Trust (with respect to the Target Fund) or the Target Fund is a
party or by which it is bound, nor will the execution, delivery
and performance of this Agreement by the Trust, on behalf of
the Target Fund, result in the acceleration of any obligation, or
the imposition of any penalty, under any material agreement,
indenture, instrument, contract, lease or other undertaking to
which the Trust (with respect to the Target Fund) or the Target
Fund is a party or by which it is bound.
(f) The Trust, on behalf of the Target Fund, has no
material contracts, agreements or other commitments that will
not be terminated without liability to it before the Closing
Date, other than liabilities, if any, to be discharged prior to the
Closing Date or that are Assumed Liabilities.
(g) No litigation, claims, actions, suits, proceeding or
investigation of or before any court or governmental body is
pending or to the Trust s knowledge threatened against the
Target Fund or any of its properties or Assets which, if
adversely determined, would materially and adversely affect
the Trust or the Target Fund s financial condition, the conduct
of its business or which would prevent or hinder the ability of
the Target Fund to carry out the transactions contemplated by
this Agreement. The Target Fund knows of no facts that 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 that materially
and adversely affects its business or its ability to consummate
the transactions contemplated herein.
(h) The audited financial statements of the Target Fund
as of March 31, 2010, the most recent fiscal year ended, have
been prepared in accordance with accounting principles
generally accepted in the United States of America ( GAAP )
consistently applied and have been audited by
PricewaterhouseCoopers LLP, and such statements (true and
complete copies of which have been furnished to the
Acquiring Fund) fairly reflect in all material respects the
financial condition and the results of operations of the Target
Fund as of such date and the results of operations and changes
in net assets for the periods indicated, and there are no
material liabilities of the Target Fund whether actual or
contingent and whether or not determined or determinable as
of such date that are required by GAAP to be disclosed but are
not disclosed in such statements.
(i) There have been no changes in the financial position
of the Target Fund as reflected in the audited financial
statements for the fiscal year ended March 31, 2010, other
than those occurring in the ordinary course of business
consistent with past practice in connection with the purchase
and sale of portfolio assets, the issuance and redemption of
Target Fund shares and the payment of normal operating
expenses, dividends and capital gains distributions. Since the
date of the financial statements referred to in paragraph 4.1(h)
above, there has been no material adverse change in the Target
Fund s financial condition, assets, liabilities or business,
results of operations or the manner of conducting business of
the Target Fund (other than changes occurring in the ordinary
course of business), or any incurrence by the Target Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to
and accepted in writing by the Acquiring Fund. For the
purposes of this paragraph 4.1(i), a decline in the net asset
value of the Target Fund due to declines in the value of the
Target Fund s Assets, the discharge of the Target Fund s
liabilities or the redemption of the Target Fund s shares by a
Target Fund s Shareholders shall not constitute a material
adverse change.
(j) Since March 31, 2010 there has not been: (i) any
change in the business, results of operations, assets or
financial condition or the manner of conducting the business
of the Target Fund other than changes in the ordinary course
of its business, or any pending or threatened litigation, which
has had or may have a material adverse effect on such
business, results of operations, assets or financial condition;
(ii) issued any option to purchase or other right to acquire
shares of the Target Fund granted by or on behalf of the
Target Fund to any person other than subscriptions to purchase
shares at net asset value in accordance with the terms in the
prospectus for the Target Fund; (iii) any entering into,
amendment or termination of any contract or agreement by or
on behalf of the Target Fund, except as otherwise
contemplated by this Agreement; (iv) any indebtedness
incurred, other than in the ordinary course of business, by or
on behalf of the Target Fund for borrowed money or any
commitment to borrow money by or on behalf of the Target
Fund; and (v) any grant or imposition of any lien, claim,
charge or encumbrance (other than encumbrances arising in
the ordinary course of business with respect to covered
options) upon any asset of the Target Fund other than a lien
for taxes not yet due and payable. Since March 31, 2010,
there has not been any amendment of the Trust s
organizational documents in a manner materially affecting the
Target Fund.
(k) As of the date hereof and at the Closing Date, all
federal and other tax returns and reports of the Target Fund
required by law to be filed have or shall have been timely and
duly filed by such dates (including any extensions) and are or
will be correct in all material respects, and all federal and
other taxes required to be paid pursuant to such returns and
reports have been paid. To the best of the Target Fund s
knowledge after reasonable investigation, no such return is
currently under audit or examination, and no assessment or
deficiency has been asserted with respect to any such returns.
(l) The Trust has authorized shares of beneficial interest
allocated to the Target Fund consisting of an unlimited
number of shares having a par value of $0.01 per share, of
which it is authorized to issue an unlimited number of shares
of each of Class 2 and Class 3 for the Target Fund, as
applicable. All issued and outstanding shares of beneficial
interest of the Target Fund have been offered and sold in
compliance in all material respects with applicable registration
requirements of the Securities Act of 1933, as amended (the
1933 Act ) or an exemption therefrom and applicable state
securities laws and are, and on the Closing Date will be, duly
authorized and validly issued and outstanding, fully paid and
nonassessable, and are not subject to preemptive or dissenter s
rights (recognizing that, under Massachusetts law, Target
Fund shareholders, under certain circumstances, could be held
personally liable for the obligations of the Target Fund). All of
the issued and outstanding shares of the Target Fund will, at
the time of the Closing Date, be held by the persons and in the
amounts set forth in the records of the Target Fund s transfer
agent as provided in paragraph 3.4. The Target Fund has no
outstanding options, warrants or other rights to subscribe for
or purchase any of the Target Fund shares and has no
outstanding securities convertible into any Target Fund shares.
(m) At the Closing Date, the Trust, on behalf of the
Target Fund, will have good and marketable title to the Assets
to be transferred to the Acquiring Fund pursuant to paragraph
1.2, and full right, power and authority to sell, assign, transfer
and deliver such Assets hereunder, free of any lien or other
encumbrance, except those liens or encumbrances as to which
the Acquiring Fund has received notice and which have been
taken into account in the net asset valuation of the Target
Fund, and, upon delivery of the Assets and the filing of any
documents that may be required under Massachusetts state
law, the Acquiring Fund will acquire good and marketable
title to the Assets, subject to no restrictions on their full
transfer, other than such restrictions as might arise under the
1933 Act, and other than as disclosed to and accepted in
writing by the Acquiring Fund.
(n) Subject to the approval of this Agreement by the
Target Fund Shareholders, the Trust, on behalf of the Target
Fund, has the power to enter into this Agreement and to
consummate the transactions contemplated herein. Subject to
the approval of this Agreement by the Target Fund
Shareholders, the execution, delivery and performance of this
Agreement and consummation of the transactions
contemplated herein have been duly authorized by all
necessary action on the part of the Trustees of the Trust.
Subject to the approval of this Agreement by the Target Fund
Shareholders, this Agreement constitutes a valid and binding
obligation of the Trust and the Target Fund, enforceable in
accordance with its terms and no other corporate action or
proceedings by the Target Fund are necessary to authorize this
Agreement and the transactions contemplated herein, 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 Target Fund
for use in no-action letters, applications for orders, registration
statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated
herein shall be accurate and complete in all material respects
and shall comply in all material respects with federal securities
and other laws and regulations.
(p) The Target Fund is a separate series of the Trust that
is treated as a corporation separate from any and all other
series of the Trust under Section 851(g) of the Code. For each
taxable year of its operation (including the taxable year ending
on the Closing Date), the Target Fund has met (or for that year
will meet) the requirements of Subchapter M of Chapter 1 of
the Code for qualification and treatment as a regulated
investment company, has elected to be such, has been (or for
that year will be) eligible to compute and has computed (or for
that year will compute) its federal income tax under Section
852 of the Code, and on or before the Closing Date, will have
distributed or will have declared dividends intended to be
sufficient to distribute substantially all of (i) the excess of (x)
its investment income excludible from gross income under
Section 103 of the Code over (y) its deductions disallowed
under Sections 265 and 171 of the Code ( net tax-exempt
income ), (ii) its investment company taxable income (as
defined in the Code) (computed without regard to any
deduction for dividends paid) and (iii) any net capital gain (as
defined in the Code) (after reduction for any allowable capital
loss carryover) that has accrued or been recognized,
respectively, through the Closing Date such that for all tax
periods ending on or before the Closing Date (and treating the
current tax year as ending on the Closing Date) the Target
Fund will not have any tax liability under Section 852 or
Section 4982.
(q) Except for the N-14 Registration Statement and the
approval of this Agreement by the Target Fund Shareholders,
no consent, approval, authorization or order under any federal
or state law or of any court or governmental authority is
required for the consummation by the Trust, on behalf of the
Target Fund, of the transactions contemplated herein. No
consent of or notice to any third party or entity other than the
Target Fund Shareholders as described in paragraph 4.1(r) is
required for the consummation by the Trust, on behalf of the
Target Fund, of the transactions contemplated by this
Agreement.
(r) The Target Fund has called a special meeting of the
Target Fund Shareholders to consider and act upon this
Agreement (or transactions contemplated hereby) and to take
all other appropriate action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be
scheduled for no later than September 17, 2010 (or such other
date as the parties may agree to in writing).
4.2 REPRESENTATIONS OF THE TRUST AND THE
ACQUIRING FUND. The Trust, on behalf of the Acquiring
Fund, represents and warrants to the Target Fund, as follows:
(a) The Trust is a trust that is duly organized, validly
existing and in good standing under the laws of the
Commonwealth of Massachusetts. The Acquiring Fund has
been validly established as a separate series of the Trust. The
Trust is duly authorized to transact business in the
Commonwealth of Massachusetts and is qualified to do
business in all jurisdictions in which it is required to be so
qualified, except jurisdictions in which the failure to so qualify
would not have a material adverse effect on the Acquiring
Fund. The Trust, on behalf of the Acquiring Fund, has all
material federal, state and local authorizations necessary to
own all of its properties and assets and to carry on its business
as now being conducted, except authorizations which the
failure to so obtain would not have a material adverse effect
on the Acquiring Fund.
(b) The Trust is registered as an open-end management
investment company under the 1940 Act, and its registration
with the Commission as an investment company under the
1940 Act is in full force and effect. The Trust is in compliance
in all material respects with the 1940 Act and the rules and
regulations thereunder with respect to the Acquiring Fund.
(c) The N-14 Registration Statement as of its effective
date and at all times subsequent thereto up to and including the
Closing Date, conforms and will conform, as it relates to the
Trust and the Acquiring Fund, in all material respects to the
requirements of the federal and state securities laws and the
rules and regulations thereunder and does not and will not
include, as it relates to the Trust and the Acquiring Fund, any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that no representations
and warranties in this paragraph 4.2 apply to statements or
omissions made in reliance upon and in conformity with
written information concerning the Trust and the Target Fund
furnished to the Acquiring Fund by the Trust or the Target
Fund. From the effective date of the N-14 Registration
Statement through the time of the meeting of the Target Fund
Shareholders and on the Closing Date, any written information
furnished by the Trust with respect to itself and the Acquiring
Fund for use in the N-14 Registration Statement or any other
materials provided in connection with the Reorganization, as
of the effective date of the N-14 Registration Statement and at
all times subsequent thereto up to and including the Closing
Date, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not
misleading.
(d) The Acquiring Fund s current prospectus, statement
of additional information and shareholder reports, each to the
extent included or incorporated by reference in the N-14
Registration Statement, are accurate and complete in all
material respects and comply in all material respects with
federal securities and other laws and regulations, and do not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated or necessary to make the
statements, in light of the circumstances in which such
statements were made, not misleading.
(e) The Acquiring Fund is not in violation of, and the
execution, delivery and performance of this Agreement in
accordance with its terms by the Trust, on behalf of the
Acquiring Fund, will not result in the violation of
Massachusetts law or any provision of the Trust s declaration
of trust or by-laws or of any material agreement, indenture,
note, mortgage, instrument, contract, lease or other
undertaking to which the Trust (with respect to the Acquiring
Fund) or the Acquiring Fund is a party or by which it is
bound, nor will the execution, delivery and performance of
this Agreement by the Trust, on behalf of the Acquiring Fund,
result in the acceleration of any obligation, or the imposition
of any penalty, under any material agreement, indenture,
instrument, contract, lease or other undertaking to which the
Trust (with respect to the Acquiring Fund) or the Acquiring
Fund is a party or by which it is bound.
(f) No litigation, claims, actions, suits proceeding or
investigation of or before any court or governmental body is
pending or to the Trust s knowledge threatened against the
Acquiring Fund or any of its properties or its assets which, if
adversely determined, would materially and adversely affect
the Trust or the Acquiring Fund s financial condition, the
conduct of its business or which would prevent or hinder the
ability of the Acquiring Fund to carry out the transactions
contemplated by this Agreement. The Acquiring Fund knows
of no facts that 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 that materially and adversely affects its business or its
ability to consummate the transactions contemplated herein.
(g) The audited financial statements of the Acquiring
Fund as of March 31, 2010, the most recent fiscal year ended,
have been prepared in accordance with GAAP consistently
applied and have been audited by PricewaterhouseCoopers
LLP, and such statements (true and complete copies of which
have been furnished to the Target Fund) fairly reflect in all
material respects the financial condition and the results of
operations of the Acquiring Fund as of such date and the
results of operations and changes in net assets for the periods
indicated, and there are no material liabilities of the Acquiring
Fund whether actual or contingent and whether or not
determined or determinable as of such date that are required
by GAAP to be disclosed but are not disclosed in such
statements.
(h) There have been no changes in the financial position
of the Acquiring Fund as reflected in the audited financial
statements for the fiscal year ended March 31, 2010, other
than those occurring in the ordinary course of business
consistent with past practice in connection with the purchase
and sale of portfolio assets, the issuance and redemption of
Acquiring Fund shares and the payment of normal operating
expenses, dividends and capital gains distributions. Since the
date of the financial statements referred to in paragraph 4.2(g)
above, there has been no material adverse change in the
Acquiring Fund s financial condition, assets, liabilities or
business, results of operations or the manner of conducting
business of the Acquiring Fund, or any incurrence by the
Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as
otherwise disclosed to and accepted in writing by the Target
Fund. For the purposes of this paragraph 4.2(h), a decline in
the net asset value of the Acquiring Fund due to declines in
the value of Acquiring Fund s assets, the discharge of the
Acquiring Fund s liabilities or the redemption of Acquiring
Fund shares by Acquiring Fund shareholders shall not
constitute a material adverse change.
(i) As of the date hereof and at the Closing Date, all
federal and other tax returns and reports of the Acquiring Fund
required by law to be filed have or shall have been timely and
duly filed by such dates (including any extensions) and are or
will be correct in all material respects, and all federal and
other taxes required to be paid pursuant to such returns and
reports have been paid. To the best of the Acquiring Fund s
knowledge after reasonable investigation, no such return is
currently under audit or examination, and no assessment or
deficiency has been asserted with respect to any such returns.
(j) The Trust has authorized shares of beneficial interest
allocated to the Acquiring Fund consisting of an unlimited
number of shares having a par value of $0.01 per share, of
which it is authorized to issue an unlimited number of shares
of each of Class 1, Class 2 and Class 3 for the Acquiring Fund.
All issued and outstanding shares of beneficial interest of the
Acquiring Fund have been offered and sold in compliance in
all material respects with applicable registration requirements
of the 1933 Act or an exemption there from and applicable
state securities laws and are, and on the Closing Date will be,
duly authorized and validly issued and outstanding, fully paid
and nonassessable, and are not subject to preemptive or
dissenter s rights. The Acquiring Fund has no outstanding
options, warrants or other rights to subscribe for or purchase
any of the Acquiring Fund s shares and has no outstanding
securities convertible into any of the Acquiring Fund s shares.
(k) The Trust, on behalf of the Acquiring Fund, has the
power to enter into this Agreement and to consummate the
transactions contemplated herein. The execution, delivery and
performance of this Agreement and consummation of the
transactions contemplated herein have been duly authorized by
all necessary action on the part of the Trustees of the Trust.
This Agreement constitutes a valid and binding obligation of
the Trust and the Acquiring Fund, enforceable in accordance
with its terms and no other corporate action or proceedings by
the Acquiring Fund are necessary to authorize this Agreement
and the transactions contemplated herein, subject as to
enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors
rights and to general equity principles.
(l) The Acquiring Fund Shares to be issued and
delivered to the Target Fund for the account of the Target
Fund Shareholders pursuant to the terms of this Agreement
will, at the Closing Date, have been duly authorized. When so
issued and delivered, the Acquiring Fund Shares will be duly
and validly issued and will be fully paid and nonassessable.
(m) The information to be furnished by the Acquiring
Fund for use in no-action letters, applications for orders,
registration statements, proxy materials and other documents
that may be necessary in connection with the transactions
contemplated herein shall be accurate and complete in all
material respects and shall comply in all material respects with
federal securities and other laws and regulations.
(n) The Acquiring Fund is a separate series of the Trust
that is treated as a corporation separate from any and all other
series of the Trust under Section 851(g) of the Code. For each
taxable year of its operation (including the taxable year that
includes the Closing Date), the Acquiring Fund has met (or for
that year will meet) the requirements of Subchapter M of
Chapter 1 of the Code for qualification and treatment as a
regulated investment company, has elected to be treated as
such, and has been (or for that year will be) eligible to
compute and has computed (or for that year will compute) its
federal income tax under Section 852 of the Code, and will
have distributed (or for that year will distribute pursuant to the
provisions of Section 855 of the Code) substantially all of (i)
its net tax-exempt income, (ii) its investment company taxable
income (as defined in the Code) (computed without regard to
any deduction for dividends paid) and (iii) any net capital gain
(as defined in the Code) (after reduction for any allowable
capital loss carryover) for taxable years ending with or prior to
the Closing Date such that for all those years the Acquiring
Fund will have no tax liability under Section 852 or Section
4982.
(o) Except for the N-14 Registration Statement, no
consent, approval, authorization or order under any federal or
state law or of any court or governmental authority is required
for the consummation by the Trust, on behalf of the Fund, of
the transactions contemplated herein. No consent of or notice
to any third party or entity other than the shareholders of the
Target Fund as described in paragraph 4.1(r) is required for
the consummation by the Trust, on behalf of the Acquiring
Fund, of the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE TRUST, THE ACQUIRING FUND
AND THE TARGET FUND
5.1 OPERATION IN ORDINARY COURSE. Subject to
paragraph 7.3, each of the Acquiring Fund and the Target
Fund will operate its business in the ordinary course of
business between the date of this Agreement and the Closing
Date, it being understood that such ordinary course of business
will include customary dividends and shareholder purchases
and redemptions. No party shall take any action that would, or
would reasonably be expected to, result in any of its
representations and warranties set forth in this Agreement
being or becoming untrue in any material respect.
5.2 STATEMENT OF ASSETS AND LIABILITIES.
The Target Fund will prepare and deliver to the Acquiring
Fund on the second business day prior to the Closing Date a
statement of the assets and liabilities of the Target Fund as of
such date for review and agreement by the parties to determine
that the Assets and Assumed Liabilities of the Target Fund are
being correctly determined in accordance with the terms of
this Agreement. The Target Fund will deliver at the Closing
(1) an updated statement of Assets and Assumed Liabilities of
the Target Fund and (2) a list of the Target Fund s portfolio
showing the tax costs of each of its Assets by lot and the
holding periods of such Assets, each of (1) and (2) as of the
Closing Date, and certified by the Treasurer of the Trust.
5.3 ACCESS TO BOOKS AND RECORDS. Upon
reasonable notice, the Target Fund shall make available to the
Trust s officers and agents, on behalf of the Acquiring Fund,
all books and records of the Target Fund.
5.4 ADDITIONAL INFORMATION. The Trust and the
Target Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Target Fund s
shares.
5.5 CONTRACT TERMINATION. The Trust, on behalf
of the Target Fund, will terminate all agreements to which it is
a party, on behalf of the Target Fund (other than this
Agreement), effective as of the Closing Date without any
liability not paid prior to the Closing Date other than as
accrued as part of the Assumed Liabilities.
5.6 FURTHER ACTION. Subject to the provisions of
this Agreement, the Trust, on behalf of the Acquiring Fund,
and the Trust, on behalf of the Target Fund, will 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, including any actions required to be taken after
the Closing Date. In particular, the Trust, on behalf of the
Target Fund, covenants that it will, as and when reasonably
requested by the Acquiring Fund, 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 the Acquiring Fund may reasonably deem necessary
or desirable in order to vest in and confirm the Acquiring
Fund s title to and possession of all the Assets and otherwise
to carry out the intent and purpose of this Agreement.
5.7 STATEMENT OF EARNINGS AND PROFITS. As
promptly as practicable, but in any case within thirty (30) days
after the Closing Date, the Trust shall furnish to the Acquiring
Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the
Target Fund for federal income tax purposes, as well as any
capital loss carryovers and items that the Acquiring Fund will
succeed to and take into account as a result of Section 381 of
the Code, and which will be certified by the Treasurer of the
Trust.
5.8 UNAUDITED FINANCIAL STATEMENTS. The
Trust shall furnish to the Acquiring Fund within five
(5) business days after the Closing Date, an unaudited
statement of the Target Fund s assets and liabilities, portfolio
of investments and the related statements of operations and
changes in net assets as of and for the interim period ending
on the Closing Date; such financial statements will represent
fairly the financial position of the Target Fund as of the date
thereof and the portfolio of investments, the results of
operations and changes in net assets indicated in conformity
with generally accepted accounting principles applied on a
consistent basis and such financial statements shall be certified
by the Treasurer of the Trust as complying with the
requirements hereof.
5.9 PREPARATION OF N-14 REGISTRATION
STATEMENT. The Trust, on behalf of the Acquiring Fund,
will prepare and file with the Commission the N-14
Registration Statement relating to the Acquiring Fund Shares
to be issued to the Target Fund Shareholders, if necessary. The
N-14 Registration Statement shall include a notice to Target
Fund Shareholders, a Combined Prospectus/Proxy Statement
and other materials relating to the transactions contemplated
by this Agreement. At the time the N-14 Registration
Statement becomes effective, at the time of the Target Fund
Shareholders meeting and at the Closing Date, the N-14
Registration Statement shall be in compliance in all material
respects with the 1933 Act, the Securities Exchange Act of
1934, as amended (the 1934 Act ) and the 1940 Act, as
applicable. Each party will provide the materials and
information necessary to prepare the N-14 Registration
Statement, for inclusion therein, in connection with the
meeting of the Target Fund Shareholders to consider the
approval of this Agreement and the transactions contemplated
herein, including in the case of the Target Fund any special
interim financial information necessary for inclusion therein.
If at any time prior to the Closing Date a party becomes aware
of any untrue statement of material fact or omission to state a
material fact required to be stated therein or necessary to make
the statements made not misleading in light of the
circumstances under which they were made, the party
discovering the item shall notify the other parties and the
parties shall cooperate in promptly preparing, filing and
clearing the Commission and, if appropriate, distributing to
the Target Fund Shareholders appropriate disclosure with
respect to the item.
5.10 TAX STATUS OF REORGANIZATION. The
intention of the parties is that the transaction contemplated by
this Agreement will qualify as a reorganization within the
meaning of Section 368(a) of the Code. Xxxxxxx Xxxx &
Xxxxxxxxx LLP, counsel to each of the Trust and the Funds,
will render an opinion on these matters. None of the Trust, the
Acquiring Fund nor the Target Fund shall take any action or
cause any action to be taken (including, without limitation, the
filing of any tax return) that is inconsistent with such
treatment or results in the failure of the transaction to qualify
as a reorganization within the meaning of Section 368(a) of
the Code. At or prior to the Closing Date, the Trust, the
Acquiring Fund and the Target Fund will take such action, or
cause such action to be taken, as is reasonably necessary to
enable Xxxxxxx Xxxx & Xxxxxxxxx LLP, counsel to the Trust, to
render the tax opinion required herein (including, without
limitation, each party s execution of representations
reasonably requested by and addressed to Xxxxxxx Xxxx &
Xxxxxxxxx LLP).
5.11 REASONABLE BEST EFFORTS. Each of the
Trust, the Acquiring Fund and the Target Fund shall use its
reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to effect the transactions contemplated
by this Agreement.
5.12 AUTHORIZATIONS. The Trust, on behalf of the
Acquiring Fund, agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the
1940 Act and any state blue sky or securities laws as it may
deem appropriate in order to operate in the normal course of
business after the Closing Date.
5.13 DISTRIBUTION. The Trust, on behalf of the
Target Fund, covenants that the 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.
5.14 PROXY. The Trust, on behalf of the Target Fund,
agrees to mail to its respective shareholders of record entitled
to vote at the special meeting of shareholders at which action
is to be considered regarding this Agreement, in sufficient
time to comply with requirements as to notice thereof, a
combined Proxy Statement and Prospectus which complies in
all material respects with the applicable provisions of Section
14(a) of the 1934 Act and Section 20(a) of the 1940 Act, and
the rules and regulations, respectively, thereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
TRUST AND THE TARGET FUND
The obligations of the Target Fund to consummate the
transactions provided for herein shall be subject, at its
election, to the performance by the Trust, on behalf of the
Acquiring Fund, of all the obligations to be performed by the
Trust, on behalf of the Acquiring Fund, pursuant to this
Agreement on or before the Closing Date and, in addition,
subject to the following conditions:
6.1 All representations, covenants and warranties of the
Trust, 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 as of the Closing Date, with the same
force and effect as if made on and as of the Closing Date. The
Trust shall have delivered to the Target Fund a certificate
executed by the Trust s President or a Vice President and its
Treasurer or Secretary, in form and substance satisfactory to
the Target Fund and dated as of the Closing Date, to such
effect and as to such other matters with respect to the
Acquiring Fund as the Target Fund shall reasonably request.
The Target Fund shall have received certified copies of the
resolutions adopted by the Board of Trustees, with respect to
the Acquiring Fund, approving this Agreement and the
transactions contemplated herein.
6.2 The Trust shall have received on the Closing Date an
opinion of Xxxxxxx XxXxxxxxx LLP, as special
Massachusetts counsel, dated as of the Closing Date, in a form
reasonably satisfactory to the Trust and the Target Fund,
covering the following points with such assumptions,
exceptions and limitations as are customary in opinions of this
sort:
(a) The Trust is existing as a voluntary association with
transferable shares of beneficial interest commonly referred to
as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts.
(b) The Trust, on behalf of the Acquiring Fund, has the
power and authority as a business trust to execute, deliver and
perform all of the obligations under the Agreement of the
Trust, on behalf of the Acquiring Fund, under the applicable
laws of the Commonwealth of Massachusetts. The execution
and delivery of the Agreement and the consummation by the
Trust, on behalf of the Acquiring Fund, of the transactions
contemplated thereby have been duly authorized by all
requisite action on the part of the Trust, on behalf of the
Acquiring Fund, under the applicable laws of the
Commonwealth of Massachusetts.
(c) The Agreement has been duly executed and
delivered by the Trust, on behalf of the Acquiring Fund, under
the applicable laws of the Commonwealth of Massachusetts
governing Massachusetts business trusts and constitutes the
valid and binding obligation of the Trust, on behalf of the
Acquiring Fund, enforceable against the Acquiring Fund in
accordance with its terms under the applicable laws of the
Commonwealth of Massachusetts.
(d) The execution and delivery by the Trust, on behalf of
the Acquiring Fund, of the Agreement and the performance of
its obligations under the Agreement in accordance with its
terms do not violate any material provision of the declaration
of trust or the by-laws of the Trust.
(e) Neither the execution, delivery nor performance by
the Trust, on behalf of the Acquiring Fund, of the Agreement
nor the compliance by the Trust, on behalf of the Acquiring
Fund, with the terms and provisions thereof will violate any
provision of any law of the Commonwealth of Massachusetts
applicable to business trusts.
6.3 The Trust shall have received on the Closing Date an
opinion of Xxxxxxx Xxxx & Xxxxxxxxx LLP, dated as of the
Closing Date, in a form reasonably satisfactory to the Trust
and the Target Fund, covering the following points with such
assumptions, exceptions and limitations as are customary in
opinions of this sort:
(a) The Trust is registered as an open-end management
investment company under the 0000 Xxx.
(b) Neither the execution, delivery nor performance by
the Trust of the Agreement nor the compliance by the
Acquiring Fund with the terms and provisions thereof will
contravene any provision of applicable federal securities law
of the United States of America.
(c) To the best of our knowledge, no governmental
approval, which has not been obtained and is not in full force
and effect, is required to authorize, or is required in
connection with, the execution or delivery of the Agreement
by the Trust, on behalf of the Acquiring Fund, or the
enforceability of the Agreement against the Trust and the
Acquiring Fund.
In giving their opinion, Xxxxxxx Xxxx & Xxxxxxxxx LLP
may state that they are relying on the opinion of Xxxxxxx
XxXxxxxxx LLP as to matters of Massachusetts law.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
TRUST AND THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate
the transactions provided for herein shall be subject, at its
election, to the performance by the Trust, on behalf of the
Target Fund, of all the obligations to be performed by the
Trust, on behalf of the Target Fund, pursuant to this
Agreement on or before the Closing Date and, in addition,
shall be subject to the following conditions:
7.1 All representations, covenants and warranties of the
Trust, on behalf of the Target Fund, contained in this
Agreement shall be true and correct in all material respects as
of the date hereof and as of the Closing Date, with the same
force and effect as if made on and as of the Closing Date. The
Trust shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed by the Trust s President or
a Vice President and the Treasurer or Secretary, in form and
substance satisfactory to the Acquiring Fund and dated as of
the Closing Date, to such effect and as to such other matters
with respect to the Target Fund as the Acquiring Fund shall
reasonably request. The Acquiring Fund shall have received
certified copies of the resolutions adopted by the Board of
Trustees, with respect to the Target Fund, approving this
Agreement and the transactions contemplated herein.
7.2 The Target Fund shall have delivered to the
Acquiring Fund (1) a statement as of the Closing Date of the
Target Fund s Assets and Assumed Liabilities, in accordance
with paragraph 5.2, and (2) a list of the Target Fund s
portfolio showing the tax costs of each of its assets by lot and
the holding periods of such assets, as of the Closing Date,
certified by the Treasurer of the Trust.
7.3 Except to the extent prohibited by Rule 19b-1 under
the 1940 Act, prior to the valuation of the Assets on the
Closing Date, the Target Fund shall have declared a dividend
or dividends, with a record and ex-dividend date prior to the
valuation of the Assets, which, together with all previous
dividends, shall have the effect of distributing to the Target
Fund Shareholders all of its investment company taxable
income for all taxable periods ending on or before the Closing
Date (computed without regard to any deduction for dividends
paid), if any, and all of its net capital gains realized in all
taxable periods ending on or before the Closing Date (after
reduction for any capital loss carry forward).
7.4 The Trust shall have received on the Closing Date an
opinion of Xxxxxxx XxXxxxxxx LLP, as special
Massachusetts counsel, dated as of the Closing Date, in a form
reasonably satisfactory to the Trust and the Acquiring Fund,
covering the following points with such assumptions,
exceptions and limitations as are customary in opinions of this
sort:
(a) The Trust is existing as a voluntary association with
transferable shares of beneficial interest commonly referred to
as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts.
(b) The Agreement has been duly authorized, executed
and delivered by the Trust, on behalf of the Target Fund,
under the applicable laws of the Commonwealth of
Massachusetts governing Massachusetts business trusts and
constitutes the valid and binding obligation of the Trust, on
behalf of the Target Fund, enforceable against the Target Fund
in accordance with its terms under the applicable laws of the
Commonwealth of Massachusetts.
(c) The execution and delivery by the Trust, on behalf of
the Target Fund, of the Agreement and the performance of the
obligations under the Agreement in accordance with its terms
do not violate any material provision of the declaration of trust
or the by-laws of the Trust.
(d) Neither the execution, delivery nor performance by
the Trust, on behalf of the Target Fund, of the Agreement will
violate any provision of any law of the Commonwealth of
Massachusetts applicable to business trusts (other than
Massachusetts securities laws).
7.5 The Trust shall have received on the Closing Date an
opinion of Xxxxxxx Xxxx & Xxxxxxxxx LLP, dated as of the
Closing Date, in a form reasonably satisfactory to the Trust
and the Acquiring Fund, covering the following points with
such assumptions, exceptions and limitations as are customary
in opinions of this sort:
(a) The Trust is registered as an open-end management
investment company under the 0000 Xxx.
(b) Neither the execution, delivery nor performance by
the Trust of the Agreement nor the compliance by the Target
Fund with the terms and provisions thereof will contravene
any provision of applicable federal securities law of the United
States of America.
(c) To the best of our knowledge, no governmental
approval, which has not been obtained and is not in full force
and effect, is required to authorize, or is required in
connection with, the execution or delivery of the Agreement
by the Trust, on behalf of the Target Fund, or the
enforceability of the Agreement against the Trust and the
Target Fund.
In giving their opinion, Xxxxxxx Xxxx & Xxxxxxxxx LLP
may state that they are relying on the opinion of Xxxxxxx
XxXxxxxxx LLP as to matters of Massachusetts law.
7.6 As of the Closing Date, there shall have been no
material change in the investment objective, policies and
restrictions nor any material increase in the investment
management fees, fee levels payable pursuant to any 12b-1
plan or distribution or shareholder servicing plan or
agreement, other fees payable for services provided to the
Target Fund, or sales loads of the Target Fund nor any
material reduction in the fee waiver or expense reduction
undertakings from those described in the N-14 Registration
Statement.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO
OBLIGATIONS OF EACH OF THE TRUST, THE
ACQUIRING FUND AND THE TARGET FUND
If any of the conditions set forth below shall not have
been satisfied on or before the Closing Date or shall not
remain satisfied with respect to the Trust, the Acquiring Fund
or the Target Fund, as applicable, shall, at its option, not be
required to consummate the transactions contemplated by this
Agreement; if any of the conditions set forth below shall not
have been satisfied on or before the Closing Date or shall not
remain satisfied with respect to the Target Fund, the Acquiring
Fund shall, at its option, not be required to consummate the
transactions contemplated by this Agreement with respect to
the Target Fund:
8.1 This Agreement and the transactions contemplated
herein, with respect to the Target Fund, shall have been
approved by the requisite vote of the holders of the
outstanding shares of the Target Fund in accordance with the
provisions of the Trust s declaration of trust and by-laws,
applicable Massachusetts law and the 1940 Act. Evidence of
such approval shall have been delivered to the Acquiring
Fund, in such form as shall be reasonably acceptable to the
Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Trust, the Acquiring Fund nor the Target
Fund may waive the condition set forth in this paragraph 8.1.
8.2 The Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or
instituted any proceeding seeking to enjoin the consummation
of the transactions contemplated by this Agreement under
Section 25(c) of the 0000 Xxx.
8.3 All third party consents and all consents, orders and
permits of federal, state and local regulatory authorities
(including those of the Commission and of state securities
authorities, including any necessary no-action positions and
exemptive orders from such federal authorities) in each case
required to permit consummation of the transactions
contemplated herein shall have been obtained, except where
failure to obtain any such consent, order or permit would not
reasonably be expected to have a material adverse effect on
the assets or properties of the Acquiring Fund or the Target
Fund, provided that any party hereto may waive any such
conditions for itself.
8.4 The N-14 Registration Statement shall have become
effective under the 1933 Act, and no stop orders suspending
the effectiveness thereof shall have been issued. To the best
knowledge of the parties to this Agreement, no investigation
or proceeding for that purpose shall have been instituted or is
pending, threatened or contemplated under the 1933 Act. The
registration statement of the Trust, with respect to the
Acquiring Fund, on Form N-1A under the 1940 Act covering
the sale of shares of the Acquiring Fund shall be effective and
no stop orders suspending the effectiveness thereof shall have
been issued.
8.5 As of the Closing Date, there shall be no pending
litigation brought by any person against the Trust, the
Acquiring Fund or the Target Fund, or the Adviser, Trustees
or officers of the foregoing, arising out of, or seeking to
prevent completion of the transactions contemplated by, this
Agreement. Furthermore, no action, suit or other proceeding
shall be pending before any court or governmental agency in
which it is sought to restrain or prohibit, or obtain damages or
other relief in connection with, this Agreement or the
transactions contemplated herein.
8.6 The Trust shall have received an opinion of Xxxxxxx
Xxxx & Xxxxxxxxx LLP, counsel to the Trust, substantially to
the effect that, based on certain facts, assumptions and
representations of the parties, and upon certain certifications
made by the Trust, on behalf of the Target Fund, by the Trust,
on behalf of the Acquiring Fund, and their respective
authorized officers, for U.S. federal income tax purposes:
(a) the transfer to the Acquiring Fund of all of the Assets
solely in exchange for Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Assumed Liabilities
of the Target Fund followed by the distribution by the Target
Fund of Acquiring Fund Shares to the Target Fund
Shareholders in complete liquidation of the Target Fund, all
pursuant to this Agreement, will constitute a reorganization
within the meaning of Section 368(a) of the Code, and the
Acquiring Fund and the Target Fund will each be a party to a
reorganization within the meaning of Section 368(b) of the
Code;
(b) under Section 1032 of the Code, no gain or loss will
be recognized by the Acquiring Fund upon the receipt of all of
the Assets solely in exchange for Acquiring Fund Shares and
the assumption by the Acquiring Fund of the Assumed
Liabilities of the Target Fund;
(c) under Sections 361 and 357(a) of the Code, no gain
or loss will be recognized by the Target Fund upon the transfer
of the Assets to the Acquiring Fund solely in exchange for
Acquiring Fund Shares and the assumption by the Acquiring
Fund of the Assumed Liabilities or upon the distribution of
Acquiring Fund Shares to the Target Fund Shareholders in
exchange for such shareholders shares of the Target Fund in
liquidation of the Target Fund except for (A) any gain or loss
that may be recognized on Section 1256 contracts as defined
in Section 1256(b) of the Code as a result of the closing of the
tax year of the Target Fund, (B) any gain that may be
recognized on the transfer of stock in a passive foreign
investment company as defined in Section 1297(a) of the
Code, and (C) any other gain or loss that may be required to
be recognized as a result of the closing of the tax year of the
Target Fund;
(d) under Section 354 of the Code, no gain or loss will
be recognized by the Target Fund Shareholders on the receipt
of Acquiring Fund Shares solely in exchange for their Target
Fund shares;
(e) under Section 358 of the Code, the aggregate basis of
Acquiring Fund Shares received by each Target Fund
Shareholder pursuant to the Reorganization will be the same
as the aggregate basis of the Target Fund shares exchanged
therefor by such shareholder;
(f) under Section 1223(1) of the Code, the holding
period of Acquiring Fund Shares to be received by each
Target Fund Shareholder pursuant to the Reorganization will
include the holding period of the Target Fund shares
exchanged therefor, provided that the Target Fund
Shareholder held the Target Fund shares as capital assets at
the time of the Reorganization;
(g) under Section 362(b) of the Code, the basis of each
Asset transferred to the Acquiring Fund in the Reorganization
will be the same in the hands of the Acquiring Fund as the
basis of such Asset in the hands of the Target Fund
immediately prior to the transfer increased by the amount of
gain (or decreased by the amount of loss), if any, recognized
by the Target Fund on the termination of the Target Fund s
taxable year or upon the transfer to the Acquiring Fund; and
(h) under Section 1223(2) of the Code, the holding
period of each of the Assets in the hands of the Acquiring
Fund will include the holding period of each such Asset when
held by the Target Fund except for any assets which may be
marked to market for federal income tax purposes on the
termination of the Target Fund s taxable year on which gain
was recognized upon the transfer to the Acquiring Fund.
Such opinion shall be based on customary assumptions
and such representations as Xxxxxxx Xxxx & Xxxxxxxxx LLP
may reasonably request, and the Trust, on behalf of the
Acquiring Fund, and the Trust, on behalf of the Target Fund,
will cooperate to make and certify the accuracy of such
representations. Notwithstanding anything herein to the
contrary, neither the Trust, on behalf of the Acquiring Fund
nor the Trust, on behalf of the Target Fund, may waive the
condition set forth in this paragraph 8.6.
ARTICLE IX
EXPENSES
Except as otherwise expressly provided in this
Agreement, the Adviser or its affiliates shall bear the direct
and indirect expenses incurred by the Trust, the Acquiring
Fund and the Target Fund, each in connection with the
transactions contemplated by the provisions of this
Agreement, including all direct and indirect expenses and out-
of-pocket costs but not any transaction costs incurred pursuant
to paragraph 1.2 hereof or any transaction costs incurred in
connection with the sale of any of the Target Fund s portfolio
securities after the Closing Date. 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 or
would prevent the Reorganization from qualifying as a tax-
free reorganization.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 No party has made to the other party any
representation, warranty and/or covenant not set forth herein
in connection with the subject matters covered hereby and this
Agreement constitutes the entire agreement between the
parties with respect thereto.
10.2 The representations and warranties of the parties
hereto set forth in this Agreement shall not survive the
consummation of the transactions contemplated herein.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual
agreement of the Trust, on behalf of the Acquiring Fund and
the Trust, on behalf of the Target Fund. In addition, the Trust,
on behalf of the Acquiring Fund, or the Trust, on behalf of the
Target Fund, may at its option terminate this Agreement at or
before the Closing Date due to:
(a) a material breach of any representation, warranty or
agreement contained herein to be performed at or before the
Closing Date, if not cured within 30 days; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party or both parties that has not
been met if it reasonably appears that it will not or cannot be
met.
11.2 In the event of any such termination, in the absence
of willful default, there shall be no liability for damages on the
part of the Trust or the Board of Trustees, or officers, to any
other party. In the event of willful default, all remedies at law
or in equity of the party adversely affected shall survive.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified or
supplemented in such manner as may be agreed upon in
writing by the officers of the Trust as specifically authorized
by the Board of Trustees; provided, however, that, following
the meeting of the Target Fund Shareholders called by the
Trust, on behalf of the Target Fund, pursuant to paragraph
4.1(r) of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number
of Acquiring Fund Shares to be issued to the Target Fund
Shareholders under this Agreement to the detriment of the
Target Fund Shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW;
ASSIGNMENT; LIMITATION OF LIABILITY
13.1 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.
13.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
13.3 This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth
of Massachusetts.
13.4 This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and
assigns, but, except as provided in this paragraph, 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.
13.5 A copy of the Declaration of Trust of the Trust is
on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that no trustee,
officer, agent or employee of the Trust shall have any personal
liability under this Agreement, and that insofar as it relates to
the Target Fund, this Agreement is binding only upon the
assets and properties of such fund.
ARTICLE XIV
NOTICES
Any notice, report, statement or demand required or
permitted by any provisions of this Agreement shall be in
writing and shall be deemed duly given if delivered by hand
(including by FedEx or similar express courier) or transmitted
by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed
to the Acquiring Fund or the Target Fund, Harborside
Financial Center, 0000 Xxxxx 0, Xxxxxx Xxxx, Xxx Xxxxxx
00000, Attention: Xxxx Xxxxx, President, or to any other
address that the Acquiring Fund or the Target Fund shall have
last designated by notice to the other party.
IN WITNESS WHEREOF, the parties have duly
executed this Agreement, all as of the date first written above.
SEASONS SERIES TRUST, on behalf of its series,
FOCUS GROWTH AND INCOME PORTFOLIO
By: //s// XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Vice President and Secretary
SEASONS SERIES TRUST, on behalf of its series,
FOCUS GROWTH PORTFOLIO
By: //s// XXXX XXXXXXX
Name: Xxxx Xxxxxxx
Title: Assistant Secretary
