AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") is made as of February 2, 2017 by and between
The Xxxxx Fund, Inc., a Maryland corporation (the
"Acquiring Fund"), and Virtus Total Return Fund, a Delaware
Statutory Trust (the "Acquired Fund" and, together with the
Acquiring Fund, the "Funds"), each with its principal place
of business at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000.
This Agreement is intended to be and is adopted as a
plan of reorganization within the meaning of Section 368(a)
of the United States Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization (the
"Reorganization") will consist of the merger of the
Acquired Fund with and into the Acquiring Fund, with the
Acquiring Fund being the Surviving Corporation, under and
pursuant to the laws of the State of Maryland, and the
shares of the Acquired Fund will be converted to shares of
the Acquiring Fund, all upon the terms and conditions
hereinafter set forth in this Agreement.
The Acquired Fund is a nondiversified, closed-end
management investment company and the Acquiring Fund is a
diversified, closed-end management investment company. The
Acquired Fund owns securities that generally are assets of
the character in which the Acquiring Fund is permitted to
invest.
The Board of Directors of the Acquiring Fund,
including a majority of the Directors who are not
"interested persons" of the Acquiring Fund, as defined in
the Investment Company Act of 1940, as amended (the "1940
Act"), has determined, with respect to the Acquiring Fund,
that the merger of the Acquired Fund into 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 would not be diluted as
a result of this transaction.
The Board of Trustees of the Acquired Fund, including a
majority of the Trustees who are not "interested persons"
of the Acquired Fund, as defined in the 1940 Act, has also
determined, with respect to the Acquired Fund, that the
merger of the Acquired Fund into 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 would not be diluted as a
result of this transaction.
NOW, THEREFORE, in consideration of the premises and
of the covenants and agreements hereinafter set forth, the
parties hereto covenant and agree as follows:
1. TRANSACTION
1.1 Subject to the terms and conditions set forth
herein and on the basis of the representations and
warranties contained herein, the Funds agree that at the
Effective Time, as defined in Section 1.2 below, the
Acquired Fund shall be merged with and into the Acquiring
Fund, and the Acquiring Fund shall be the Surviving
Corporation and shall be governed by the laws of the State
of Maryland.
1.2 Subject to the satisfaction of each of the
conditions to the obligations of the respective Funds
hereunder, the Funds shall execute, file and record as
provided under the laws of Maryland Articles of Merger
substantially in the form set forth as "Exhibit A," with
such changes thereto as shall be approved by the respective
Funds in accordance with Maryland law. The Merger shall
become effective on or after the filing of such Articles of
Merger at the time and on the date set forth herein. The
date and time when the Merger shall become effective are
referred to herein as the "Effective Time."
1.3 The Articles of Incorporation of the Acquiring
Fund in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving
Corporation, until amended in the manner provided in such
Articles of Incorporation or in the Bylaws of the Surviving
Corporation and in the Maryland General Corporation Law.
1.4 The Bylaws of the Acquiring Fund in effect
immediately prior to the Effective Time shall be the Bylaws
of the Surviving Corporation, until amended in the manner
provided in such Bylaws and in the Maryland General
Corporation Law.
1.5 At the Effective Time, the separate existence of
the Acquired Fund shall cease, except to the extent, if
any, continued by statute, and all the assets, rights,
privileges, powers and franchises of the Acquired Fund and
all debts due on whatever account to it, shall be taken and
deemed to be transferred to and vested in the Acquiring
Fund without further act or deed, and all such assets,
rights, privileges, powers and franchises, and all and
every other interest of the Acquired Fund, shall be
thereafter effectively the property of the Acquiring Fund
as they were of the Acquired Fund; and the title to and
interest in any real estate vested by deed, lease or
otherwise, unto either of the Funds, shall not revert or be
in any way impaired. Except as otherwise specifically set
forth in this Agreement, the identity, existence, purposes,
powers, franchises, rights, immunities and liabilities of
the Acquiring Fund shall continue unaffected and unimpaired
by the Reorganization.
2. MANNER OF CONVERTING SHARES; VALUATION
2.1 The manner and basis of converting the issued
and outstanding shares of the Acquired Fund into the shares
of the Acquiring Fund shall be as hereinafter set forth in
this Article.
2.2 The whole and fractional shares of the Acquired
Fund issued and outstanding immediately prior to the
Valuation Time (as defined below) shall, as of the
Valuation Time and without further act, be converted into,
and become a number of whole and fractional shares of the
Acquiring Fund (the "Acquiring Fund Shares"), with a net
asset value equal to the value of the net assets of the
Acquired Fund computed immediately after the close of
business of the New York Stock Exchange on the Closing Date
(the "Valuation Time"), using the valuation procedures set
forth in the Acquiring Fund's Articles of Incorporation.
Each shareholder of record of the Acquired Fund will be
credited with a pro rata number of such shares of the
Acquiring Fund received in the Merger based on the number
of Acquired Fund shares held by such shareholder at the
Valuation Time relative to the total number of issued and
outstanding Acquired Fund shares at the Valuation Time.
2.3 Virtus Fund Services, LLC ("VFS") shall make all
computations of value, in its capacity as administrator for
the Funds.
2.4 All computations of value hereunder shall be
made in accordance with each Fund's regular practice and
the requirements of the 1940 Act, and shall be subject to
confirmation by each Fund's respective independent
registered public accounting firm upon reasonable request
of the other Fund.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be [April __, 2017], or
such other date as the parties may agree. All acts taking
place at the closing of the transaction (the "Closing")
shall be deemed to take place simultaneously as of
immediately after the close of business on the Closing Date
unless otherwise agreed to by the parties. The close of
business on the Closing Date shall be as of 4:00 p.m.,
Eastern Time. The Closing shall be held at the offices of
Virtus Investment Partners, 000 Xxxxx Xxxxxx, Xxxxxxxx, XX
00000 or at such other time and/or place as the parties may
agree.
3.2 The Acquired Fund shall direct JPMorgan Chase
Bank, NA, as custodian for the Acquired Fund (the
"Custodian"), to deliver, on the next business day after
the Closing, a certificate of an authorized officer stating
that all assets and property, including, without
limitation, all cash, securities, commodities and futures
interests and dividends or interests receivable, that are
owned by the Acquired Fund, and any rights to register
shares under applicable securities laws, or deferred or
prepaid expenses shown as an asset on the books of the
Acquired Fund (collectively, the "Assets") shall have been
delivered in proper form to the Acquiring Fund. The
Acquired Fund shall have delivered to the Acquiring Fund a
certificate executed in the Acquired Fund's name by its
Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Acquiring Fund, and dated as of the
Closing Date, to the effect that all necessary taxes in
connection with the delivery of the Assets, including all
applicable federal and state stock transfer stamps, if any,
have been paid or provision for payment has been made. The
Acquired Fund's portfolio securities represented by a
certificate or other written instrument shall be presented
by the Custodian as custodian for both Funds, from the
Acquired Fund to the Acquiring Fund for examination no
later than on the next business day following the Closing
Date, and shall be transferred and delivered by the
Acquired Fund on the next business day following the
Closing Date for the account of the Acquiring Fund duly
endorsed in proper form for transfer in such condition as
to constitute good delivery thereof. The Custodian shall
deliver as of the Closing Date by book entry, in accordance
with the customary practices of such depositories and the
Custodian, the Acquired Fund's portfolio securities and
instruments deposited with a "securities depository", as
defined in Rule 17f-4 under the 1940 Act. The cash to be
transferred by the Acquired Fund shall be delivered by wire
transfer of federal funds on the Closing Date.
3.3 The Acquired Fund shall direct Computershare
Trust Company NA in its capacity as transfer agent for the
Acquired Fund (the "Transfer Agent") to deliver on the next
business day following the Closing, a certificate of an
authorized officer stating that its records contain the
names and addresses of the Acquired Fund Shareholders, and
the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the
Closing. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date to the Secretary of the
Acquired Fund, or provide evidence satisfactory to the
Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the
Acquiring Fund. At the Closing each party shall deliver to
the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such
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 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, the Closing Date shall be postponed until
the first business day after the day when trading shall
have been fully resumed and reporting shall have been
restored.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as has been fully disclosed to the
Acquiring Fund in a written instrument executed by an
officer of the Acquired Fund, the Acquired Fund represents
and warrants as follows:
(a) The Acquired Fund is a statutory trust duly
organized, validly existing and in good standing under the
laws of the State of Delaware, with power under the Trust
Instrument to own all of its properties and assets and to
carry on its business as it is now being conducted;
(b) The Acquired Fund is registered with the U.S.
Securities and Exchange Commission (the "Commission") as a
closed-end management investment company under the 1940
Act, and the registration of shares of the Acquired Fund
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 have been obtained
under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act") and the 1940 Act and such as may
be required by state securities laws;
(d) The current prospectus, statement of additional
information, shareholder reports, marketing and other
related materials of the Acquired Fund and each prospectus
and statement of additional information of the Acquired
Fund used at all times prior to the date of this Agreement
conforms or conformed at the time of its use in all
material respects to the applicable requirements of the
1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder, and does not or did not at the
time of its use include any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made,
not materially misleading;
(e) On the Closing Date, the Acquired Fund will have
good and marketable title to the Assets and full right,
power, and authority to sell, assign, transfer and deliver
such Assets hereunder free of any liens or other
encumbrances, and upon delivery and payment for such
Assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might
arise under the 1933 Act, other than as disclosed to the
Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and
the execution, delivery and performance of this Agreement
will not result, in (i) a violation of Delaware law or a
material violation of the Trust Instrument or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Acquired Fund is a party or by
which it is bound, or (ii) the acceleration of any
obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment
or decree to which the Acquired Fund is a party or by which
it is bound;
(g) All material contracts or other commitments of
the Acquired Fund (other than this Agreement and certain
investment contracts, including options, futures and
forward contracts) will terminate without liability or
obligation to the Acquired Fund on or prior to the Closing
Date;
(h) Except as otherwise disclosed in writing to and
accepted by the Acquiring Fund, no litigation or
administrative proceeding or investigation of or before any
court or governmental body is presently pending or, to its
knowledge, threatened against the Acquired Fund or any of
its properties or assets that, if adversely determined,
would materially and adversely affect its financial
condition or the conduct of its business. The Acquired
Fund knows of no facts which might form the basis for the
institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and
adversely affects its business or its ability to consummate
the transactions herein contemplated;
(i) The audited Statement of Assets and Liabilities,
Statements of Operations and Changes in Net Assets, and
Schedule of Investments of the Acquired Fund at November 30,
2015 are in accordance with generally accepted accounting
principles ("GAAP") consistently applied, and such
statements (copies of which have been furnished to the
Acquiring Fund) present fairly, in all material respects,
the financial condition of the Acquired Fund as of such date
in accordance with GAAP, and there are no known contingent
liabilities of the Acquired Fund required to be reflected on
a balance sheet (including the notes thereto) in accordance
with GAAP as of such date not disclosed therein;
(j) Since November 30, 2015, there has not been any
material adverse change in the Acquired Fund's financial
condition, assets, liabilities or business, other than
changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness
maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted
by the Acquiring Fund. For the purposes of this
subparagraph (j), a decline in net asset value per share of
the Acquired Fund due to declines in market values of
securities in the Acquired Fund's portfolio, 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 Fund's
knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(l) For each taxable year of its operation
(including through the Closing Date), the Acquired Fund has
met (or will meet) the requirements of Subchapter M of the
Code for qualification as a regulated investment company,
has been (or will be) eligible to and has computed (or will
compute) its Federal income tax under Section 852 of the
Code, and will have distributed all of its investment
company taxable income and net capital gain (as defined in
the Code) that has accrued through the Closing Date, and
before the Closing Date will have declared dividends
sufficient to distribute all of its investment company
taxable income and net capital gain for the period ending
on the Closing Date;
(m) All issued and outstanding shares of the
Acquired Fund are, and on the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-
assessable and have been offered and sold in every state
and the District of Columbia in compliance in all material
respects with applicable registration requirements of the
1933 Act and state securities laws. All of the issued and
outstanding shares of the Acquired Fund 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 shares of the Acquired Fund, nor is there
outstanding any security convertible into any of the
Acquired Fund shares;
(n) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the
Closing Date by all necessary action, if any, on the part
of the Board of Trustees of the Acquired Fund, and, subject
to the approval of the shareholders of the Acquired Fund,
this Agreement will constitute a valid and binding
obligation of the Acquired Fund, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general
equity principles;
(o) The information to be furnished by the Acquired
Fund for use in registration statements, proxy materials
and other documents filed or to be filed with any Federal,
state or local regulatory authority (including the
Financial Industry 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; and
(p) The Joint Proxy Statement/Prospectus, insofar as
it relates to the Acquired Fund, will, through the date of
the meeting of the Acquired Fund Shareholders contemplated
therein and at the Closing Date (i) not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which such statements were made, not materially misleading,
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; provided,
however, that the representations and warranties of this
subparagraph (p) shall not apply to statements in or
omissions from the Joint Proxy Statement/Prospectus made in
reliance upon and in conformity with information that was
furnished by the Acquiring Fund for use therein.
4.2 Except as has been fully disclosed to the
Acquired Fund in a written instrument executed by an
officer of the Acquiring Fund, the Acquiring Fund
represents and warrants as follows:
(a) The Acquiring Fund is duly organized as a
corporation, validly existing and in good standing under
the laws of the State of Maryland with power under its
charter and Bylaws, each as amended from time to time, to
own all of its assets and to carry on its business as it is
now being conducted;
(b) The Acquiring Fund is registered with the
Commission as a closed-end management investment company
under the 1940 Act and the registration of shares of the
Acquiring Fund under the 1933 Act, is in full force and
effect;
(c) No consent, approval, authorization, or order of
any court or governmental authority is required for the
consummation by the Acquiring Fund of the transactions
contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act and such
as may be required by state securities laws;
(d) The Joint Proxy Statement/Prospectus of the
Acquiring Fund initially filed with the Commission on
December 7, 2016 on Form N-14 which will become effective
prior to the Closing Date, conforms and, as of its
effective date and the Closing Date, will conform 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 and, as of its
effective date and the Closing Date, will 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 materially misleading;
(e) The Acquiring Fund is not engaged currently, and
the execution, delivery and performance of this Agreement
will not result, in (i) a material violation of its charter
and Bylaws, or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring
Fund is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquiring
Fund is a party or by which it is bound;
(f) Except as otherwise disclosed in writing to and
accepted by the Acquired Fund, no litigation or
administrative proceeding or investigation of or before any
court or governmental body is presently pending or, to its
knowledge, threatened against the Acquiring Fund, or any of
the Acquiring Fund's properties or assets that, if
adversely determined, would materially and adversely affect
the Acquiring Fund's financial condition or the conduct of
the Acquiring Fund's business. The Acquiring Fund knows of
no facts which might form the basis for the institution of
such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects
the Acquiring Fund's business or the Acquiring Fund's
ability to consummate the transactions herein contemplated;
(g) On the Closing Date, the Acquiring Fund will
have good and marketable title to its assets;
(h) The audited financial statements of the
Acquiring Fund at December 31, 2015 are in accordance with
GAAP consistently applied, and such statements (copies of
which have been furnished to the Acquired Fund) fairly
reflect the financial condition of the Acquiring Fund as of
such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date not disclosed therein;
(i) Since December 31, 2015, there has not been any
material adverse change in the Acquiring Fund's financial
condition, assets, liabilities, or business other than
changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness
maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted
by the Acquired Fund. For the purposes of this subparagraph
(i), a decline in the net asset value of the Acquiring Fund
shall not constitute a material adverse change;
(j) 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
Fund's knowledge no such return is currently under audit
and no assessment has been asserted with respect to such
returns;
(k) For each fiscal year of its operation (including
through the end of the year in which the Reorganization
occurs), the Acquiring Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company, has
distributed in each such year all net investment company
taxable income (computed without regard to any deduction
for dividends paid) and net realized capital gains (after
reduction for any capital loss carryforward) and has met
the diversification requirements of the Code and the
regulations thereunder;
(l) All issued and outstanding Acquiring Fund Shares
are, and on the Closing Date will be, duly and validly
issued and outstanding, fully paid and non-assessable and
have been offered and sold in every state and the District
of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act. 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;
(m) The execution, delivery and performance of this
Agreement will have been fully authorized prior to the
Closing Date by all necessary action, if any, on the part
of the Directors of the Acquiring Fund, and, subject to any
necessary approval of the shareholders of the Acquiring
Fund, this Agreement will constitute a valid and binding
obligation 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;
(n) Acquiring Fund Shares to be issued and delivered
to the Acquired Fund, for the account of the Acquired Fund
Shareholders, pursuant to the terms of this Agreement, will
on the Closing Date have been duly authorized and, when so
issued and delivered, will be duly and validly issued
Acquiring Fund Shares, and will be fully paid and non-
assessable;
(o) The information to be furnished by the Acquiring
Fund for use in the registration statements, proxy
materials and other documents that may be necessary in
connection with the transactions contemplated hereby shall
be accurate and complete in all material respects and shall
comply in all material respects with Federal securities and
other laws and regulations applicable thereto; and
(p) The Joint Proxy Statement/Prospectus, insofar as
it relates to the Acquiring Fund and the Acquiring Fund
Shares, will, through the date of the meeting of
shareholders of the Acquired Fund and Acquiring Fund
contemplated therein and at the Closing Date (i) not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
materially misleading, 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;
provided, however, that the representations and warranties
of this subparagraph (p) shall not apply to statements in
or omissions from the Joint Proxy Statement/Prospectus made
in reliance upon and in conformity with information that
was furnished by the Acquired Fund for use therein.
5. COVENANTS OF THE ACQUIRED FUND
5.1 The Acquired Fund will operate its business in
the ordinary course between the date hereof and the Closing
Date except as contemplated by this Agreement, it being
understood that such ordinary course of business will
include the declaration and payment of customary dividends
and distributions, and any other distribution that may be
advisable.
5.2 The Acquired Fund will call a meeting of the
shareholders of the Acquired Fund to consider and vote upon
this Agreement and to take all other actions necessary to
obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring
Fund Shares to be issued hereunder are not being acquired
for the purpose of making any distribution thereof, other
than in accordance with the terms of this Agreement.
5.4 The Acquired Fund shall assist the Acquiring
Fund in obtaining such information as the Acquiring Fund
reasonably requests concerning the holders of the Acquired
Fund's shares.
5.5 Subject to the provisions of this Agreement, the
Acquired Fund will take, or cause to be taken, all action,
and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
5.6 The Acquired Fund will provide the Acquiring
Fund with information regarding the Acquired Fund,
reasonably necessary for the preparation of a joint proxy
statement/prospectus on Form N-14 (the "Joint Proxy
Statement/Prospectus"), in compliance with the 1934 Act and
the 1940 Act in connection with the meeting of shareholders
of the Acquired Fund to consider and vote upon this
Agreement and the transactions contemplated herein.
5.7 The Acquired Fund shall use its reasonable best
efforts to fulfill or obtain the fulfillment of the
conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
5.8 The Acquired Fund covenants that it will, from
time to time, as and when reasonably requested by the
Acquiring Fund, execute and deliver or cause to be executed
and delivered all such assignments and other instruments,
and will take or cause to be taken such further action as
the Acquiring Fund, may reasonably deem necessary or
desirable in order to vest in and confirm (a) Acquired
Fund's title to and possession of the Acquiring Fund Shares
to be delivered hereunder, and (b) the Acquiring Fund's
title to and possession of all the assets, and to carry out
the intent and purpose of this Agreement.
6. COVENANTS OF THE ACQUIRING FUND
6.1 The Acquiring Fund will operate its business in
the ordinary course between the date hereof and the Closing
Date except as contemplated by this Agreement.
6.2 Subject to the provisions of this Agreement, the
Acquiring Fund will take, or cause to be taken, all action,
and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
6.3 The Acquiring Fund shall use its reasonable best
efforts to fulfill or obtain the fulfillment of the
conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
6.4 The Joint Proxy Statement/Prospectus which the
Acquiring Fund shall have prepared and filed for the
registration under the 1933 Act of the Acquiring Fund
Shares to be distributed to the Acquired Fund Shareholders
pursuant hereto, shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof
shall have been issued and, to the knowledge of the parties
thereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or
contemplated under the 0000 Xxx.
6.5 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.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED
FUND
The obligations of the Acquired Fund to consummate the
transactions provided for herein shall be subject, at the
Acquired Fund's election, to the performance by the
Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition
thereto, the following further conditions:
7.1 All representations and warranties 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;
7.2 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 Fund on or before the Closing Date;
7.3 The Acquiring Fund shall have delivered to the
Acquired Fund a certificate executed in the Acquiring
Fund's name by its President or Vice President, and its
Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Acquired Fund, and dated as of the
Closing Date, to the effect that the representations and
warranties of the Acquiring Fund made in this Agreement are
true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by
this Agreement and as to such other matters as the Acquired
Fund shall reasonably request; and
7.4 The Acquired Fund and 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 2.2.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND
The obligations of the Acquiring Fund to consummate
the transactions provided for herein shall be subject, at
the Acquiring Fund's election, to the performance by the
Acquired Fund of all of the obligations to be performed by
it hereunder on or before the Closing Date and, in addition
thereto, the following further conditions:
8.1 All representations and warranties 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;
8.2 The Acquired Fund shall have delivered to the
Acquiring Fund a statement of the Acquired Fund's assets
and liabilities, as of the Closing Date, which is prepared
in accordance with GAAP and certified by the Treasurer of
the Acquired Fund;
8.3. 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 Fund, on or before the Closing Date;
8.4 The Acquired Fund shall have delivered to the
Acquiring Fund a certificate executed in the Acquired
Fund's name by its President or Vice President, and its
Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Acquiring Fund, and dated as of the
Closing Date, to the effect that the representations and
warranties of the Acquired Fund made in this Agreement are
true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by
this Agreement and as to such other matters as the
Acquiring Fund shall reasonably request; and
8.5 The Acquired Fund and 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 2.2.
9. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND THE ACQUIRED FUND
If any of the conditions set forth below have not been
satisfied on or before the Closing Date with respect to
either the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be
required to consummate the transactions contemplated by
this Agreement:
9.1 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,
as necessary, in accordance with the Acquired Fund's Trust
instrument, applicable Delaware law and the 1940 Act.
Notwithstanding anything herein to the contrary, neither
the Acquired Fund nor the Acquiring Fund may waive the
conditions set forth in this paragraph 9.1;
9.2 On the Closing Date no action, suit or other
proceeding shall be pending or, to the knowledge of either
Fund, threatened before any court or governmental agency in
which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Agreement
or the transactions contemplated herein;
9.3 All consents of other parties and all other
consents, orders and permits of Federal, state and local
regulatory authorities deemed necessary by either Fund 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;
9.4 The Joint Proxy Statement/Prospectus shall have
become effective under the 1933 Act and no stop orders
suspending the effectiveness thereof shall have been issued
and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have
been instituted or be pending, threatened or contemplated
under the 1933 Act; and
9.5 The Funds shall have received the opinion of
Xxxxxxxx & Worcester LLP ("Tax Counsel"), addressed to the
Funds substantially to the effect that, based upon certain
facts, assumptions, and representations, the transaction
contemplated by this Agreement should, for Federal income
tax purposes, qualify as a tax-free reorganization
described in Section 368(a) of the Code. The delivery of
such opinion is conditioned upon receipt of representations
Tax Counsel shall request of each Fund. Notwithstanding
anything herein to the contrary, neither party may waive
the condition set forth in this paragraph 9.5.
10. BROKERAGE FEES AND EXPENSES
10.1 The Acquired Fund and the Acquiring Fund
represent and warrant that there are no brokers or finders
entitled to receive any payments in connection with the
transactions provided for herein.
10.2 The expenses relating to the proposed
Reorganization will be borne by [the Funds in proportion to
their respective net assets as of the close of business on
the day that all required shareholder approvals have
occurred]. The costs of the Reorganization shall include,
but not be limited to, costs associated with obtaining any
necessary order of exemption from the 1940 Act, preparation
of the Joint Proxy Statement/Prospectus, printing and
distributing the Acquiring Fund's prospectus/proxy
statement or information statement, legal fees, accounting
fees, and securities registration fees. 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.
10.3 In the event the transactions contemplated by
this Agreement are not consummated, then [Virtus Investment
Advisers, Inc.] agrees that it [or one of its affiliates]
shall bear all of the costs and expenses incurred by both
the Acquiring Fund and the Acquired Fund in connection with
such transactions.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 Neither the Acquiring Fund nor the Acquired
Fund has made any representation, warranty or covenant not
set forth herein; this Agreement constitutes the entire
agreement between the parties.
11.2 The 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. The covenants to be performed after the Closing
shall survive the Closing.
12. TERMINATION
This Agreement may be terminated and the transactions
contemplated hereby may be abandoned by either party by (i)
mutual agreement of the parties, or (ii) by either party if
the Closing shall not have occurred on or before December
31, 2017, unless such date is extended by mutual agreement
of the parties, or (iii) by either party if the other party
shall have materially breached its obligations under this
Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the
event of any such termination, this Agreement shall become
void and there shall be no liability hereunder on the part
of any party or its respective Trustees/Directors or
officers, except for any such material breach or
intentional misrepresentation, as to each of which all
remedies at law or in equity of the party adversely
affected shall survive.
13. WAIVER
The Acquiring Fund and the Acquired Fund, after
consultation with their respective counsel and by mutual
consent of their Board of Trustees, may waive any condition
to their respective obligations hereunder, except the
conditions set forth in paragraphs 9.1 and 9.5.
14. AMENDMENTS
This Agreement may be amended, modified or
supplemented in such manner as may be deemed necessary or
advisable and mutually agreed upon in writing by the
authorized officers of either the Acquired Fund or the
Acquiring Fund; provided, however, that following the
meeting of the shareholders of the Acquired Fund called
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.
15. 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 receiving party in care of
Virtus Investment Advisers, Inc., 000 Xxxxx Xxxxxx,
Xxxxxxxx, XX 00000, Attn: Counsel.
16. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
16.1 The Article and paragraph headings contained in
this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
16.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
16.3 This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware without regard to its principles of conflicts of
laws.
16.4 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
party. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person, firm
or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies
under or by reason of this Agreement.
17. INDEMNIFICATION
17.1 The Acquiring Fund agrees to indemnify and hold
harmless the Acquired Fund, and its trustees, officers,
employees and agents (the "Acquired Fund Indemnified
Parties"), from and against any and all losses, claims,
damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which the Acquired
Fund Indemnified Parties 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 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 Fund or the members of the
Acquiring Fund's Board of Directors or its officers prior
to the Closing Date, provided that this indemnification
shall not apply to the extent such loss, claim, damage,
liability or expense (or actions with respect thereto)
shall be due to any negligent, intentional or fraudulent
act, omission or error of the Acquired Fund or its
respective directors, officers, employees or agents.
17.2 The Acquired Fund agrees to indemnify and hold
harmless the Acquiring Fund, and its directors, officers,
employees and agents (the "Acquiring Fund Indemnified
Parties") from and against any and all losses, claims,
damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which the Acquiring
Fund Indemnified Parties 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 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 Fund or the members of the
Acquired Fund's Board of Trustees or its officers prior to
the Closing Date, provided that this indemnification shall
not apply to the extent such loss, claim, damage, liability
or expense (or actions with respect thereto) shall be due
to any negligent, intentional or fraudulent act, omission
or error of the Acquiring Fund or its respective directors,
officers, employees or agents.
7.3 The Acquiring Fund understands and agrees that
the obligations of the Acquired Fund under this Agreement
shall not be binding upon any trustee, shareholder,
nominee, officer, agent or employee of the Acquired Fund
personally, but bind only the Acquired Fund and the
Acquired Fund's property. Moreover, all persons shall look
only to the assets of the Acquired Fund to satisfy the
obligations of the Acquired Fund hereunder. The Acquiring
Fund represents that it has notice of the provisions of the
charter of the Acquired Fund disclaiming such trustee and
officer liability for acts or obligations of the Acquired
Fund.
17.4 The Acquired Fund understands and agrees that
the obligations of the Acquiring Fund under this Agreement
shall not be binding upon any director, shareholder,
nominee, officer, agent or employee of the Acquiring Fund
personally, but bind only the Acquiring Fund and the
Acquiring Fund's property. Moreover, all persons shall
look only to the assets of the Acquiring Fund to satisfy
the obligations of the Acquiring Fund thereunder. The
Acquired Fund represents that it has notice of the
provisions of the charter of the Acquiring Fund disclaiming
such director and officer liability for acts or obligations
of the Acquiring Fund.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed by its President, Vice
President or Treasurer all as of the date first written
above.
THE XXXXX FUND, INC.
By: /s/W. Xxxxxxx Xxxxxxx
By: W. Xxxxxxx Xxxxxxx
Title: Executive Vice President and Treasurer
VIRTUS TOTAL RETURN FUND
By:_/s/Xxxxxxx Xxxxxxx
By: Xxxxxxx Xxxxxxx
Title: Vice President, Secretary and Chief
Legal Officer
Agreed and accepted as to paragraph 10.3 only:
VIRTUS INVESTMENT ADVISERS, INC.
By: /s/Xxxxxxx X. Xxxxxxx
By: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
