77M. Xxxx Xxxxx Partners Core Bond Fund
Agreement and Plan of Reorganization
Xxxx Xxxxx Core Bond Fund and Xxxx Xxxxx
Partners Core Bond Fund
This AGREEMENT AND PLAN OF REORGANIZATION
(Agreement) is made as of this 21st day of
September, 2007, by and among Xxxx Xxxxx
Partners Income Trust, a Maryland business
trust (the Acquiring Entity), with its
principal place of business at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on behalf of
its series Xxxx Xxxxx Partners Core Bond Fund
(the Acquiring Fund), Xxxx Xxxxx Income Trust,
Inc., a Maryland corporation (the Acquired
Entity), with its principal place of business
at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
on behalf of its series Xxxx Xxxxx Core Bond
Fund (the Acquired Fund), and, solely for
purposes of paragraph 10.2 hereof, Xxxx Xxxxx
Partners Fund Advisor, LLC.
WHEREAS, each of the Acquired Fund and the
Acquiring Fund is a series of an open-end
management investment company registered
pursuant to the Investment Company Act of 1940,
as amended (the 1940 Act);
WHEREAS, it is intended that, for United
States federal income tax purposes (i) the
transactions contemplated by this Agreement
constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the Code) and (ii) this
Agreement constitute a plan of reorganization
within the meaning of Section 368 of the Code
and Treasury Regulations Section 1.368-2(g);
WHEREAS, the reorganization will consist of
(1) the sale, assignment, conveyance, transfer
and delivery of all of the property and assets
of the Acquired Fund to the Acquiring Fund in
exchange solely for a class of shares of
beneficial interest of the Acquiring Fund (the
Acquiring Fund Shares) corresponding to the
class of outstanding shares of common stock of
the Acquired Fund (the Acquired Fund Shares),
as described herein, (2) the assumption by the
Acquiring Fund of all liabilities of the
Acquired Fund, and (3) the subsequent
distribution of the Acquiring Fund Shares to
the shareholders of the Acquired Fund and the
subsequent redemption of the Acquired Fund
Shares and termination of the Acquired Fund, as
provided herein (the Reorganization), all upon
the terms and conditions hereinafter set forth
in this Agreement;
WHEREAS, the Acquired Fund currently owns
securities that are generally assets of the
character in which the Acquiring Fund is
permitted to invest;
WHEREAS, the Board of Trustees of the
Acquiring Entity (the Acquiring Entity Board)
has determined, with respect to the Acquiring
Fund, that the sale, assignment, conveyance,
transfer and delivery of all of the property
and assets of the Acquired Fund for Acquiring
Fund Shares and the assumption of all
liabilities of the Acquired Fund by the
Acquiring Fund is in the best interests of the
Acquiring Fund and its shareholders and that
the interests of the existing shareholders of
the Acquiring Fund will not be diluted as a
result of this transaction; and
WHEREAS, the Board of Directors of the
Acquired Entity (the Acquired Entity Board) has
determined, with respect to the Acquired Fund,
that the sale, assignment, conveyance, transfer
and delivery of all of the property and assets
of the Acquired Fund for Acquiring Fund Shares
and the assumption of all liabilities of the
Acquired Fund by the Acquiring Fund is in the
best interests of the Acquired Fund and its
shareholders and that the interests of the
existing shareholders of the Acquired Fund will
not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the
premises and of the covenants and agreements
hereinafter set forth, the parties hereto
covenant and agree as follows:
1.
TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE
ACQUIRING FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND
LIABILITIES AND THE TERMINATION OF THE
ACQUIRED FUND
1.1 Subject to requisite approvals and
the other terms and conditions herein set forth
and on the basis of the representations and
warranties contained herein, the Acquired
Entity, on behalf of the Acquired Fund, agrees
to sell, assign, convey, transfer and deliver
all of its property and assets, as set forth in
paragraph 1.2, to the Acquiring Fund, and the
Acquiring Entity, on behalf of the Acquiring
Fund, agrees in exchange therefor: (a) to
deliver to the Acquired Fund the number of full
and fractional Acquiring Fund Shares
corresponding to the class of the Acquired Fund
Shares as of the time and date set forth in
paragraph 3.1, determined by dividing the value
of the Acquired Funds net assets with respect
to the class of the Acquired Fund (computed in
the manner and as of the time and date set
forth in paragraph 2.1) by the net asset value
of one share of the corresponding class of
Acquiring Fund Shares (computed in the manner
and as of the time and date set forth in
paragraph 2.2); and (b) to assume all
liabilities of the Acquired Fund. Such
transactions shall take place on a closing date
as provided for in paragraph 3.1 (the Closing
Date). For purposes of this Agreement, the
Primary Class shares of the Acquired Fund
correspond to the Class A shares of the
Acquiring Fund, and the term Acquiring Fund
Shares should be read to include such class of
shares of the Acquiring Fund.
1.2 The property and assets of the
Acquired Entity, attributable to the Acquired
Fund, to be sold, assigned, conveyed,
transferred and delivered to and acquired by
the Acquiring Entity, on behalf of the
Acquiring Fund, shall consist of all assets and
property of every kind and nature of the
Acquired Fund, including, without limitation,
all rights, receivables (including dividend,
interest and other receivables), cash, cash
equivalents, claims (whether absolute or
contingent, known or unknown), securities,
commodities and futures interests, good will
and other intangible property, any deferred or
prepaid expenses and all interests, rights,
privileges and powers, the Acquired Fund owns
at the Valuation Date (as defined in paragraph
2.1) (collectively, Assets). The Acquiring
Entity, on behalf of the Acquiring Fund, shall
assume all of the liabilities and obligations
of the Acquired Fund, including, without
limitation, all indemnification obligations of
the Acquired Fund with respect to the current
and former members of the Acquired Entity Board
and officers of the Acquired Entity, whether
accrued or contingent, known or unknown,
existing at the Valuation Date (collectively,
Liabilities). The Acquired Fund will sell,
assign, convey, transfer and deliver to the
Acquiring Entity, on behalf of the Acquiring
Fund, any rights, stock dividends, or other
securities received by the Acquired Fund after
the Closing Date as stock dividends or other
distributions on or with respect to the
property and assets transferred, which rights,
stock dividends, and other securities shall be
deemed included in the property and assets
transferred to the Acquiring Entity, on behalf
of the Acquiring Fund, at the Closing Date and
shall not be separately valued, in which case
any such distribution that remains unpaid as of
the Closing Date shall be included in the
determination of the value of the assets of the
Acquired Fund acquired by the Acquiring Entity
on behalf of the Acquiring Fund.
1.3 The Acquired Fund will make
reasonable efforts to discharge all of its
known Liabilities prior to the Valuation Date.
1.4 On or as soon as practicable prior
to the Closing Date, the Acquired Fund will
declare and pay to its shareholders of record
one or more dividends and/or other
distributions so that it will have distributed
substantially all of its investment company
taxable income as defined in the Code (computed
without regard to any deduction for dividends
paid) and realized net capital gain as defined
in the Code (after deduction for any available
capital loss carryover), if any, for all tax
periods ending on or before the Closing Date
(and treating the current taxable year as
ending on the Closing Date) such that the
Acquired Fund will have no tax liability under
Section 852 or Section 4982 for the current and
any prior tax periods.
1.5 Immediately following the actions
contemplated by paragraph 1.1, the Acquired
Entity shall take such actions necessary to
complete the liquidation of the Acquired Fund.
To complete the liquidation, the Acquired
Entity, on behalf of the Acquired Fund, shall
(a) distribute to the latters shareholders of
record with respect to the class of Acquired
Fund Shares as of the Closing Date (Acquired
Fund Shareholders), on a pro rata basis within
that class, the Acquiring Fund Shares of the
corresponding class received by the Acquired
Entity, on behalf of the Acquired Fund,
pursuant to paragraph 1.1, (b) thereafter,
redeem shares of the Acquired Fund in
accordance with Maryland law and (c) terminate
the Acquired Fund. Such distribution and
subsequent redemption shall be accomplished,
with respect to the class of Acquired Fund
Shares, by the transfer of the Acquiring Fund
Shares then credited to the account of the
Acquired Fund on the books of the Acquiring
Fund to open accounts on the share records of
the Acquiring Fund in the names of the Acquired
Fund Shareholders. The aggregate net asset
value of the Acquiring Fund Shares to be so
credited to the Acquired Fund Shareholders
shall be equal to the aggregate net asset value
of the Acquired Fund Shares owned by Acquired
Fund Shareholders on the Closing Date. All
issued and outstanding Acquired Fund Shares
will be redeemed on the books of the Acquired
Fund. The Acquiring Fund shall not issue
certificates representing any class of
Acquiring Fund Shares in connection with such
exchange.
1.6 Ownership of Acquiring Fund Shares
will be shown on the books of the Acquiring
Funds transfer agent.
1.7 Any reporting responsibility of the
Acquired Fund, including, but not limited to,
the responsibility for filing regulatory
reports, tax returns, or other documents with
the Securities and Exchange Commission
(Commission), any state securities commission,
and any federal, state or local tax authorities
or any other relevant regulatory authority, is
and shall remain the responsibility of the
Acquired Entity, on behalf of the Acquired
Fund. The Acquiring Entity shall fully
cooperate to the extent necessary or desirable
for these responsibilities to be discharged.
2.
VALUATION
2.1 The value of the Assets and the
amount of the Liabilities shall be determined
as of the time for calculation of net asset
value as set forth in the then-current
prospectus for the Acquired Fund, and after the
declaration of any dividends by the Acquired
Fund, on the Closing Date (such time and date
being hereinafter called the Valuation Date),
computed using the valuation procedures
established by the Acquired Entity Board. All
computations of value and amounts shall be made
by (a) State Street Bank and Trust Company, in
its capacity as accounting agent for the
Acquired Fund, or (b) in the case of securities
subject to fair valuation, in accordance with
the valuation procedures of the Acquired Entity
adopted in good faith by the Acquired Entity
Board. All computations of value and amounts
pursuant to this paragraph 2.1 shall be subject
to confirmation by the Acquiring Funds
independent registered public accounting firm.
2.2 The net asset value per share of the
class of Acquiring Fund Shares shall be
determined to the nearest full cent on the
Valuation Date, using the valuation procedures
established by the Acquiring Entity Board. All
computations of value shall be made by (a)
State Street Bank and Trust Company, in its
capacity as accounting agent for the Acquiring
Fund, or (b) in the case of securities subject
to fair valuation, in accordance with the
valuation procedures of the Acquiring Entity
adopted in good faith by the Acquiring Entity
Board. All computations of value and amounts
pursuant to this paragraph 2.2 shall be subject
to confirmation by the Acquired Funds
independent registered public accounting firm.
2.3 The number of Acquiring Fund Shares
of the class to be issued in exchange for the
Assets shall be determined by dividing the
value of the net assets with respect to the
class of Acquired Fund Shares, determined using
the same valuation procedures referred to in
paragraph 2.1, by the net asset value of an
Acquiring Fund Share of the corresponding
class, determined using the same valuation
procedures referred to in paragraph 2.2.
3.
CLOSING AND CLOSING DATE
3.1 Subject to the terms and conditions
set forth herein, the Closing Date shall be
September 21, 2007, or such other date as the
parties may agree. All acts taking place at
the closing of the transactions provided for in
this Agreement (Closing) shall be deemed to
take place simultaneously as of the close of
business on the Closing Date unless otherwise
agreed to by the parties. The close of
business on the Closing Date shall be as of
4:00 p.m., Eastern Time or such later time on
that date as the Acquired Funds net asset value
and/or the net asset value per share of the
class of shares of the Acquiring Fund is
calculated in accordance with paragraph 2.2 and
after the declaration of any dividends. The
Closing shall be held at the offices of Xxxxxxx
XxXxxxxxx LLP or at such other time and/or
place as the parties may agree.
3.2 The Acquired Entity shall direct
State Street Bank and Trust Company (the
Custodian) to transfer ownership of the Assets
from the accounts of the Acquired Fund that the
Custodian maintains as custodian for the
Acquired Fund to the accounts of the Acquiring
Fund that the Custodian maintains as custodian
for the Acquiring Fund and to deliver to the
Acquiring Entity, at the Closing, a certificate
of an authorized officer stating that (i) the
Assets of the Acquired Fund have been so
transferred as of the Closing Date, and (ii)
all necessary taxes in connection with the
delivery of the Assets of the Acquired Fund,
including all applicable federal and state
stock transfer stamps, if any, have been paid
or provision for payment has been made.
3.3 The Acquired Entity shall direct
PFPC Inc., in its capacity as transfer agent
for the Acquired Fund (Transfer Agent), to
deliver to the Acquiring Entity at the Closing
a certificate of an authorized officer stating
that its records contain the name and address
of each Acquired Fund Shareholder and the
number and percentage ownership of the
outstanding class of Acquired Fund Shares owned
by each such shareholder immediately prior to
the Closing. The Acquiring Fund shall deliver
to the Secretary of the Acquired Fund a
confirmation evidencing that (a) the
appropriate number of Acquiring Fund Shares
have been credited to the Acquired Funds
account on the books of the Acquiring Fund
pursuant to paragraph 1.1 prior to the actions
contemplated by paragraph 1.5 and (b) the
appropriate number of Acquiring Fund Shares
have been credited to the accounts of the
Acquired Fund Shareholders on the books of the
Acquiring Fund pursuant to paragraph 1.5. At
the Closing, each party shall deliver to the
other party such bills of sale, checks,
assignments, share certificates, if any,
receipts or other documents as the other party
or its counsel may reasonably request.
3.4 In the event that on the Valuation
Date (a) the New York Stock Exchange or another
primary trading market for portfolio securities
of the Acquiring Fund or the Acquired Fund
(each, an Exchange) shall be closed to trading
or trading thereupon shall be restricted, or
(b) trading or the reporting of trading on such
Exchange or elsewhere shall be disrupted so
that accurate appraisal of the value of the net
assets of the Acquired Fund or the Acquiring
Fund is impracticable (in the judgment of the
Acquiring Entity Board with respect to the
Acquiring Fund and the Acquired Entity Board
with respect to the Acquired Fund), the Closing
Date shall be postponed until the first Friday
(that is also a business day) after the day
when trading shall have been fully resumed and
reporting shall have been restored.
4.
REPRESENTATIONS AND WARRANTIES
4.1 Except as has been fully disclosed
to the Acquiring Entity in Schedule 4.1 of this
Agreement, the Acquired Entity, on behalf of
the Acquired Fund, represents and warrants to
the Acquiring Entity and the Acquiring Fund as
follows:
(a) The Acquired Fund is duly
established as a series of the Acquired Entity,
which 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, as amended and/or
supplemented (the Acquired Entity Charter), to
own all of its assets and to carry on its
business as it is being conducted as of the
date hereof. The Acquired Entity is duly
qualified to do business as a foreign
corporation in each jurisdiction in which the
conduct of its business makes such
qualification necessary except where the
failure to so qualify would not have a material
adverse effect on the condition (financial or
otherwise), business, properties, net assets or
results of operations of the Acquired Entity.
The Acquired Entity has all necessary federal,
state and local authorization to carry on its
business as now being conducted and to fulfill
the terms of this Agreement, except as set
forth in paragraph 4.1(c).
(b) The Acquired Entity is a
registered open-end management investment
company, and its registration with the
Commission as an investment company under the
1940 Act, and the registration of the class of
Acquired Fund Shares under the Securities Act
of 1933, as amended (1933 Act), is in full
force and effect.
(c) No consent, approval,
authorization, or order of any court or
governmental authority is required for the
consummation by the Acquired Fund of the
transactions contemplated herein, except such
as may be required under the 1933 Act, the
Securities Exchange Act of 1934 (1934 Act), the
0000 Xxx, xxxxx securities laws and the Xxxx-
Xxxxx-Xxxxxx Act.
(d) The current prospectus and
statement of additional information of the
Acquired Fund (true and correct copies of which
have been delivered to the Acquiring Entity)
and each prospectus and statement of additional
information of the Acquired Fund used during
the three (3) years prior to the date of this
Agreement conforms or conformed at the time of
its use in all material respects to the
applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the
Commission thereunder and does not or did not
at the time of its use include any untrue
statement of a material fact or omit to state
any material fact required to be stated therein
or necessary to make the statements therein, in
light of the circumstances under which they
were made, not materially misleading.
(e) On the Closing Date, the Acquired
Entity, on behalf of the Acquired Fund, will
have good and marketable title to the Assets
and full right, power and authority to sell,
assign, convey, transfer and deliver such
Assets hereunder free of any liens or other
encumbrances, and upon delivery and payment for
the Assets, the Acquiring Entity, on behalf of
the Acquiring Fund, will acquire good and
marketable title thereto, subject to no
restrictions on the full transfer thereof,
excluding such restrictions as might arise
under the 1933 Act.
(f) The Acquired Fund is not engaged
currently, and the execution, delivery and
performance of this Agreement by the Acquired
Entity, on behalf of the Acquired Fund, will
not result, in a material violation of Maryland
law or of the Acquired Entity Charter or the
by-laws of the Acquired Entity, or of any
agreement, indenture, instrument, contract,
lease or other undertaking to which the
Acquired Entity, on behalf of the Acquired
Fund, is a party or by which it is bound, and
the execution, delivery and performance of this
Agreement by the Acquired Entity, on behalf of
the Acquired Fund, will not result in the
acceleration of any material obligation, or the
imposition of any material penalty, under any
agreement, indenture, instrument, contract,
lease, judgment or decree to which the Acquired
Entity, on behalf of the Acquired Fund, is a
party or by which it is bound.
(g) All material contracts or other
commitments of the Acquired Fund (other than
this Agreement, certain investment contracts,
including options, futures, swaps and forward
contracts, the indemnification agreements of
the current and former members of the Acquired
Entity Board, and those contracts listed in
Schedule 4.1) will terminate without liability
to the Acquired Fund on or prior to the Closing
Date. Each contract listed in Schedule 4.1 is
a valid, binding and enforceable obligation of
the Acquired Fund and, to the Acquired Funds
knowledge, the other parties thereto (assuming
due authorization, execution and delivery by
the other parties thereto) and the assignment
by the Acquired Fund to the Acquiring Fund of
each such contract will not result in the
termination of such contract, any breach or
default thereunder by the Acquired Fund or the
imposition of any penalty thereunder.
(h) No litigation or administrative
proceeding or investigation of or before any
court or governmental body is presently pending
or, to the Acquired Entitys knowledge,
threatened against the Acquired Entity, with
respect to the Acquired Fund or any of its
properties or assets, that, if adversely
determined, would materially and adversely
affect its financial condition or the conduct
of the Acquired Funds business. The Acquired
Entity, on behalf of the Acquired Fund, is not
a party to or subject to the provisions of any
order, decree or judgment of any court or
governmental body which materially and
adversely affects the Acquired Funds business
or the Acquired Entitys ability to consummate
the transactions herein contemplated on behalf
of the Acquired Fund.
(i) The Statement of Assets and
Liabilities, Statements of Operations and
Changes in Net Assets and Schedule of
Investments of the Acquired Fund as at the last
day of and for the most recently completed
fiscal year of the Acquired Fund prior to the
date of this Agreement, have been audited by
PricewaterhouseCoopers LLP, an independent
registered public accounting firm, and are in
accordance with accounting principles generally
accepted in the United States of America (GAAP)
consistently applied, and such statements (true
and correct copies of which have been furnished
to the Acquiring Entity) present fairly, in all
material respects, the financial condition of
the Acquired Fund as of such date and for such
period in accordance with GAAP, and there are
no known contingent, accrued or other
liabilities of the Acquired Fund required to be
reflected on a balance sheet (including the
notes thereto) in accordance with GAAP as of
such date that are not disclosed therein. The
Statement of Assets and Liabilities, Statements
of Operations and Changes in Net Assets and
Schedule of Investments (unaudited) of the
Acquired Fund as at the last day of and for the
most recently completed fiscal half year of the
Acquired Fund following the date of the audited
annual statements referenced above are sent to
Acquired Fund shareholders in the regular
course in accordance with GAAP consistently
applied, and such statements (true and correct
copies of which have been furnished to the
Acquiring Entity) present fairly, in all
material respects, the financial condition of
the Acquired Fund, and all known contingent,
accrued or other liabilities of the Acquired
Fund required to be reflected on a balance
sheet (including the notes thereto) in
accordance with GAAP as of such date are
disclosed therein.
(j) Since the last day of the most
recently completed fiscal year of the Acquired
Fund prior to the date of this Agreement, there
has not been any material adverse change in the
Acquired Funds financial condition, assets,
liabilities or business, other than changes
occurring in the ordinary course of business,
or any incurrence by the Acquired Fund of
indebtedness for money borrowed maturing more
than one year from the date such indebtedness
was incurred. For the purposes of this
subparagraph (j), a decline in net asset value
per share of Acquired Fund Shares due to
declines in market values of securities held by
the Acquired Fund, the discharge of Acquired
Fund liabilities, or the redemption of Acquired
Fund Shares by shareholders of the Acquired
Fund shall not constitute a material adverse
change.
(k) On the Closing Date, all federal
and other tax returns, dividend reporting forms
and other tax-related reports of the Acquired
Fund required by law to have been filed by such
date (including any extensions) shall have been
filed and are or will be correct in all
material respects, and all federal and other
taxes shown as due or required to be shown as
due on said returns and reports shall have been
paid or provision shall have been made for the
payment thereof and, to the best of the
Acquired Entitys knowledge, no such return is
currently under audit and no assessment has
been asserted with respect to such returns.
(l) The Acquired Fund is a separate
series of the Acquired Entity that is treated
as a corporation separate from any and all
other series of the Acquired Entity under
Section 851(g) of the Code. For each taxable
year of its operation (including the current
taxable year, assuming such year ends on the
Closing Date), the Acquired Fund has met (or
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 will be) eligible to compute and has
computed (or 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
(after reduction for any allowable capital loss
carryover) (as defined in the Code) 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 Acquired Fund will not
have any tax liability under Section 852 or
Section 4982.
(m) All issued and outstanding
Acquired Fund Shares are, and on the Closing
Date will be, duly authorized and validly and
legally issued and outstanding, fully paid and
non-assessable by the Acquired Entity and have
been offered and sold in any state, territory
or the District of Columbia in compliance in
all material respects with applicable
registration requirements of all applicable
federal and state securities laws. All of the
issued and outstanding Acquired Fund Shares
will, at the time of Closing, be held by the
persons and in the amounts set forth in the
records of the Transfer Agent, on behalf of the
Acquired Fund, as provided in paragraph 3.3.
The Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe
for or purchase any of the Acquired Fund
Shares, nor is there outstanding any security
convertible into any of the Acquired Fund
Shares.
(n) The Acquired Fund will review its
assets to ensure that at any time after its
shareholders have approved this Agreement and
prior to the Closing Date its assets do not
include any assets that the Acquiring Fund is
not permitted, or reasonably believes to be
unsuitable for it, to acquire, including
without limitation any security that, prior to
its acquisition by the Acquired Fund, is
unsuitable for the Acquiring Fund to acquire.
(o) The execution, delivery and
performance of this Agreement, and the
transactions contemplated herein, have been
duly authorized by all necessary action on the
part of the Acquired Entity Board, on behalf of
the Acquired Fund, and this Agreement
constitutes a valid and binding obligation of
the Acquired Entity, on behalf of the Acquired
Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and
other laws relating to or affecting creditors
rights and to general equity principles.
(p) The combined proxy statement and
prospectus (Proxy Statement) to be included in
the Registration Statement (as defined in
paragraph 5.6), insofar as it relates to the
Acquired Fund, from the effective date of the
Registration Statement through the date of the
meeting of shareholders of the Acquired Fund
contemplated therein and on the Closing Date,
will (i) not contain any statement which, at
the time and in light of the circumstances
under which it is made, is false or misleading
with respect to any material fact, or which
omits to state any material fact necessary in
order to make the statements therein not false
or misleading (provided that this
representation and warranty shall not apply to
statements in or omissions from the Proxy
Statement made in reliance upon and in
conformity with information that was furnished
by the Acquiring Entity for use therein) and
(ii) comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations
thereunder. The information to be furnished by
the Acquired Fund for use in registration
statements and other documents filed or to be
filed with any federal, state or local
regulatory authority, which may be necessary in
connection with the transactions contemplated
hereby, shall be accurate and complete in all
material respects and shall comply in all
material respects with federal securities and
other laws and regulations thereunder
applicable thereto.
4.2 Except as has been fully disclosed
to the Acquired Entity in Schedule 4.2 to this
Agreement, the Acquiring Entity, on behalf of
the Acquiring Fund, represents and warrants to
the Acquired Entity and the Acquired Fund as
follows:
(a) The Acquiring Fund is duly
established as a series of the Acquiring
Entity, which is a business trust duly
organized, validly existing and in good
standing under the laws of the State of
Maryland, with the power under its Declaration
of Trust, as amended and/or supplemented (the
Acquiring Entity Charter), to own all of its
assets and to carry on its business as it is
being conducted as of the date hereof. The
Acquiring Entity is duly qualified to do
business as a foreign trust in each
jurisdiction in which the conduct of its
business makes such qualification necessary
except where the failure to so qualify would
not have a material adverse effect on the
condition (financial or otherwise), business,
properties, net assets or results of operations
of the Acquiring Entity. The Acquiring Entity
has all necessary federal, state and local
authorization to carry on its business as now
being conducted and to fulfill the terms of
this Agreement except as described in paragraph
4.2(c).
(b) The Acquiring Entity is a
registered open-end management investment
company, and its registration with the
Commission as an investment company under the
1940 Act, and the registration of the class of
Acquiring Fund Shares under the 1933 Act, is in
full force and effect or will be in full force
and effect as of the Closing Date.
(c) No consent, approval,
authorization, or order of any court or
governmental authority is required for the
consummation by the Acquiring Fund of the
transactions contemplated herein, except such
as may be required under the 1933 Act, the 1934
Act, the 1940 Act, state securities laws and
the Xxxx-Xxxxx-Xxxxxx Act.
(d) The current prospectus and
statement of additional information of the
Acquiring Fund (true and correct copies of
which have been delivered to the Acquired
Entity) and each prospectus and statement of
additional information of the Acquiring Fund
used during the three (3) years prior to the
date of this Agreement conforms or conformed at
the time of its use in all material respects to
the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of
the Commission thereunder and does not or did
not at the time of its use include any untrue
statement of a material fact or omit to state
any material fact required to be stated therein
or necessary to make the statements therein, in
light of the circumstances under which they
were made, not materially misleading.
(e) The Acquiring Fund is not engaged
currently, and the execution, delivery and
performance of this Agreement by the Acquiring
Entity, on behalf of the Acquiring Fund, will
not result, in a material violation of Maryland
law or the Acquiring Entity Charter or the by-
laws of the Acquiring Entity, or of any
agreement, indenture, instrument, contract,
lease or other undertaking to which the
Acquiring Entity, on behalf of the Acquiring
Fund, is a party or by which it is bound, and
the execution, delivery and performance of this
Agreement by the Acquiring Entity, on behalf of
the Acquiring Fund, will not result in the
acceleration of any material obligation, or the
imposition of any material penalty, under any
agreement, indenture, instrument, contract,
lease, judgment or decree to which the
Acquiring Entity, on behalf of the Acquiring
Fund, is a party or by which it is bound.
(f) No litigation or administrative
proceeding or investigation of or before any
court or governmental body is presently pending
or, to the Acquiring Entitys knowledge,
threatened against the Acquiring Entity, with
respect to the Acquiring Fund, or any of its
properties or assets, that, if adversely
determined, would materially and adversely
affect its financial condition or the conduct
of the Acquiring Funds business. The Acquiring
Entity, on behalf of the Acquiring Fund, is not
a party to or subject to the provisions of any
order, decree or judgment of any court or
governmental body which materially and
adversely affects the Acquiring Funds business
or the Acquiring Entitys ability to consummate
the transactions herein contemplated on behalf
of the Acquiring Fund.
(g) The Statement of Assets and
Liabilities, Statements of Operations and
Changes in Net Assets and Schedule of
Investments of the Acquiring Fund as at the
last day of and for the most recently completed
fiscal year of the Acquiring Fund prior to the
date of this Agreement, have been audited by
KPMG, LLP, an independent registered public
accounting firm, and are in accordance with
GAAP consistently applied, and such statements
(true and correct copies of which have been
furnished to the Acquired Entity) present
fairly, in all material respects, the financial
condition of the Acquiring Fund as of such date
and for such period in accordance with GAAP,
and there are no known contingent, accrued or
other liabilities of the Acquiring Fund
required to be reflected on a balance sheet
(including the notes thereto) in accordance
with GAAP as of such date that are not
disclosed therein.
(h) Since the last day of the most
recently completed fiscal year of the Acquiring
Fund prior to the date of this Agreement, there
has not been any material adverse change in the
Acquiring Funds financial condition, assets,
liabilities or business, other than changes
occurring in the ordinary course of business,
or any incurrence by the Acquiring Fund of
indebtedness for money borrowed maturing more
than one year from the date such indebtedness
was incurred. For the purposes of this
subparagraph (h), a decline in net asset value
per share of Acquiring Fund Shares due to
declines in market values of securities held by
the Acquiring Fund, the discharge of Acquiring
Fund liabilities, or the redemption of
Acquiring Fund Shares by shareholders of the
Acquiring Fund shall not constitute a material
adverse change.
(i) On the Closing Date, all federal
and other tax returns, dividend reporting forms
and other tax-related reports of the Acquiring
Fund required by law to have been filed by such
date (including any extensions) shall have been
filed and are or will be correct in all
material respects, and all federal and other
taxes shown as due or required to be shown as
due on said returns and reports shall have been
paid or provision shall have been made for the
payment thereof and, to the best of the
Acquiring Entitys knowledge, no such return is
currently under audit and no assessment has
been asserted with respect to such returns.
(j) The Acquiring Fund is a separate
series of the Acquiring Entity that is treated
as a corporation separate from any and all
other series of the Acquiring Entity 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 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 will be)
eligible to compute and has computed (or will
compute) its federal income tax under Section
852 of the Code, and will have distributed (or
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 (computed
without regard to any deduction for dividends
paid) (as defined in the Code) and (iii) any
net capital gain (after reduction for any
capital loss carryover) (as defined in the
Code) for taxable years ending 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.
(k) All issued and outstanding
Acquiring Fund Shares are, and on the Closing
Date will be, duly authorized and validly and
legally issued and outstanding, fully paid and
non-assessable by the Acquiring Entity and will
have been offered and sold in any state,
territory or the District of Columbia in
compliance in all material respects with
applicable registration requirements of all
applicable federal and state securities laws.
The Acquiring Fund does not have outstanding
any options, warrants or other rights to
subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares.
All of the Acquiring Fund Shares to be issued
and delivered to the Acquired Entity, for the
account of the Acquired Fund Shareholders,
pursuant to this Agreement, will on the Closing
Date have been duly authorized and, when so
issued and delivered, will be duly and validly
and legally issued Acquiring Fund Shares and be
fully paid and non-assessable by the Acquiring
Entity.
(l) The execution, delivery and
performance of this Agreement, and the
transactions contemplated herein, have been
duly authorized by all necessary action on the
part of the Acquiring Entity Board, on behalf
of the Acquiring Fund, and this Agreement
constitutes a valid and binding obligation of
the Acquiring Entity, on behalf of the
Acquiring Fund, enforceable in accordance with
its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or
affecting creditors rights and to general
equity principles.
(m) The Proxy Statement to be included
in the Registration Statement, insofar as it
relates to the Acquiring Fund and the Acquiring
Fund Shares, from the effective date of the
Registration Statement through the date of the
meeting of shareholders of the Acquired Fund
contemplated therein and on the Closing Date,
will (i) not contain any statement which, at
the time and in the light of the circumstances
under which it is made, is false or misleading
with respect to any material fact, or which
omits to state any material fact necessary to
make the statements therein not false or
misleading (provided that this representation
and warranty shall not apply to statements in
or omissions from the Proxy Statement made in
reliance upon and in conformity with
information that was furnished by the Acquired
Entity for use therein) and (ii) comply in all
material respects with the provisions of the
1933 Act, the 1934 Act and the 1940 Act and the
rules and regulations thereunder. The
information to be furnished by the Acquiring
Fund for use in registration statements and
other documents filed or to be filed with any
federal, state or local regulatory authority,
which may be necessary in connection with the
transactions contemplated hereby, shall be
accurate and complete in all material respects
and shall comply in all material respects with
federal securities and other laws and
regulations applicable thereto.
5.
COVENANTS
The Acquired Entity, on behalf of the
Acquired Fund, and the Acquiring Entity, on
behalf of the Acquiring Fund, respectively,
hereby further covenant as follows:
5.1 The Acquired Fund and the Acquiring
Fund each will operate its business in the
ordinary course and shall comply in all
material respects with all applicable laws,
rules and regulations between the date hereof
and the Closing Date, it being understood that
such ordinary course of business will include
the declaration and payment of customary
dividends and other distributions, and any
other distribution that may be advisable.
5.2 The Acquired Entity will call and
hold a meeting of the shareholders of the
Acquired Fund to consider and act upon this
Agreement and to take all other action
necessary to obtain approval of the
transactions contemplated herein.
5.3 The Acquiring Fund Shares to be
acquired by the Acquired Fund hereunder are not
being acquired for the purpose of making any
distribution thereof, other than in accordance
with the terms of this Agreement.
5.4 The Acquired Entity, on behalf of
the Acquired Fund, will assist the Acquiring
Entity in obtaining such information as the
Acquiring Entity reasonably requests concerning
the beneficial ownership of the Acquired Fund
Shares.
5.5 Subject to the provisions of this
Agreement, the Acquiring Entity, on behalf of
the Acquiring Fund, and the Acquired Entity, on
behalf of the Acquired Fund, each 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.
5.6 The Acquiring Entity, on behalf of
the Acquiring Fund, shall prepare and file a
Registration Statement on Form N-14 in
compliance with the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations
thereunder with respect to the Reorganization
(the Registration Statement). The Acquired
Entity, on behalf of the Acquired Fund, will
provide to the Acquiring Entity such
information regarding the Acquired Fund as may
be reasonably necessary for the preparation of
the Registration Statement.
5.7 The Acquiring Entity, on behalf of
the Acquiring Fund, and the Acquired Entity, on
behalf of the Acquired Fund, each will use its
reasonable best efforts to fulfill or obtain
the fulfillment of the conditions precedent to
effect the transactions contemplated by this
Agreement as promptly as practicable.
5.8 The Acquired Entity, on behalf of
the Acquired Fund, will, from time to time, as
and when reasonably requested by the Acquiring
Entity, 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
Entity, on behalf of the Acquiring Fund, may
reasonably deem necessary or desirable in order
to vest in and confirm (a) the Acquired Entitys
title to and possession of the Acquiring Fund
Shares to be delivered hereunder and (b) the
Acquiring Entitys title to and possession of
all the Assets and to otherwise to carry out
the intent and purpose of this Agreement.
5.9 The Acquiring Entity, on behalf of
the Acquiring Fund, will use all reasonable
efforts to obtain the approvals and
authorizations required by the 1933 Act, the
1940 Act and such of the state blue sky or
securities laws as may be necessary in order to
continue its operations after the Closing Date.
5.10 The Acquiring Entity shall not
change the Acquiring Entity Charter, prospectus
or statement of additional information so as to
restrict permitted investments for the
Acquiring Fund, except as required by the
Commission prior to the Closing.
5.11 Prior to the Valuation Date, the
Acquired Entity Board shall adopt the valuation
procedures of the Acquiring Entity with respect
to the Acquired Fund.
5.12 The Acquired Fund and the Acquiring
Fund will each report the Reorganization as a
reorganization on their federal income tax
returns for their respective taxable years in
which the Reorganization occurs, including
filing any and all statements required by
Treas. Reg. ? 1.368-3.
6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUIRED ENTITY
The obligations of the Acquired Entity, on
behalf of the Acquired Fund, to consummate the
transactions provided for herein shall be
subject, at the Acquired Entitys election, to
the following conditions:
6.1 All representations and warranties
of the Acquiring Entity, on behalf of the
Acquiring Fund, contained in this Agreement
shall be true and correct in all material
respects as of the date hereof and, except as
they may be affected by the transactions
contemplated by this Agreement, as of the
Closing Date, with the same force and effect as
if made on and as of the Closing Date.
6.2 The Acquiring Entity, on behalf of
the Acquiring Fund, shall have performed all of
the covenants and complied with all of the
provisions required by this Agreement to be
performed or complied with by the Acquiring
Entity, on behalf of the Acquiring Fund, on or
before the Closing Date.
6.3 The Acquiring Entity, on behalf of
the Acquiring Fund, shall have executed and
delivered an assumption of the Liabilities and
all such other agreements and instruments as
the Acquired Entity may reasonably deem
necessary or desirable in order to vest in and
confirm (a) the Acquired Funds title to and
possession of the Acquiring Fund Shares to be
delivered hereunder and (b) the Acquiring
Entitys assumption of all of the Liabilities
and to otherwise to carry out the intent and
purpose of this Agreement.
6.4 The Acquiring Entity, on behalf of
the Acquiring Fund, shall have delivered to the
Acquired Fund a certificate executed in the
name of the Acquiring Entity, on behalf of the
Acquiring Fund, by the Acquiring Entitys
President or Vice President and its Treasurer
or Assistant Treasurer, in a form reasonably
satisfactory to the Acquired Entity and dated
as of the Closing Date, as to the matters set
forth in paragraphs 6.1 and 6.2 and as to such
other matters as the Acquired Entity shall
reasonably request.
6.5 The Acquiring Entity, on behalf of
the Acquiring Fund, and the Acquired Entity, on
behalf of the Acquired Fund, shall have agreed
on the number of full and fractional Acquiring
Fund Shares to be issued in connection with the
Reorganization after such number has been
calculated in accordance with paragraph 1.1.
7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUIRING ENTITY
The obligations of the Acquiring Entity, on
behalf of the Acquiring Fund, to consummate the
transactions provided for herein shall be
subject, at the Acquiring Entitys election, to
the following conditions:
7.1 All representations and warranties
of the Acquired Entity, on behalf of the
Acquired Fund, contained in this Agreement
shall be true and correct in all material
respects as of the date hereof and, except as
they may be affected by the transactions
contemplated by this Agreement, as of the
Closing Date, with the same force and effect as
if made on and as of the Closing Date.
7.2 The Acquired Entity, on behalf of
the Acquired Fund, shall have performed all of
the covenants and complied with all of the
provisions required by this Agreement to be
performed or complied with by the Acquired
Entity, on behalf of the Acquired Fund, on or
before the Closing Date.
7.3 The Acquired Entity shall have
delivered to the Acquiring Entity, on behalf of
the Acquiring Fund, a Statement of Assets and
Liabilities of the Acquired Fund as of the
Closing Date, including a schedule of
investments, certified by the Treasurer of the
Acquired Entity on behalf of the Acquired Fund.
The Acquired Entity, on behalf of the Acquired
Fund, shall have executed and delivered all
such assignments and other instruments of
transfer as the Acquiring Entity may reasonably
deem necessary or desirable in order to vest in
and confirm (a) the Acquired Funds title to and
possession of the Acquiring Fund Shares to be
delivered hereunder and (b) the Acquiring Funds
title to and possession of all the Assets and
to otherwise to carry out the intent and
purpose of this Agreement.
7.4 The Acquired Entity, on behalf of
the Acquired Fund, shall have delivered to the
Acquiring Entity a certificate executed in the
name of the Acquired Entity, on behalf of the
Acquired Fund, by the Acquired Entitys
President or Vice President and its Treasurer
or Assistant Treasurer, in a form reasonably
satisfactory to the Acquiring Entity and dated
as of the Closing Date, as to the matters set
forth in paragraphs 7.1 and 7.2 and as to such
other matters as the Acquiring Entity shall
reasonably request.
7.5 The Acquired Entity, on behalf of
the Acquired Fund, and the Acquiring Entity, on
behalf of the Acquiring Fund, shall have agreed
on the number of full and fractional Acquiring
Fund Shares to be issued in connection with the
Reorganization after such number has been
calculated in accordance with paragraph 1.1.
8.
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS
OF ACQUIRING ENTITY AND ACQUIRED ENTITY
If any of the conditions set forth below
have not been satisfied on or before the
Closing Date with respect to the Acquired
Entity, on behalf of the Acquired Fund, or the
Acquiring Entity, on behalf of the Acquiring
Fund, the other party to this Agreement shall
be entitled on behalf of the Acquired Fund or
Acquiring Fund, as applicable, at its option,
to refuse to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions
contemplated herein shall have been approved by
the requisite vote of the holders of the
outstanding shares of the Acquired Fund, in
accordance with the provisions of the Acquired
Entity Charter, the by-laws of the Acquired
Entity, and Maryland law, and certified copies
of the resolutions evidencing such approval
shall have been delivered to the Acquiring
Entity. Notwithstanding anything herein to the
contrary, neither the Acquiring Entity nor the
Acquired Entity may waive the condition set
forth in this paragraph 8.1.
8.2 On the Closing Date, no court or
governmental agency of competent jurisdiction
shall have issued any order that remains in
effect and that restrains or enjoins the
Acquired Entity, with respect to the Acquired
Fund, or the Acquiring Entity, with respect to
the Acquiring Fund, from completing the
transactions contemplated by this Agreement.
8.3 All consents of other parties and
all other consents, orders and permits of
federal, state and local regulatory authorities
deemed necessary by the Acquiring Entity or the
Acquired Entity to permit consummation, in all
material respects, of the transactions
contemplated hereby shall have been obtained,
except where failure to obtain any such
consent, order or permit would not involve a
risk of a material adverse effect on the assets
or properties of the Acquiring Fund or the
Acquired Fund, provided that either party
hereto may for itself waive any of such
conditions.
8.4 The Registration Statement shall
have become effective under the 1933 Act and no
stop orders suspending the effectiveness
thereof shall have been issued and, to the best
knowledge of the parties hereto, no
investigation or proceeding for that purpose
shall have been instituted or be pending.
8.5 The parties shall have received the
opinion of Xxxxxxx XxXxxxxxx LLP, dated the
Closing Date, substantially to the effect that,
based upon certain facts, assumptions and
representations and upon certifications made by
the Acquired Entity, on behalf of the Acquired
Fund, the Acquiring Entity, on behalf of the
Acquiring Fund, and their respective authorized
officers, (i) the Reorganization will
constitute a reorganization within the meaning
of Section 368(a) of the Code, and the Acquired
Fund and the Acquiring Fund will each be a
party to a reorganization within the meaning of
Section 368(b) of the Code; (ii) no gain or
loss will be recognized by the Acquiring Fund
upon receipt of the Assets solely in exchange
for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the
Acquired Fund Liabilities; (iii) the basis in
the hands of the Acquiring Fund of the Assets
will be the same as the basis of the Assets in
the hands of the Acquired Fund immediately
prior to the transfer, increased by the amount
of gain (or decreased by the amount of loss),
if any, recognized by the Acquired Fund upon
the transfer; (iv) the holding periods of the
Assets in the hands of the Acquiring Fund will
include the periods during which the Assets
were held by the Acquired Fund (except where
investment activities of the Acquiring Fund
have the effect of reducing or eliminating the
holding period with respect to an asset); (v)
no gain or loss will be recognized by the
Acquired Fund upon the transfer of the Assets
to the Acquiring Fund in exchange for the
Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Acquired Fund
Liabilities, or upon the distribution of the
Acquiring Fund Shares by the Acquired Fund to
its shareholders in liquidation except for (A)
any gain or loss that may be recognized with
respect to contracts subject to Section 1256 of
the Code, (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 Acquired Funds
taxable year; (vi) no gain or loss will be
recognized by the Acquired Fund shareholders
upon the exchange of their Acquired Fund Shares
solely for the Acquiring Fund Shares as part of
the Reorganization; (vii) the aggregate basis
of the Acquiring Fund Shares that each Acquired
Fund shareholder receives in connection with
the transaction will be the same as the
aggregate basis of his or her Acquired Fund
Shares exchanged therefor; and (viii) an
Acquired Fund shareholders holding period for
his or her Acquiring Fund Shares will include
the period for which he or she held the
Acquired Fund Shares exchanged therefor,
provided that he or she held the Acquired Fund
Shares as capital assets on the date of the
exchange. The delivery of such opinion is
conditioned upon the receipt by Xxxxxxx
XxXxxxxxx LLP of representations it shall
request of the Acquiring Entity and the
Acquired Entity. Notwithstanding anything
herein to the contrary, neither the Acquiring
Entity nor the Acquired Entity may waive the
condition set forth in this paragraph 8.5.
8.6 The Acquiring Entity, on behalf of
the Acquiring Fund, shall have received on the
Closing Date an opinion of Xxxxxxxxxxx &
Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP (K&L Gates),
in a form reasonably satisfactory to the
Acquiring Entity, and dated as of the Closing
Date, substantially to the effect that, based
upon certain facts and certifications made by
the Acquired Entity, on behalf of the Acquired
Fund, and its authorized officers: (a) the
Acquired Entity is a corporation validly
existing under the laws of the State of
Maryland; (b) the Acquired Entity, with respect
to the Acquired Fund, has the corporate power
to carry on its business as presently conducted
in accordance with the description thereof in
the Acquired Entitys registration statement as
an open-end investment company registered under
the 1940 Act; (c) this Agreement has been duly
authorized, executed and, so far as known to
such counsel, delivered by the Acquired Entity,
on behalf of the Acquired Fund, and assuming
due authorization, execution and delivery of
this Agreement by the Acquiring Entity, on
behalf of the Acquiring Fund, constitutes a
valid and legally binding obligation of the
Acquired Entity, on behalf of the Acquired
Fund, enforceable against the Acquired Entity
in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and laws
of general applicability relating to or
affecting creditors rights and to general
equity principles (whether in a proceeding
under equity or at law); provided that such
counsel shall be entitled to state that it
expresses no opinion with respect to the
validity, binding effect or enforceability of
any contractual provisions purporting to
provide indemnification of any person for any
claims, damages, liabilities or expenses which
may be limited by any applicable federal or
state securities laws or as a matter of public
policy; (d) the execution and delivery of this
Agreement did not, and the transfer of the
Assets for Acquiring Fund Shares and the
assumption by the Acquiring Fund of the
Liabilities pursuant to this Agreement will
not, violate the Acquired Entity Charter or the
by-laws of the Acquired Entity; (e) to the
knowledge of such counsel, all regulatory or
court consents, authorizations, approvals,
orders or filings required to be obtained or
made by the Acquired Entity, on behalf of the
Acquired Fund, under the federal laws of the
United States or the laws of the State of
Maryland for the transfer of the Assets for
Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Liabilities pursuant to
this Agreement have been obtained or made,
except such as may be required under state
securities or blue sky laws as to which such
counsel need express no opinion; and (f) to the
knowledge of such counsel, and without any
independent investigation, other than as
disclosed on the schedule provided by the
Acquired Entity pursuant to paragraph 4.1 of
this Agreement, the Acquired Fund is not
subject to any litigation or administrative
proceeding that could reasonably be expected to
have a materially adverse effect on the
operations of the Acquired Fund. Such opinion
may state that it is solely for the benefit of
the Acquiring Entity and the Acquiring Entity
Board. Such opinion may contain such
assumptions and limitations as shall be in the
opinion of K&L Gates appropriate to render the
opinions expressed therein. With respect to
all matters of Maryland law, such counsel shall
be entitled to state that, with the approval of
the Acquiring Entity, they have relied on the
opinion of Xxxxxxx LLP and that their opinion
is subject to the same assumptions,
qualifications and limitations with respect to
such matters as are contained in the opinion of
Xxxxxxx LLP.
8.7 The Acquired Entity, on behalf of
the Acquired Fund, shall have received on the
Closing Date an opinion of Xxxxxxx XxXxxxxxx
LLP, in a form reasonably satisfactory to the
Acquired Entity, and dated as of the Closing
Date, substantially to the effect that, based
upon certain facts and certifications made by
the Acquiring Entity, on behalf of the
Acquiring Fund and its authorized officers: (a)
the Acquiring Entity is a business trust
validly existing under the laws of the State of
Maryland; (b) the Acquiring Entity, with
respect to the Acquiring Fund, has the power as
a business trust to carry on its business as
presently conducted in accordance with the
description thereof in the Acquiring Entitys
registration statement as an open-end
investment company registered under the 1940
Act; (c) this Agreement has been duly
authorized, executed and, so far as is known to
such counsel, delivered by the Acquiring
Entity, on behalf of the Acquiring Fund, and
assuming due authorization, execution and
delivery of this Agreement by the Acquired
Entity, on behalf of the Acquired Fund,
constitutes a valid and legally binding
obligation of the Acquiring Entity, on behalf
of the Acquiring Fund, enforceable against the
Acquiring Entity in accordance with its terms,
subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization,
moratorium and laws of general applicability
relating to or affecting creditors rights and
to general equity principles (whether in a
proceeding under equity or at law); provided
that such counsel shall be entitled to state
that it expresses no opinion with respect to
the validity, binding effect or enforceability
of any contractual provisions purporting to
provide indemnification of any person for any
claims, damages, liabilities or expenses which
may be limited by any applicable federal or
state securities laws or as a matter of public
policy; (d) the execution and delivery of this
Agreement did not, and the issuance of the
Acquiring Fund Shares and the assumption of the
Liabilities in exchange for the transfer of the
Assets pursuant to this Agreement will not,
violate the Acquiring Entity Charter or the by-
laws of the Acquiring Entity; (e) to the
knowledge of such counsel, all regulatory or
court consents, authorizations, approvals,
orders or filings required to be obtained or
made by the Acquiring Entity, on behalf of the
Acquiring Fund, under the federal laws of the
United States or the laws of the State of
Maryland with respect to the issuance of the
Acquiring Fund Shares in exchange for the
transfer of the Assets and the assumption of
the Liabilities pursuant to this Agreement have
been obtained or made, except such as may be
required under state securities or blue sky
laws, as to which such counsel need express no
opinion; and (f) to the knowledge of such
counsel, and without any independent
investigation, other than as disclosed on the
schedule provided by the Acquiring Entity
pursuant to paragraph 4.2 of this Agreement,
the Acquiring Fund is not subject to any
litigation or administrative proceeding that
could reasonably be expected to have a
materially adverse effect on the operations of
the Acquiring Fund. Such opinion may state
that it is solely for the benefit of the
Acquired Entity and the Acquired Entity Board.
Such opinion may contain such assumptions and
limitations as shall be in the opinion of
Xxxxxxx XxXxxxxxx LLP appropriate to render the
opinions expressed therein. With respect to
all matters of Maryland law, such counsel shall
be entitled to state that, with the approval of
the Acquired Entity, they have relied on the
opinion of Xxxxxxx LLP and that their opinion
is subject to the same assumptions,
qualifications and limitations with respect to
such matters as are contained in the opinion of
Xxxxxxx LLP.
8.8 The Assets will include no assets
which the Acquiring Fund, by reason of
limitations contained in the Acquiring Entity
Charter or in investment restrictions in effect
on the Closing Date, may not properly acquire.
9.
INDEMNIFICATION
9.1 The Acquiring Entity, out of the
Acquiring Funds assets and property (including
any amounts paid to the Acquiring Fund pursuant
to any applicable liability insurance policies
or indemnification agreements) agrees to
indemnify and hold harmless the Acquired Entity
and the members of the Acquired Entity Board
and its 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 the Acquired
Entity and those board members and officers may
become subject, insofar as such loss, claim,
damage, liability or expense (or actions with
respect thereto) arises out of or is based on
(a) any breach by the Acquiring Entity, on
behalf of the Acquiring Fund, of any of its
representations, warranties, covenants or
agreements set forth in this Agreement or (b)
any act, error, omission, neglect,
misstatement, materially misleading statement,
breach of duty or other act wrongfully done or
attempted to be committed by the Acquiring
Entity or the members of the Acquiring Entity
Board or its officers prior to the Closing
Date, provided that such indemnification by the
Acquiring Entity is not (i) in violation of any
applicable law or (ii) otherwise prohibited as
a result of any applicable order or decree
issued by any governing regulatory authority or
court of competent jurisdiction.
9.2 The Acquired Entity, out of the
Acquired Funds assets and property (including
any amounts paid to the Acquired Fund pursuant
to any applicable liability insurance policies
or indemnification agreements) agrees to
indemnify and hold harmless the Acquiring
Entity and the members of the Acquiring Entity
Board and its 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 the Acquiring
Entity and those board members and officers may
become subject, insofar as such loss, claim,
damage, liability or expense (or actions with
respect thereto) arises out of or is based on
(a) any breach by the Acquired Entity, on
behalf of the Acquired Fund, of any of its
representations, warranties, covenants or
agreements set forth in this Agreement or (b)
any act, error, omission, neglect,
misstatement, materially misleading statement,
breach of duty or other act wrongfully done or
attempted to be committed by the Acquired
Entity or the members of the Acquired Entity
Board or its officers prior to the Closing
Date, provided that such indemnification by the
Acquired Entity is not (i) in violation of any
applicable law or (ii) otherwise prohibited as
a result of any applicable order or decree
issued by any governing regulatory authority or
court of competent jurisdiction.
10. BROKER FEES AND EXPENSES
10.1 The Acquiring Entity, on behalf of
the Acquiring Fund, and the Acquired Entity, on
behalf of the Acquired Fund, represent and
warrant to each other that there are no brokers
or finders entitled to receive any payments in
connection with the transactions provided for
herein.
10.2 Xxxx Xxxxx Partners Fund Advisor,
LLC will pay all the costs of the
Reorganization. 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.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The Acquiring Entity and the
Acquired Entity agree that neither party has
made any representation, warranty or covenant,
on behalf of either the Acquiring Fund or the
Acquired Fund, respectively, not set forth
herein and that this Agreement constitutes the
entire agreement between the parties.
11.2 The covenants to be performed after
the Closing by both the Acquiring Entity and
the Acquired Entity, and the obligations of the
Acquiring Entity, on behalf of the Acquiring
Fund, in Article 9, shall survive the Closing.
All other representations, warranties and
covenants contained in this Agreement or in any
document delivered pursuant hereto or in
connection herewith shall not survive the
consummation of the transactions contemplated
hereunder and shall terminate on the Closing.
12. TERMINATION
This Agreement may be terminated and the
transactions contemplated hereby may be
abandoned at any time prior to the Closing Date
by resolution of either the Acquiring Entity
Board or the Acquired Entity Board, if
circumstances should develop that, in the
opinion of that Board, make proceeding with the
Agreement inadvisable with respect to the
Acquiring Fund or the Acquired Fund,
respectively. Any such termination resolution
to be effective shall be promptly communicated
to the other party and, in any event, prior to
the Closing Date.
13. AMENDMENTS
This Agreement may be amended, modified or
supplemented in such manner as may be deemed
necessary or advisable by the authorized
officers of the Acquired Entity and the
Acquiring Entity; provided, however, that
following the meeting of the Acquired Fund
shareholders called by the Acquired Fund
pursuant to paragraph 5.2 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 Acquired
Fund shareholders under this Agreement to the
detriment of such shareholders without their
further approval.
14. NOTICES
Any notice, report, statement or demand
required or permitted by any provisions of this
Agreement shall be in writing and shall be
given by facsimile, electronic delivery (i.e.,
e-mail), personal service or prepaid or
certified mail addressed to the Acquiring
Entity or the Acquired Entity, at its address
set forth in the preamble to this Agreement, in
each case to the attention of its President.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW;
SEVERABILITY; ASSIGNMENT; LIMITATION OF
LIABILITY
15.1 The Article headings contained in
this Agreement are for reference purposes only
and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2 This Agreement may be executed in
any number of counterparts, each of which shall
be deemed an original.
15.3 This Agreement shall be governed by
and construed and interpreted in accordance
with the internal laws of the State of New
York.
15.4 This Agreement shall bind and inure
to the benefit of the parties hereto and their
respective successors and assigns, but no
assignment or transfer hereof or of any rights
or obligations hereunder shall be made by any
party without the written consent of the other
parties. 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.
15.5 Consistent with the Acquiring
Entity Charter, the obligations of the
Acquiring Entity with respect to the Acquiring
Fund entered into in the name or on behalf of
the Acquiring Entity by any of its Trustees,
officers, employees or agents are made not
individually, but in such capacities, and are
not binding upon any of the Trustees, officers,
employees, agents or shareholders of the
Acquiring Entity, personally, but bind only the
assets of the Acquiring Entity belonging to the
Acquiring Fund, and all persons dealing with
any series or funds of the Acquiring Entity
must look solely to the assets of the Acquiring
Entity belonging to such series or fund for the
enforcement of any claims against the Acquiring
Entity.
IN WITNESS WHEREOF, each of the parties
hereto has caused this Agreement to be executed
by its duly authorized officer.
XXXX XXXXX PARTNERS INCOME TRUST,
on behalf of its series XXXX XXXXX PARTNERS
CORE BOND FUND
By: /s/ R. Xxx Xxxxxx
Name: R. Xxx Xxxxxx
Title: President
XXXX XXXXX INCOME TRUST, INC.,
on behalf of its series XXXX XXXXX CORE BOND
FUND
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Vice President and Chief Legal Officer
Solely for purposes of paragraph 10.2 of the
Agreement:
XXXX XXXXX PARTNERS FUND ADVISOR, LLC
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
SCHEDULE 4.1
As previously disclosed to the Board of
Trustees of the Acquiring Entity, on behalf of
the Acquiring Fund, the Acquired Fund currently
holds certain securities that are rated below
investment grade and will continue to hold such
securities on the Closing Date.
SCHEDULE 4.2
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