EXHIBIT 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
February 15, 2002, between Hartford Bond HLS Fund, Inc., a Maryland corporation
("Acquiring Fund") and Fortis Series Fund, Inc., a Minnesota corporation
("Fortis"), on behalf of its series Fortis Diversified Income Series ("Target
Fund"). (Acquiring Fund and Target Fund are sometimes referred to herein
individually as a "Fund" and collectively as the "Funds.") All agreements,
representations and warranties, actions, and obligations described herein made
or to be taken or undertaken by Target Fund are made and shall be taken or
undertaken by Fortis on behalf of Target Fund.
The parties intend this Agreement to be, and adopt it as, a "plan of
reorganization" within the meaning of the regulations under section 368 of the
Code ("Regulations"). Target Fund has a single class of shares and Acquiring
Fund has two classes of shares, Class IA shares and Class IB shares. The
reorganization will involve the transfer of the assets of Target Fund, subject
to the liabilities of Target Fund, to Acquiring Fund, in exchange solely for
Class IA shares of common stock of Acquiring Fund ("Acquiring Fund Shares"),
followed by the constructive distribution of those shares pro rata to the
holders of shares of Target Fund ("Target Fund Shares"), all on the terms and
conditions set forth herein. (All such transactions are referred to herein as
the "Reorganization.")
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. PLAN OF REORGANIZATION
1.1. Subject to the requisite approval by Target Fund shareholders and
to the other terms and conditions set forth herein and on the basis of the
representations and warranties contained herein, Target Fund agrees to assign,
sell, convey, transfer, and deliver all of its assets described in paragraph 1.2
("Assets") to Acquiring Fund and Acquiring Fund agrees in exchange therefor (a)
to assume all of the liabilities of Target Fund described in paragraph 1.3
("Liabilities"), and (b) to issue and deliver to Target Fund the number of full
and fractional (rounded to the third decimal place) Acquiring Fund Shares
determined by dividing the value of the Assets of the Target Fund less the
Liabilities of the Target Fund by the net asset value ("NAV") of an Acquiring
Fund Share (both computed as set forth in paragraph 2.1). Such transactions
shall take place at the Closing (as defined in paragraph 3.1).
1.2. The Assets shall include all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), claims and rights of
action, rights to register shares under applicable securities laws, books and
records, deferred and prepaid expenses shown as assets on Target Fund's books,
and other property owned by Target Fund at the Effective Time (as defined in
paragraph 3.1).
1.3. The Liabilities shall include all liabilities, debts, obligations,
and duties of whatever kind or nature of the Target Fund at the Effective Time,
whether absolute, accrued, contingent, or otherwise, whether or not arising in
the ordinary course of business, and whether or not specifically referred to in
this Agreement, including any obligation to indemnify the directors of Fortis,
acting in their capacities as such, to the fullest extent permitted by law and
the amended and restated articles of incorporation ("Articles of Incorporation")
and bylaws of Fortis (collectively "Liabilities").
1.4. In order to bind all holders of Target Fund shares to the
transactions contemplated hereby, and in particular in order to bind them to the
cancellation and retirement of the outstanding Target Fund shares held by them,
Fortis shall, prior to the Effective Time, (a) obtain approval pursuant to
Minnesota law of an amendment substantially in the form attached hereto as
Schedule A (the "Amendment") to its Articles of Incorporation, and (b) file the
Amendment with the Secretary of State of Minnesota.
1.5. At or immediately before the Effective Time, Target Fund shall
declare and pay to its shareholders a dividend and/or other distribution in an
amount large enough so that it will have distributed all of its investment
company taxable income (as defined in section 852(b)(2) of the Code but computed
without regard to any deduction for dividends paid) and substantially all of its
net capital gain (as defined in section 852(b)(3) of the Code, but computed
without regard to any deduction for capital gain dividends) for the current
taxable year through the Effective Time.
1.6. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target Fund shall distribute the Acquiring Fund Shares it receives
pursuant to paragraph 1.1 to Target Fund's shareholders of record, determined as
of the Effective Time (each, a "Shareholder"), in constructive exchange for
their Target Fund Shares. Such distribution shall be accomplished by Acquiring
Fund's transfer agent's opening accounts on Acquiring Fund's share transfer
books in the Shareholders' names and transferring such Acquiring Fund Shares
thereto. Each Shareholder's account shall be credited with the respective pro
rata number of full and fractional (rounded to the third decimal place)
Acquiring Fund Shares due that Shareholder. All outstanding Target Fund Shares,
including any represented by certificates, shall simultaneously be canceled on
Target Fund's share transfer books. Acquiring Fund shall not issue certificates
representing the Acquiring Fund Shares issued in connection with the
Reorganization.
1.7. As soon as reasonably practicable after distribution of the
Acquiring Fund Shares pursuant to paragraph 1.6, Fortis shall wind up the
affairs of Target Fund and shall file any required final regulatory reports,
including but not limited to any Form N-SAR and Rule 24f-2 filings with respect
to Target Fund.
1.8. Any transfer taxes payable on issuance of Acquiring Fund Shares in
a name other than that of the registered holder on Target Fund's books of the
Target Fund Shares constructively exchanged therefor shall be paid by the person
to whom such Acquiring Fund Shares are to be issued, as a condition of such
transfer.
2. VALUATION
2.1. For purposes of paragraph 1.1(b), the value of the Assets and the
Liabilities and the NAV of an Acquiring Fund Share shall be computed as of the
close of business on the date of the
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Closing ("Valuation Time"). The NAV of an Acquiring Fund Share shall be computed
using the valuation procedures set forth in the Acquiring Fund's then current
prospectus and statement of additional information ("SAI"). The value of the
Assets and Liabilities shall be computed using the valuation procedures set
forth in the Target Fund's then current prospectus and SAI, subject to
adjustment by the amount, if any, agreed to by Acquiring Fund and Fortis.
Acquiring Fund and Fortis agree to use all commercially reasonable efforts to
resolve any material differences between the value of the Assets and Liabilities
determined in accordance with the valuation procedures of the Target Fund and
the value of the Assets and Liabilities determined in accordance with the
valuation procedures of the Acquiring Fund prior to the Valuation Time.
2.2. All computations pursuant to paragraph 2.1 shall be made by or
under the direction of Hartford Administrative Services Company.
3. CLOSING AND EFFECTIVE TIME
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the offices of Xxxxxx & Xxxxxxx
LLP, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, on or about April 30,
2002, or at such other place and/or on such other date as to which the parties
hereto may agree. All acts taking place at the Closing shall be deemed to take
place simultaneously as of the close of business on the date thereof or at such
other time as to which the parties hereto may agree ("Effective Time"). If,
immediately before the Valuation Time, (a) the New York Stock Exchange is closed
to trading or trading thereon is restricted or (b) trading or the reporting of
trading on that exchange or elsewhere is disrupted, so that accurate appraisal
of the value of the Assets and Liabilities and the NAV of an Acquiring Fund
Share is impracticable, the Effective Time shall be postponed until the first
business day after the day when such trading has fully resumed and such
reporting has been restored.
3.2. Fortis shall deliver to Acquiring Fund at the Closing a schedule
of the Assets and Liabilities as of the Effective Time, which shall set forth
for all portfolio securities included therein and all other Assets, their
adjusted basis and holding period, by lot, for federal income tax purposes.
Fortis' custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
Acquiring Fund at the Effective Time and (b) all necessary taxes in conjunction
with the delivery of the Assets, including all applicable federal and state
stock transfer stamps, if any, have been paid or provision for payment has been
made.
3.3. Fortis' transfer agent shall deliver to Acquiring Fund at the
Closing a statement of an authorized officer thereof certifying that its records
contain the names and addresses of the Shareholders and the number and
percentage ownership of outstanding Target Fund Shares owned by each
Shareholder, all as of the Effective Time. Acquiring Fund's transfer agent shall
deliver at the Closing a certificate as to the opening on Acquiring Fund's share
transfer books of accounts in the Shareholders' names. Acquiring Fund shall
issue and deliver a confirmation to Fortis evidencing the Acquiring Fund Shares
to be credited to Target Fund at the Effective Time or provide evidence
satisfactory to Fortis that such Acquiring Fund Shares have been credited to
Target Fund's account on Acquiring Fund's books. At the Closing, Acquiring Fund
and Fortis each shall deliver to the other bills of sale, checks, assignments,
stock certificates, receipts, or other documents the other party or its counsel
reasonably requests.
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3.4. Acquiring Fund and Fortis each shall deliver to the other at the
Closing a certificate executed in its name by its President or a Vice President
in form and substance satisfactory to the recipient and dated the Effective
Time, to the effect that the representations and warranties it made in this
Agreement are true and correct at the Effective Time except as they may be
affected by the transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1. Fortis represents and warrants as follows:
4.1.1. Fortis is a corporation that is duly organized, validly
existing, and in good standing under the laws of the State of
Minnesota; and its Articles of Incorporation are on file with the
Secretary of the State of Minnesota;
4.1.2. Fortis is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
("1940 Act"), and such registration is in full force and effect;
4.1.3. Target Fund is a duly established and designated series
of Fortis; and all Target Fund Shares outstanding at the Effective Time
will have been duly authorized and duly and validly issued and
outstanding shares of Target Fund, fully paid and non-assessable;
4.1.4. At the Closing, Target Fund will have good and
marketable title to the Assets and full right, power, and authority to
sell, assign, transfer, and deliver the Assets free of any liens or
other encumbrances; and on delivery and payment for the Assets,
Acquiring Fund will acquire good and marketable title thereto;
4.1.5. Target Fund's current prospectus and SAI conform in all
material respects to the applicable requirements of the Securities Act
of 1933, as amended ("1933 Act"), and the 1940 Act and the rules and
regulations thereunder and do not 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 misleading;
4.1.6. Target Fund is not in violation of, and the execution
and delivery of this Agreement and consummation of the transactions
contemplated hereby will not conflict with or violate, applicable law
or any provision of Fortis' Articles of Incorporation or By-Laws or of
any agreement, instrument, lease, or other undertaking to which Target
Fund is a party or by which it is bound or result in the acceleration
of any obligation, or the imposition of any penalty, under any
agreement, judgment, or decree to which Target Fund is a party or by
which it is bound, except as previously disclosed in writing to and
accepted by Acquiring Fund;
4.1.7. Except as otherwise disclosed in writing to and
accepted by Acquiring Fund, all material contracts and other
commitments of or applicable to Target Fund (other than this Agreement
and investment contracts, including options, futures, and forward
contracts) will
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be terminated, or provision for discharge of any liabilities of Target
Fund thereunder will be made, at or prior to the Effective Time,
without either Fund's incurring any liability or penalty with respect
thereto and without diminishing or releasing any rights Target Fund may
have had with respect to actions taken or omitted or to be taken by any
other party thereto prior to the Closing;
4.1.8. Except as otherwise disclosed in writing to and
accepted by Acquiring Fund, no litigation, administrative proceeding,
or investigation of or before any court or governmental body is
presently pending or (to Fortis' knowledge) threatened against Fortis
or any of its properties or assets that, if adversely determined, would
materially and adversely affect Target Fund's financial condition or
the conduct of its business; and Fortis knows of no facts that might
form the basis for the institution of any such litigation, proceeding,
or investigation 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 or adversely affects its business or its ability to
consummate the transactions contemplated hereby;
4.1.9. The execution, delivery, and performance of this
Agreement have been duly authorized and the Amendment shall have been
duly approved as of the date hereof by all necessary action on the part
of Fortis' board of directors; and, subject to approval by Target
Fund's shareholders, this Agreement constitutes a valid and legally
binding obligation of Target Fund, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and similar laws
relating to or affecting creditors' rights and by general principles of
equity;
4.1.10. At the Effective Time, the performance of this
Agreement shall have been duly authorized and the Amendment shall have
been duly approved by all necessary action by Target Fund's
shareholders;
4.1.11. No governmental consents, approvals, authorizations,
or filings are required under the 1933 Act, the Securities Exchange Act
of 1934, as amended ("1934 Act"), the 1940 Act, or applicable state
securities laws for the execution or performance of this Agreement by
Fortis, except for (a) the filing with the Securities and Exchange
Commission ("SEC") of a registration statement by Acquiring Fund on
Form N-14 relating to the Acquiring Fund Shares issuable hereunder, and
any supplement or amendment thereto ("Registration Statement"),
including therein a prospectus/proxy statement ("Proxy Statement"), and
(b) such consents, approvals, authorizations, and filings as have been
made or received or as may be required subsequent to the Effective
Time;
4.1.12. On the effective date of the Registration Statement,
at the time of the shareholders' meeting referred to in paragraph 5.2,
and at the Effective Time, the Proxy Statement will (a) comply in all
material respects with the applicable provisions of the 1933 Act, the
1934 Act, and the 1940 Act and the rules and regulations thereunder and
(b) 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 misleading; provided that the foregoing
shall not apply to statements in or omissions from the Proxy Statement
made in reliance on and in conformity with information furnished by
Acquiring Fund for use therein;
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4.1.13. There are no Liabilities other than Liabilities
disclosed or provided for in Fortis' financial statements referred to
in paragraph 4.1.16 and Liabilities incurred by Target Fund in the
ordinary course of its business subsequent to December 31, 2001, or
otherwise previously disclosed to Acquiring Fund, none of which has
been materially adverse to the business, assets, or results of Target
Fund's operations;
4.1.14. Target Fund is a "fund" as defined in section
851(g)(2) of the Code; it qualified for treatment as a regulated
investment company under Subchapter M of the Code ("RIC") for each past
taxable year since it commenced operations and will continue to meet
all the requirements for such qualification for its current taxable
year; the Assets will be invested at all times through the Effective
Time in a manner that ensures compliance with the foregoing; and Target
Fund has no earnings and profits accumulated in any taxable year in
which the provisions of Subchapter M did not apply to it;
4.1.15. Target Fund's federal income tax returns, and all
applicable state and local tax returns, for all taxable years through
and including the taxable year ended December 31, 2000 have been timely
filed and all taxes payable pursuant to such returns have been timely
paid; and
4.1.16. Fortis' financial statements for the year ended
December 31, 2001 to be delivered to Acquiring Fund, fairly represent
Target Fund's financial position as of such date and the results of its
operations and changes in its net assets for the period then ended.
4.2. Acquiring Fund represents and warrants as follows:
4.2.1. Acquiring Fund is a corporation that is duly organized,
validly existing, and in good standing under the laws of the State of
Maryland; and its articles of incorporation ("Articles of
Incorporation") are on file with the Secretary of the State of
Maryland;
4.2.2. Acquiring Fund is duly registered as an open-end
management investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
4.2.3. No consideration other than Acquiring Fund Shares will
be issued in exchange for the Assets in the Reorganization;
4.2.4. The Acquiring Fund Shares to be issued and delivered to
Target Fund hereunder will, at the Effective Time, have been duly
authorized and, when issued and delivered as provided herein, will be
duly and validly issued and outstanding shares of Acquiring Fund, fully
paid and non-assessable;
4.2.5. Acquiring Fund's current prospectus and SAI conform in
all material respects to the applicable requirements of the 1933 Act
and the 1940 Act and the rules and regulations thereunder and do not
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 misleading;
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4.2.6. Acquiring Fund is not in violation of, and the
execution and delivery of this Agreement and consummation of the
transactions contemplated hereby will not conflict with or violate,
applicable law or any provision of Acquiring Fund's Articles of
Incorporation or By-Laws or of any provision of any agreement,
instrument, lease, or other undertaking to which Acquiring Fund is a
party or by which it is bound or result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree to which Acquiring Fund is a party or by which it
is bound, except as previously disclosed in writing to and accepted by
Fortis;
4.2.7. Except as otherwise disclosed in writing to and
accepted by Fortis, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is presently
pending or (to Acquiring Fund's knowledge) threatened against Acquiring
Fund or any of its properties or assets that, if adversely determined,
would materially and adversely affect Acquiring Fund's financial
condition or the conduct of its business; and Acquiring Fund knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation 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 or adversely affects its
business or its ability to consummate the transactions contemplated
hereby;
4.2.8. The execution, delivery, and performance of this
Agreement have been duly authorized as of the date hereof by all
necessary action on the part of Acquiring Fund's board of directors
(together with Fortis' board of directors, the "Boards"); no approval
of this Agreement by Acquiring Fund's shareholders is required under
Acquiring Fund's Articles of Incorporation or By-Laws, or applicable
law; and this Agreement constitutes a valid and legally binding
obligation of Acquiring Fund, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
4.2.9. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the 1934 Act, the 1940 Act, or
applicable state securities laws for the execution or performance of
this Agreement by Acquiring Fund, except for (a) the filing with the
SEC of the Registration Statement and (b) such consents, approvals,
authorizations, and filings as have been made or received or as may be
required subsequent to the Effective Time;
4.2.10. On the effective date of the Registration Statement,
at the time of the shareholders' meeting referred to in paragraph 5.2,
and at the Effective Time, the Proxy Statement will (a) comply in all
material respects with the applicable provisions of the 1933 Act, the
1934 Act, and the 1940 Act and the rules and regulations thereunder and
(b) 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 misleading; provided that the foregoing
shall not apply to statements in or omissions from the Proxy Statement
made in reliance on and in conformity with information furnished by
Fortis for use therein;
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4.2.11. Acquiring Fund is a "fund" as defined in section
851(g)(2) of the Code; it qualified for treatment as a RIC for each
past taxable year since it commenced operations and will continue to
meet all the requirements for such qualification for its current
taxable year; Acquiring Fund intends to continue to meet all such
requirements for the next taxable year; and it has no earnings and
profits accumulated in any taxable year in which the provisions of
Subchapter M of the Code did not apply to it;
4.2.12. Acquiring Fund's federal income tax returns, and all
applicable state and local tax returns, for all taxable years through
and including the taxable year ended December 31, 2000 have been timely
filed and all taxes payable pursuant to such returns have been timely
paid; and
4.2.13. Acquiring Fund's financial statements for the year
ended December 31, 2001 to be delivered to Fortis, fairly represent
Acquiring Fund's financial position as of that date and the results of
its operations and changes in its net assets for the year then ended.
4.3. Acquiring Fund and Fortis each represent and warrant as follows:
4.3.1. The fair market value of the Acquiring Fund Shares
received by each Shareholder will be approximately equal to the fair
market value of its Target Fund Shares constructively surrendered in
exchange therefor;
4.3.2. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
4.3.3. There is no intercompany indebtedness between the Funds
that was issued or acquired, or will be settled, at a discount.
5. COVENANTS
5.1. Each Fund covenants to operate its respective business in the
ordinary course between the date hereof and the Closing, it being understood
that such ordinary course will include declaring and paying customary dividends
and other distributions (including the dividend and/or other distribution
referred to in paragraph 1.4) and changes in operations contemplated by each
Fund's normal business activities.
5.2. Target Fund covenants to call a shareholders' meeting to consider
and act on this Agreement and the Amendment and to take all other action
necessary to obtain approval of the transactions contemplated hereby.
5.3. Target Fund covenants that the Acquiring Fund Shares to be
delivered hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms hereof.
5.4. Target Fund covenants that it will assist Acquiring Fund in
obtaining information Acquiring Fund reasonably requests concerning the
beneficial ownership of Target Fund Shares.
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5.5. Target Fund covenants that its books and records (including all
books and records required to be maintained under the 1940 Act and the rules and
regulations thereunder) will be turned over to Acquiring Fund at the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy Statement
in compliance with applicable federal and state securities laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other 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 other Fund may deem necessary or desirable
in order to vest in, and confirm to, (a) Acquiring Fund, title to and possession
of all the Assets, and (b) Target Fund, title to and possession of the Acquiring
Fund Shares to be delivered hereunder, and otherwise to carry out the intent and
purpose hereof.
5.8. Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and
state securities laws it deems appropriate to continue its operations after the
Effective Time.
5.9. Subject to this Agreement, each Fund covenants to take or cause to
be taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
6. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance
by the corresponding Fund of all its obligations to be performed hereunder at or
before the Effective Time, (b) all representations and warranties of the
corresponding Fund contained herein being true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated hereby, as of the Effective Time, with the same force
and effect as if made at and as of the Effective Time, and (c) the following
further conditions that, at or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Board and shall have been approved by
Target Fund's shareholders in accordance with Fortis' Articles of Incorporation
and By-Laws and applicable law.
6.2. The Amendment shall have been duly approved by Fortis' board of
directors and shall have been approved by Target Fund's shareholders in
accordance with Fortis' Articles of Incorporation and By-Laws and applicable
law, and the Amendment shall have been duly filed with the Minnesota Secretary
of State.
6.3. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The Registration Statement shall have become
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued, and the SEC shall not have issued an unfavorable
report with respect to the Reorganization under section 25(b) of the 1940 Act
nor instituted any proceedings seeking to enjoin consummation of the
transactions contemplated hereby under section 25(c) of the 1940 Act. All
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consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on either Fund's assets or properties, provided that either
Acquiring Fund or Fortis may for itself waive any of such conditions.
6.4. At the Effective Time, 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 to obtain damages or other relief in connection with,
the transactions contemplated hereby.
6.5. Fortis shall have received an opinion of counsel to Acquiring Fund
substantially to the effect that:
6.5.1. Acquiring Fund is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland
with power under its Articles of Incorporation to own all its
properties and assets and, to the knowledge of such counsel, to carry
on its business as presently conducted;
6.5.2. This Agreement has been duly authorized, executed, and
delivered by Aquiring Fund; no approval of this Agreement by Acquiring
Fund's shareholders is required under Acquiring Fund's Articles or
Incorporation or By-Laws, or applicable law; and assuming due
authorization, execution, and delivery of this Agreement by Fortis on
behalf of Target Fund, this Agreement is a valid and legally binding
obligation of Acquiring Fund, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
6.5.3. The Acquiring Fund Shares to be issued and distributed
to the Shareholders under this Agreement, assuming their due delivery
as contemplated by this Agreement, will be duly authorized, validly
issued and outstanding, and fully paid and non-assessable;
6.5.4. The execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not,
violate Acquiring Fund's Articles of Incorporation or By-Laws or any
provision of any agreement (known to such counsel, without any
independent inquiry or investigation) to which Acquiring Fund is a
party or by which it is bound or (to the knowledge of such counsel,
without any independent inquiry or investigation) result in the
acceleration of any obligation, or the imposition of any penalty, under
any agreement, judgment, or decree to which Acquiring Fund is a party
or by which it is bound, except as set forth in such opinion or as
previously disclosed in writing to and accepted by Fortis;
6.5.5. No consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Acquiring Fund of the transactions contemplated herein, except those
obtained under the 1933 Act, the 1934 Act, and the 1940 Act and those
that may be required under state securities laws;
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6.5.6. Acquiring Fund is registered with the SEC as an
investment company, and to the knowledge of such counsel no order has
been issued or proceeding instituted to suspend such registration; and
6.5.7. To the knowledge of such counsel (without any
independent inquiry or investigation), (a) no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is pending or threatened as to Acquiring Fund or any
of its properties or assets attributable or allocable to Acquiring Fund
and (b) Acquiring Fund is not a party to or subject to the provisions
of any order, decree, or judgment of any court or governmental body
that materially and adversely affects Acquiring Fund's business, except
as set forth in such opinion or as otherwise disclosed in writing to
and accepted by Fortis.
In rendering such opinion, such counsel may (1) rely, as to matters governed by
the laws of the State of Maryland, on an opinion of competent Maryland counsel,
(2) make assumptions regarding the authenticity, genuineness, and/or conformity
of documents and copies thereof without independent verification thereof, (3)
limit such opinion to applicable federal and state law, and (4) define the word
"knowledge" and related terms to mean the knowledge of attorneys then with such
counsel who have devoted substantive attention to matters directly related to
this Agreement and the Reorganization.
6.6. Acquiring Fund shall have received an opinion of Xxxxxx & Xxxxxxx
LLP, counsel to Fortis, substantially to the effect that:
6.6.1. Target Fund is a duly established series of Fortis, a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Minnesota with power under its Articles
of Incorporation to own all its properties and assets and, to the
knowledge of such counsel, to carry on its business as presently
conducted.;
6.6.2. This Agreement (a) has been duly authorized, executed,
and delivered by Fortis on behalf of Target Fund and (b) assuming due
authorization, execution, and delivery of this Agreement by Acquiring
Fund, is a valid and legally binding obligation of Fortis with respect
to Target Fund, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
6.6.3. The execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not,
violate Fortis' Articles of Incorporation or By-Laws or any provision
of any agreement (known to such counsel, without any independent
inquiry or investigation) to which Fortis (with respect to Target Fund)
is a party or by which it is bound or (to the knowledge of such
counsel, without any independent inquiry or investigation) result in
the acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Fortis (with respect
to Target Fund) is a party or by which it is bound, except as set forth
in such opinion or as previously disclosed in writing to and accepted
by Acquiring Fund;
6.6.4. No consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Fortis (on behalf of Target Fund) of the
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transactions contemplated herein, except those obtained under the 1933
Act, the 1934 Act, and the 1940 Act and those that may be required
under state securities laws;
6.6.5. Fortis is registered with the SEC as an investment
company, and to the knowledge of such counsel no order has been issued
or proceeding instituted to suspend such registration; and
6.6.6. To the knowledge of such counsel (without any
independent inquiry or investigation), (a) no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is pending or threatened as to Fortis (with respect
to Target Fund) or any of its properties or assets attributable or
allocable to Target Fund and (b) Fortis (with respect to Target Fund)
is not a party to or subject to the provisions of any order, decree, or
judgment of any court or governmental body that materially and
adversely affects Target Fund's business, except as set forth in such
opinion or as otherwise disclosed in writing to and accepted by
Acquiring Fund.
In rendering such opinion, such counsel may (1) make assumptions regarding the
authenticity, genuineness, and/or conformity of documents and copies thereof
without independent verification thereof, (2) limit such opinion to applicable
federal and state law, and (3) define the word "knowledge" and related terms to
mean the knowledge of attorneys then with such counsel who have devoted
substantive attention to matters directly related to this Agreement and the
Reorganization.
6.7. Acquiring Fund and Fortis each shall have received an opinion of
Xxxxxx & Whitney LLP, addressed to and in form and substance reasonably
satisfactory to it, as to the federal income tax consequences mentioned below
("Tax Opinion"). In rendering the Tax Opinion, such counsel may rely as to
factual matters, exclusively and without independent verification, on the
representations and warranties made in this Agreement, which such counsel may
treat as representations and warranties made to it, and in separate letters
addressed to such counsel and the certificates delivered pursuant to paragraph
3.4. The Tax Opinion shall be substantially to the effect that, based on the
facts and assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income tax
purposes:
6.7.1. Acquiring Fund's acquisition of the Assets in exchange
solely for Acquiring Fund Shares, followed by Target Fund's
distribution of those shares pro rata to the Shareholders in exchange
for their Target Fund Shares, will qualify as a reorganization within
the meaning of section 368(a)(1) of the Code, and each Fund will be "a
party to a reorganization" within the meaning of section 368(b) of the
Code;
6.7.2. Target Fund will recognize no gain or loss on the
transfer of the Assets to Acquiring Fund in exchange solely for
Acquiring Fund Shares or on the subsequent distribution of those shares
to the Shareholders in exchange for their Target Fund Shares;
6.7.3. Acquiring Fund will recognize no gain or loss on its
receipt of the Assets in exchange solely for Acquiring Fund Shares and
the assumption by Acquiring Fund of the liabilities of Target Fund;
12
6.7.4. Acquiring Fund's basis in the Assets will be the same
as Target Fund's basis therein immediately before the Reorganization,
and Acquiring Fund's holding period for the Assets will include Target
Fund's holding period therefor;
6.7.5. A Shareholder will recognize no gain or loss on the
exchange of all its Target Fund Shares solely for Acquiring Fund Shares
pursuant to the Reorganization. Shareholders subject to taxation will
recognize income upon receipt of any net investment income or net
capital gains of Target Fund which are distributed by Target Fund prior
to the Closing;
6.7.6. A Shareholder's aggregate basis in the Acquiring Fund
Shares to be received by it in the Reorganization will be the same as
the aggregate basis in its Target Fund Shares to be constructively
surrendered in exchange for those Acquiring Fund Shares, and its
holding period for those Acquiring Fund Shares will include its holding
period for those Target Fund Shares, provided the Shareholder held them
as capital assets at the Effective Time; and
6.7.7. Acquiring Fund will succeed to and take into account
the items of Target Fund described in Section 381(c) of the Code.
Acquiring Fund will take these items into account subject to the
conditions and limitations specified in Sections 381, 382, 383 and 384
of the Code and the Regulations thereunder.
Notwithstanding subparagraphs 6.7.2 and 6.7.4, the Tax Opinion may state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
Shareholder with respect to any asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a xxxx-to-market
system of accounting.
At any time before the Closing, either Acquiring Fund or Fortis may waive any of
the foregoing conditions (except those set forth in paragraphs 6.1 and 6.2) if,
in the judgment of its Board, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
7. BROKERAGE FEES
Acquiring Fund and Fortis each represent and warrant to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
8. EXPENSES; INDEMNIFICATION
8.1 The parties hereto understand and agree that the cost of the
transactions contemplated by this Agreement are being borne by Hartford Life and
Accident Insurance Company and/or its affiliates, to the extent not borne by
Acquiring Fund.
8.2 Acquiring Fund agrees to indemnify and hold harmless Fortis, Target
Fund and each of Fortis' directors and officers 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, jointly or severally, Fortis, Target Fund or
13
any of Fortis' directors or officers may become subject, insofar as any such
loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by Acquiring Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
8.3 Fortis and Target Fund agree to indemnify and hold harmless
Acquiring Fund and each of Acquiring Fund's directors and officers 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, jointly or severally, Acquiring Fund or any of
Acquiring Fund's directors or officers may become subject, insofar as any such
loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Fortis or Target Fund of any of
their representations, warranties, covenants or agreements set forth in this
Agreement.
9. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not
set forth herein, and this Agreement constitutes the entire agreement between
the parties. The representations, warranties, and covenants contained herein or
in any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
10. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Target Fund's shareholders:
10.1. By either Fund (a) in the event of the other Fund's material
breach of any representation, warranty, or covenant contained herein to be
performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such condition will
not or cannot be met, or (c) if the Closing has not occurred on or before
December 31, 2002; or
10.2. By the parties' mutual agreement.
In the event of termination under paragraphs 10.1(c) or 10.2, there shall be no
liability for damages on the part of either Fund to the other Fund.
11. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target Fund's shareholders, in any manner
mutually agreed on in writing by the parties; provided that following such
approval no such amendment may have the effect of changing the provisions for
determining the number of Acquiring Fund shares to be issued to Target Fund
shareholders under this Agreement to the detriment of such shareholders without
their further approval.
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12. MISCELLANEOUS
12.1. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Minnesota; provided that, in the case of
any conflict between such laws and the federal securities laws, the latter shall
govern.
12.2. Nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
12.3. This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by each Investment
Company and delivered to the other party hereto. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
HARTFORD BOND HLS FUND, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
---------------------------
Its: President
FORTIS SERIES FUND, INC.
on behalf of its series Fortis
Diversified Income Series
By: /s/ Xxxxx X. Xxxxxxxxxxxx
---------------------------
Its: President
15
SCHEDULE A
ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
FORTIS SERIES FUND, INC.
The undersigned officer of Fortis Series Fund, Inc. (the
"Corporation"), a Minnesota corporation which is subject to the provisions of
Minnesota Statutes, Chapter 302A, hereby certifies that the following amendment
to the Corporation's amended and restated articles of incorporation has been
adopted by the Board of Directors and by the requisite vote of shareholders of
the Corporation pursuant to said Chapter 302A:
WHEREAS, the Corporation is registered as an open end management
investment company (i.e., a mutual fund) under the Investment Company
Act of 1940 and offers its shares to the public in several series, each
of which represents a separate and distinct portfolio of assets; and
WHEREAS, it is desirable and in the best interests of the holders of
the Series C ("Money Market Series"), Series D ("Asset Allocation
Series"), Series E ("Diversified Income Series"), Series F ("Global
Growth Series"), Series G ("High Yield Series"), Series H ("Growth &
Income Series") and Series N ("S&P 500 Index Series") shares of the
Corporation (hereinafter, the "Acquired Funds") that the assets
belonging to each Acquired Fund be sold to , in exchange for Class IA
shares of the respective Acquiring Fund, which shares will be
distributed pro rata to the former shareholders of the Acquired Funds;
and
WHEREAS, it is desirable and in the best interests of the holders of
the Series C shares of the Corporation (also known as the "Money Market
Series") that the assets belonging to such Series be sold to Hartford
Money Market HLS Fund, Inc., a Maryland Corporation ("Hartford Money
Market Fund"), in exchange for Class IA shares of Hartford Money Market
Fund, which shares will be distributed pro rata to the former
shareholders of Money Market Series; and
WHEREAS, the Corporation and Hartford Money Market Fund have entered
into an Agreement and Plan of Reorganization dated ______, 2002
providing for the foregoing transactions; and
WHEREAS, it is desirable and in the best interests of the holders of
the Series D shares of the Corporation (also known as the "Asset
Allocation Series") that the assets belonging to such Series be sold to
Hartford Advisers HLS Fund, Inc., a Maryland Corporation ("Hartford
Advisers Fund"), in exchange for Class IA shares of Hartford Advisers
Fund, which shares will be distributed pro rata to the former
shareholders of Asset Allocation Series; and
16
WHEREAS, the Corporation and Hartford Advisers Fund have entered into
an Agreement and Plan of Reorganization dated ______, 2002 providing
for the foregoing transactions; and
WHEREAS, it is desirable and in the best interests of the holders of
the Series E shares of the Corporation (also known as the "Diversified
Income Series") that the assets belonging to such Series be sold to
Hartford Bond HLS Fund, Inc., a Maryland Corporation ("Hartford Bond
Fund"), in exchange for Class IA shares of Hartford Bond Fund, which
shares will be distributed pro rata to the former shareholders of
Diversified Income Series; and
WHEREAS, the Corporation and Hartford Bond Fund have entered into an
Agreement and Plan of Reorganization dated ______, 2002 providing for
the foregoing transactions; and
WHEREAS, it is desirable and in the best interests of the holders of
the Series F, Series G and Series H shares of the Corporation (also
known as "Global Growth Series," "High Yield Series" and "Growth &
Income Series," respectively) that the assets belonging to such Series
be sold to Hartford Global Leaders HLS Fund ("Hartford Global Leaders
Fund"), Hartford High Yield HLS Fund ("Hartford High Yield Fund") and
Hartford Growth and Income HLS Fund ("Hartford Growth and Income
Fund"), respectively, each of which is a series of Hartford Series
Fund, Inc., a Maryland Corporation ("Hartford Series Fund"), in
exchange for Class IA shares of Hartford Global Leaders Fund, Hartford
High Yield Fund or Hartford Growth and Income Fund, as the case may be,
which shares will be distributed pro rata to the former shareholders of
Global Growth Series, High Yield Series or Growth & Income Series, as
the case may be; and
WHEREAS, the Corporation and Hartford Series Fund have entered into an
Agreement and Plan of Reorganization dated ______, 2002 providing for
the foregoing transactions; and
WHEREAS, it is desirable and in the best interests of the holders of
the Series N shares of the Corporation (also known as the "S&P 500
Index Series") that the assets belonging to such Series be sold to
Hartford Index HLS Fund, Inc., a Maryland Corporation ("Hartford Index
Fund"), in exchange for Class IA shares of Hartford Index Fund, which
shares will be distributed pro rata to the former shareholders of S&P
500 Index Series; and
WHEREAS, each Reorganization Agreement requires that, in order to bind
all holders of shares of the respective series of the Corporation to
the foregoing transactions, and in particular to bind such holders to
the cancellation and retirement of their outstanding shares of the
Corporation, it is necessary to adopt an amendment to the Corporation's
amended and restated articles of incorporation.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation's amended and
restated articles of incorporation be, and the same hereby are, amended
to add the following Article 5A immediately following Article 5
thereof:
17
5A. (a) For purposes of this Article 5, the following terms shall have
the following meanings:
"Acquired Funds" means the Series C, Series D, Series E, Series F,
Series G, Series H and Series N shares of the Corporation (also known as "Money
Market Series," "Asset Allocation Series," "Diversified Income Series," "Global
Growth Series," "High Yield Series," "Growth & Income Series" and "S&P 500 Index
Series," respectively).
"Acquiring Funds" means Hartford Money Market HLS Fund, Inc., a
Maryland corporation, with respect to the Series C shares of the Corporation;
Hartford Advisers HLS Fund, Inc., a Maryland corporation, with respect to the
Series D shares of the Corporation; Hartford Bond HLS Fund, Inc., a Maryland
corporation, with respect to the Series E shares of the Corporation; Hartford
Global Leaders HLS Fund, Hartford High Yield HLS Fund and Hartford Growth and
Income HLS Fund, each a series of Hartford Series Fund, Inc., a Maryland
corporation, with respect to the Series F, Series G and Series H shares of the
Corporation, respectively; and Hartford Index HLS Fund, Inc., a Maryland
corporation, with respect to the Series N shares of the Corporation.
"Exchange Date" has the meaning set forth in the Reorganization
Agreements.
"Reorganization Agreements" means the five Agreements and Plans of
Reorganization dated _________, 2002, to which the Corporation and Hartford
Money Market HLS Fund, Inc., Hartford Advisers HLS Fund, Inc., Hartford Bond HLS
Fund, Inc., Hartford Series Fund, Inc. or Hartford Index HLS Fund, Inc. are
parties, each of which relates to one or more specific Acquired Funds and the
corresponding Acquiring Fund or Funds. Each such agreement is referred to as a
"Reorganization Agreement."
(b) At the Exchange Date, the assets belonging to each Acquired Fund,
the Special Liabilities associated therewith, and the General Assets and General
Liabilities allocated to such Acquired Fund, shall be transferred to the
corresponding Acquiring Fund listed in the applicable Reorganization Agreement
in exchange for shares of such Acquiring Fund, all as set forth in the
Reorganization Agreement. Such Acquiring Fund shares shall be distributed to
Acquired Fund shareholders as set forth in (c) below. For purposes of the
foregoing, the terms "assets belonging to," "Special Liabilities," "General
Assets" and "General Liabilities" have the meanings assigned to them in Articles
7(b), 7(c) and 7(d) of the Corporation's amended and restated articles of
incorporation.
(c) At the Exchange Date, each issued and outstanding share of each
Acquired Fund shall be, without further action, exchanged for that number of the
Class IA shares of the corresponding Acquiring Fund determined in accordance
with Sections 3 and 4 of the Reorganization Agreement, and such Acquired Fund
shares shall be cancelled and retired. The distribution of such Acquiring Fund
shares to Acquired Fund shareholders shall be accomplished in the manner set
forth in Section 4(a) of the applicable Reorganization Agreement.
18
(d) From and after the Exchange Date, the Acquired Fund shares
cancelled and retired pursuant to (c) above shall have the status of authorized
and unissued shares of the Corporation, without designation as to series or
class.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment on behalf of the Corporation on
____________, 2002.
FORTIS SERIES FUND, INC.
By ______________________________
Its Secretary
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