Exhibit (4)
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
January 19, 1996 by and between The One Group -Registered Trademark-, a
Massachusetts business trust, ("One Group") and Paragon Portfolio, a
Massachusetts business trust ("Paragon"). The capitalized terms used herein
shall have the meaning ascribed to them in this Agreement.
1. PLAN OF REORGANIZATION
(a) Paragon will sell, assign, convey, transfer and deliver to One Group,
and One Group will acquire, on the Exchange Date all of the properties and
assets existing at the Valuation Time in Paragon Treasury Money Market Fund
("Paragon Money Market"), Paragon Short-Term Government Fund ("Paragon
Government"), Paragon Intermediate-Term Bond Fund ("Paragon Bond"), Paragon
Value Equity Income Fund ("Paragon Equity"), Paragon Louisiana Tax-Free Fund
("Paragon Louisiana"), Paragon Value Growth Fund ("Paragon Growth") and Paragon
Gulf South Growth Fund ("Paragon Gulf South") (Paragon Money Market, Paragon
Government, Paragon Bond, Paragon Equity, Paragon Louisiana, Paragon Growth and
Paragon Gulf South, each is a "Paragon Fund" and are collectively the "Paragon
Funds"), such acquisition to be made by The One Group Treasury Securities Money
Market Fund ("One Group Money Market"), The One Group Limited Volatility Bond
Fund ("One Group Limited Volatility"), The One Group Government Bond Fund ("One
Group Bond"), One Group Income Equity Fund ("One Group Equity"), The One Group
Louisiana Municipal Bond Fund ("One Group Louisiana"), The One Group Value
Growth Fund ("One Group Growth") and The One Group Gulf South Fund ("One Group
Gulf South") (One Group Money Market, One Group
Limited Volatility, One Group Bond, One Group Income Equity, One Group
Louisiana, One Group Growth and One Group Gulf South, each is a "One Group
Fund" and are collectively the "One Group Funds"), respectively, of One Group.
For purposes of this Agreement the respective Paragon Funds correspond to the
One Group Funds as follows: Paragon Money Market corresponds to One Group Money
Market; Paragon Government corresponds to One Group Limited Volatility; Paragon
Bond corresponds to One Group Bond; Paragon Equity corresponds to One Group
Income Equity; Paragon Louisiana corresponds to One Group Louisiana; Paragon
Growth corresponds to One Group Growth; and One Group Gulf South corresponds to
Paragon Gulf South. In consideration therefor, each One Group Fund shall, on
the Exchange Date, assume all of the liabilities of the corresponding Paragon
Fund in exchange for a number of full and fractional One Group Class A,
Fiduciary Class or Class B shares of the corresponding One Group Fund
(collectively, "Shares") having an aggregate net asset value equal to the value
of all of the assets of each Paragon Fund transferred to the corresponding One
Group Fund on such date less the value of all of the liabilities of each Paragon
Fund assumed by the corresponding One Group Fund on that date. It is intended
that each reorganization described in this Agreement shall be a tax-free
reorganization under the Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a)
of this Agreement, each Paragon Fund shall distribute in complete liquidation
to its respective shareholders of record as of the Exchange Date the Shares
received by it, each shareholder being entitled to receive that number of
Shares equal to the proportion which the number of shares of beneficial
interest of the applicable class of the Paragon Fund held by such shareholder
bears to the number of such shares of such Paragon Fund outstanding on such
date. If the Paragon shareholder of record is a financial
organization authorized to act in a fiduciary, advisory, custodial or similar
capacity, that shareholder will receive One Group Fiduciary Class Shares. All
other Paragon Class A shareholders will receive One Group Class A Shares.
Shareholders of record holding Paragon Class B Shares, other than Class B
shareholders of Paragon Money Market, will receive One Group Class B shares.
Paragon Money Market Class B Shares will receive One Group Money Market Class A
shares.
II. AGREEMENT
One Group and Paragon represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF PARAGON. Paragon and each Paragon
Fund jointly and severally represent and warrant to and agree with One Group and
each One Group Fund that:
(a) Paragon is a business trust duly established and validly existing
under the laws of the Commonwealth of Massachusetts and has power to own all of
its properties and assets and to carry out its obligations under this Agreement.
Paragon and each Paragon Fund is not required to qualify as a foreign
association in any jurisdiction. Paragon and each Paragon Fund has all
necessary federal, state and local authorizations to carry on its business as
now being conducted and to fulfill the terms of this Agreement, except as set
forth in Section 1(l).
(b) Paragon is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
Each Paragon Fund has elected to qualify and has qualified as a regulated
investment company under Part I of Subchapter M of the Code, as of and since its
first taxable year, and qualifies and intends to continue to qualify
as a regulated investment company for its taxable year ending upon its
liquidation. Each Paragon Fund has been a regulated investment company under
such sections of the Code at all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each Paragon Fund at and for the year ended
November 30, 1994, such statements and schedules having been audited by Price
Waterhouse LLP, independent accountants to Paragon, have been furnished to One
Group.
(d) The combined prospectus of the Paragon Funds dated March 30, 1995 (the
"Paragon Prospectus") and the Statement of Additional Information for the
Paragon Funds dated March 30, 1995 and on file with the Securities and Exchange
Commission (the "Commission"), which have been previously furnished to One
Group, did not as of their dates and do not as of the date hereof 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 not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Paragon or any Paragon Fund, threatened against
Paragon or any Paragon Fund which assert liability on the part of Paragon or any
Paragon Fund.
(f) There are no material contracts outstanding to which Paragon or any
Paragon Fund is a party, other than as disclosed in the Paragon Prospectus and
the corresponding Statement of Additional Information, or in the Registration
Statement and the Proxy Statement as defined herein.
(g) Neither Paragon nor any Paragon Fund has any known liabilities of a
material nature, contingent or otherwise, other than those shown as belonging to
it on its statement of assets and liabilities as of November 30, 1995, and those
incurred in the ordinary course of Paragon's business as an investment company
since that date. Prior to the Exchange Date, Paragon will advise One Group of
all known material liabilities, contingent or otherwise, incurred by it and each
Paragon Fund subsequent to November 30, 1995, whether or not incurred in the
ordinary course of business.
(h) As used in this Agreement, the term "Investments" shall mean each
Paragon Fund's investments shown on the schedule of its portfolio investments as
of November 30, 1995 referred to in Section 1(c) hereof, as supplemented with
such changes as Paragon or each Paragon Fund shall make after November 30, 1995,
which changes have been disclosed to One Group, and changes made on and after
the date of this Agreement after advising One Group of such proposed changes,
and changes resulting from stock dividends, stock split-ups, mergers and similar
corporate actions.
(i) Each Paragon Fund has filed or will file all federal and state tax
returns which, to the knowledge of Paragon's officers, are required to be filed
by each Paragon Fund and has paid
or will pay all federal and state taxes shown to be due on said returns or on
any assessments received by each Paragon Fund. All tax liabilities of each
Paragon Fund have been adequately provided for on its books, and no tax
deficiency or liability of any Paragon Fund has been asserted, and no question
with respect thereto has been raised, by the Internal Revenue Service or by any
state or local tax authority for taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval as described in Section 8(a) and otherwise as described in
Section 1(1), Paragon on behalf of each Paragon Fund will have full right, power
and authority to sell, assign, transfer and deliver the Investments and any
other assets and liabilities of each Paragon Fund to be transferred to the
corresponding One Group Fund pursuant to this Agreement. At the Exchange Date,
subject only to the delivery of the Investments and any such other assets and
liabilities as contemplated by this Agreement, One Group will, on behalf of each
One Group Fund, acquire the Investments and any such other assets subject to no
encumbrances, liens or security interests in favor of any third party creditor
of Paragon or a Paragon Fund and, except as described in Section 1(k), without
any restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as amended (the
"1933 Act"), of any of the Investments would be required if they were, as of the
time of such transfer, the subject of a public distribution by either of Paragon
or One Group, except as previously disclosed to One Group by Paragon.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Paragon or any
Paragon Fund of the transactions contemplated by this Agreement, except such as
may be required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, state securities
or blue sky laws (which term as used herein shall include the laws of the
District of Columbia and of Puerto Rico) or the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 (the "H-S-R Act").
(m) The registration statement (the "Registration Statement") filed with
the Commission by One Group on Form N-14 relating to the Shares issuable
hereunder, and the proxy statement of Paragon included therein (the "Proxy
Statement"), on the effective date of the Registration Statement and insofar as
they relate to Paragon and the Paragon Funds, (i) will 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 and (ii) will 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 not misleading; and
at the time of the shareholders' meeting referred to in Section 8(a) below and
on the Exchange Date, the prospectus contained in the Registration Statement of
which the Proxy Statement is a part (the "Prospectus"), as amended or
supplemented by any amendments or supplements filed with the Commission by One
Group, insofar as it relates to Paragon and the Paragon Funds, will 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 not
misleading; provided, however, that the representations and warranties in this
subsection shall apply only to statements of fact relating to Paragon and any
Paragon Fund contained in the Registration Statement, the Prospectus or the
Proxy Statement, or omissions to state in any thereof a material fact relating
to Paragon or any Paragon Fund, as such Registration Statement, Prospectus and
Proxy Statement shall be furnished to Paragon in definitive form as soon as
practicable following effectiveness of the Registration Statement and before
any public distribution of the Prospectus or Proxy Statement.
(n) All of the issued and outstanding shares of beneficial interest of
each Paragon Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws.
(o) Each of the Paragon Funds is qualified, and will at all times through
the Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code.
(p) At the Exchange Date, each of the Paragon Funds will have sold such of
its assets, if any, as necessary to assure that, after giving effect to the
acquisition of the assets pursuant to this Agreement, each of the One Group
Funds will remain a "diversified company" within the meaning of Section 5(b) (l)
of the 1940 Act and in compliance with such other mandatory investment
restrictions as are set forth in the One Group Prospectuses previously furnished
to Paragon.
2. REPRESENTATIONS AND WARRANTIES OF ONE GROUP. One Group and each One
Group Fund jointly and severally represent and warrant to and agree with Paragon
and each Paragon Fund that:
(a) One Group is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts and has power to carry on
its business as it is now being conducted and to carry out this Agreement. One
Group and each One Group Fund is not required to qualify as a foreign
association in any jurisdiction. One Group and each One Group Fund has all
necessary federal, state and local authorizations to own all of its properties
and assets and to carry on its business as now being conducted and to fulfill
the terms of this Agreement, except as set forth in Section 2(i).
(b) One Group is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect. Each One Group Fund that has had active operations
prior to the Exchange Date, has elected to qualify and has qualified as a
regulated investment company under Part I of Subchapter M of the Code, as of and
since its first taxable year, and qualifies and intends to continue to qualify
as a regulated investment company for its taxable year ending June 30, 1995.
Each One Group Fund that has had actual operations prior to the Exchange Date
has been a regulated investment company under such sections of the Code at all
times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of investments (indicating
their market values) for each One Group Fund for the year ended June 30, 1995,
such statements and schedules having been audited by Coopers & Xxxxxxx,
independent accountants to One Group, have been furnished to Paragon. Unaudited
statements of assets and liabilities, statements of operations, statements of
changes in net assets and schedules of investments (indicating their market
values) for each One Group Fund as of December 31, 1995 have also been furnished
to Paragon. Such statements of assets and liabilities and schedules fairly
present the financial position of the One Group Funds as of their respective
dates, and said statements of operations and changes in net assets fairly
reflect the results of its operations and changes in financial position for the
periods covered thereby in conformity with generally accepted accounting
principles.
(d) The prospectuses of each One Group Fund dated November 1, 1995
(collectively, the "One Group Prospectuses"), other than those relating to
the One Group Louisiana, One Group Growth and One Group Gulf South, and the
Statement of Additional Information
for the One Group Funds, dated November 1, 1995, and on file with the
Commission, which have been previously furnished to Paragon, did not as of their
dates and do not as of the date hereof 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 not misleading. The One Group
Louisiana, One Group Growth and One Group Gulf South Prospectuses and the
Statements of Additional Information, as amended, filed with the Commission on
November 24, 1995, which have been previously furnished to Paragon, did not as
of their dates and do not as of the date hereof 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 not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of One Group or any One Group Fund, threatened
against One Group or any One Group Fund which assert liability on the part of
One Group or any One Group Fund.
(f) There are no material contracts outstanding to which One Group or any
One Group Fund is a party, other than as disclosed in the One Group Prospectuses
and the corresponding Statement of Additional Information or in the Registration
Statement.
(g) Neither One Group nor any One Group Fund has any known liabilities of
a material nature, contingent or otherwise, other than those shown on its
statement of assets and liabilities as of December 31, 1995 referred to above
and those incurred in the ordinary course of the business of One Group as an
investment company or any One Group Fund since such date. Prior to the Exchange
Date, One Group will advise Paragon of all known material liabilities,
contingent or otherwise, incurred by it and each One Group Fund subsequent to
December 31, 1995, whether or not incurred in the ordinary course of business.
(h) Each One Group Fund has filed or will file all federal and state tax
returns which, to the knowledge of One Group's officers, are required to be
filed by each One Group Fund and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by each One
Group Fund. All tax liabilities of each One Group Fund have been adequately
provided for on its books, and no tax deficiency or liability of any One Group
Fund has been asserted, and no question with respect thereto has been raised, by
the Internal Revenue Service or by any state or local tax authority for taxes in
excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by One Group or any One Group Fund of
the transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, state securities or Blue Sky
laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise as
described in Section 2 (i), One Group on behalf of each One Group Fund will have
full right, power and authority to purchase the Investments and any other assets
and assume the liabilities of each Paragon Fund to be transferred to the
corresponding One Group Fund pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement, on
the effective date of the Registration Statement and insofar as they relate to
One Group and the One Group Funds: (i) will 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 and (ii) will 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 not misleading; and at the time of the
shareholders'
meeting referred to in Section 8(a) and at the Exchange Date, the Prospectus, as
amended or supplemented by any amendments or supplements filed with the
Commission by One Group or any One Group Fund, will 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 not misleading;
provided, however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the Registration
Statement, the Prospectus or the Proxy Statement made in reliance upon and in
conformity with information furnished by Paragon or any Paragon Fund for use in
the Registration Statement, the Prospectus or the Proxy Statement.
(l) Shares to be issued to each Paragon Fund have been duly authorized
and, when issued and delivered pursuant to this Agreement and the Prospectus,
will be legally and validly issued and will be fully paid and nonassessable by
One Group and no shareholder of One Group will have any preemptive right of
subscription or purchase in respect thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each of One Group Money Market, One Group Bond, One Group Limited
Volatility, and One Group Equity is qualified and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code. Each of One Group Louisiana, One Group
Growth and One Group Gulf South, upon filing of its first income tax return at
the completion of its first taxable year, will elect to be a regulated
investment company and until such time will take all steps necessary to ensure
qualification as a regulated investment company.
3. REORGANIZATION. (a) Subject to the requisite shareholder approval as
described in Section 8(a) and to the other terms and conditions contained herein
(including each Paragon Fund's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof ), Paragon and each Paragon Fund agree to
sell, assign, convey, transfer and deliver to the corresponding One Group Fund,
and One Group and each One Group Fund agree to acquire from the corresponding
Paragon Fund, on the Exchange Date all of the Investments and all of the cash
and other assets of each Paragon Fund in exchange for that number of Shares of
the corresponding One Group Fund provided for in Section 4 and the assumption by
the corresponding One Group Fund of all the liabilities of the Paragon Fund.
Pursuant to this Agreement, each Paragon Fund will, as soon as practicable after
the Exchange Date, distribute in liquidation all of the Shares received by it to
its shareholders in exchange for their shares of beneficial interest of such
Paragon Fund.
(b) Paragon, on behalf of each Paragon Fund, will pay or cause to be paid
to the corresponding One Group Fund any interest and cash dividends received by
it on or after the Exchange Date with respect to the Investments transferred to
the One Group Funds hereunder. Paragon, on behalf of each Paragon Fund, will
transfer to the corresponding One Group Fund any rights, stock dividends or
other securities received by Paragon or any Paragon Fund after the Exchange Date
as stock dividends or other distributions on or with respect to the Investments
transferred, which rights, stock dividends and other securities shall be deemed
included in the assets transferred to each One Group Fund at the Exchange Date
and shall not be separately valued, in which case any such distribution that
remains unpaid as of the
Exchange Date shall be included in the determination of the value of the assets
of the Paragon Fund acquired by the corresponding One Group Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, One Group will
deliver to Paragon a number of Shares having an aggregate net asset value equal
to the value of the assets of the Corresponding Paragon Fund acquired by each
One Group Fund, less the value of the liabilities of such Paragon Fund assumed,
determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each Paragon Fund's net
assets will be computed as of the Valuation Time using the valuation procedures
for the corresponding One Group Fund as set forth in the One Group Prospectus
for the particular One Group Fund
(b) Subject to Section 4(d) hereof, the net asset value of a share of each
One Group Fund will be determined to the nearest full cent as of the Valuation
Time, using the valuation procedures set forth in the One Group Prospectus for
the particular One Group Fund.
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m. Eastern
Standard time on March 22, 1996 or such earlier or later day as may be
mutually agreed upon in writing by the parties hereto (the "Valuation Time").
(d) No formula will be used to adjust the net asset value of any Paragon
Fund or One Group Fund to take into account differences in realized and
unrealized gains and losses.
(e) Each One Group Fund shall issue its Shares to the corresponding
Paragon Fund on one share deposit receipt registered in the name of the
corresponding Paragon Fund. Each Paragon Fund shall distribute in liquidation
the Shares received by it hereunder pro rata to its shareholders of each class
of shares by redelivering such share deposit receipt to One Group's transfer
agent which will
as soon as practicable set up open accounts for each Paragon Fund shareholder in
accordance with written instructions furnished by Paragon.
(f) Each One Group Fund shall assume all liabilities of the corresponding
Paragon Fund, whether accrued or contingent, in connection with the acquisition
of assets and subsequent dissolution of the corresponding Paragon Fund or
otherwise, except that recourse for assumed liabilities relating to a particular
Paragon Fund will be limited to the corresponding One Group Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5 (e),
all fees and expenses, including accounting expenses, portfolio transfer taxes
(if any) or other similar expenses incurred in connection with the consummation
by One Group and Paragon of the transactions contemplated by this Agreement will
be paid by the party directly incurring such fees and expenses, except that the
costs of proxy materials and proxy solicitation, including legal expenses, will
be borne by the One Group; PROVIDED, HOWEVER, that such expenses will in any
event be paid by the party directly incurring such expenses if and to the extent
that the payment by the other party of such expenses would result in the
disqualification of any One Group Fund and any Paragon Fund, as the case may be,
as a "regulated investment company" within the meaning of Section 851 of the
Code.
(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of Paragon being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Paragon's obligations referred to in Section 8(a) or Section 10) Paragon shall
pay directly all reasonable fees and expenses incurred by One Group in
connection with such transactions, including, without limitation, legal,
accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of One Group being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to One Group's obligations referred to in Section 8(a) or Section 9), One Group
shall pay directly all reasonable fees and expenses incurred by Paragon in
connection with such transactions, including without limitation legal,
accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) One Group or Paragon being either
unwilling or unable to go forward or (ii) the nonfulfillment or failure of any
condition to Paragon or One Group's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of Paragon and One Group
shall bear the expenses it has actually incurred in connection with such
transactions.
(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
6. PERMITTED ASSETS. One Group agrees to advise Paragon promptly if at
any time prior to the Exchange Date the assets of any Paragon Fund include any
assets that the corresponding One Group 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 any Paragon Fund, One Group has
informed Paragon is unsuitable for the corresponding One Group Fund to acquire.
7. EXCHANGE DATE. Delivery of the assets of the Paragon Funds to be
transferred, assumption of the liabilities of the Paragon Funds to be assumed,
and the delivery of Shares to be issued shall be made at the offices of Banc One
Investment Advisors Corporation at 9:00 am. on March 25, 1996, or at such other
time and date agreed to by Paragon and One Group, the date and time upon which
such delivery is to take place being referred to herein as the "Exchange Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Paragon agrees to
call a special meeting of the shareholders of each Paragon Fund as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of each Paragon Fund to and
the assumption of all of the liabilities of each Paragon Fund by the
corresponding One Group Fund as herein provided, adopting this Agreement, and
authorizing the liquidation and dissolution of any Paragon Fund, and, except as
set forth in Section 13, it shall be a condition to the obligations of each of
the parties hereto that the holders of the shares of beneficial interest of each
Paragon Fund, and each class of shares of each Paragon Fund if such is required
under the 1940 Act, shall have approved this Agreement and the transactions
contemplated herein in the manner required by law and Paragon's Declaration of
Trust at such a meeting on or before the Valuation Time.
(b) Paragon and each Paragon Fund agree that the liquidation and
dissolution of each Paragon Fund will be effected in the manner provided in
Paragon's Declaration of Trust in accordance with applicable law, and that it
will not make any distributions of any Shares to the shareholders of a Paragon
Fund without first paying or adequately providing for the payment of all of such
Paragon Fund's known debts, obligations and liabilities.
(c) Each of One Group and Paragon will cooperate with the other, and each
will furnish to the other the information relating to itself required by the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
to be set forth in the Registration Statement, including the Prospectus and the
Proxy Statement.
9. CONDITIONS TO ONE GROUP'S OBLIGATIONS. The obligations of One Group
and each One Group Fund hereunder shall be subject to the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Paragon
Funds, shall have been approved as set forth in Section 8(a).
(b) Paragon shall have furnished to One Group a statement of each Paragon
Fund's assets and liabilities, with values determined as provided in Section 4
of this Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on Paragon's behalf by its
President (or any Vice President) and Treasurer, and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation Time
and as of the Exchange Date there has been no material adverse change in the
financial position of any Paragon Fund since November 30, 1995, other than
changes in the Investments since that date or changes in the market value of the
Investments, or changes due to net redemptions of shares of the Paragon Funds,
dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Paragon and each Paragon Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, Paragon and each Paragon Fund has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to each of such dates, and Paragon shall have furnished to One Group a
statement, dated the Exchange Date, signed by Paragon's President (or any Vice
President) and Treasurer certifying those facts as of such dates.
(d) Paragon shall have delivered to One Group a letter from Price
Waterhouse LLP dated the Exchange Date stating that such firm reviewed the
federal and state income tax returns of each Paragon Fund for the year ended
November 30, 1995 and that, in the course of such review, nothing came to their
attention which caused them to believe that such returns did not properly
reflect, in all material respects, the federal and state income taxes of each
Paragon Fund for the periods covered thereby, or that each Paragon Fund would
not qualify as a regulated investment company for federal income tax purposes.
(e) There shall not be any material litigation pending with respect to the
matters contemplated by this Agreement.
(f) One Group shall have received an opinion of Xxxx and Xxxx, in form
reasonably satisfactory to One Group and dated the Exchange Date, to the effect
that (i) Paragon is a business trust duly established and validly existing under
the laws of the Commonwealth of Massachusetts, and neither Paragon nor any
Paragon Fund is, to the knowledge of such counsel, required to qualify to do
business as a foreign association in any jurisdiction, (ii) this Agreement has
been duly authorized, executed, and delivered by Paragon and, assuming that the
Registration Statement, the Prospectus and the Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by One Group, is a valid and binding
obligation of Paragon, (iii) Paragon and each Paragon Fund has power to sell,
assign, convey, transfer and deliver the Investments and other assets
contemplated hereby and, upon consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement, Paragon and each Paragon
Fund will have duly
sold, assigned, conveyed, transferred and delivered such Investments and other
assets to One Group, (iv) the execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not, violate
Paragon's Declaration of Trust, or Bylaws, as amended, or any provision of any
agreement known to such counsel to which Paragon or any Paragon Fund is a party
or by which it is bound, it being understood that with respect to investment
restrictions as contained in Paragon's Declaration of Trust, or Bylaws, or then-
current prospectus or statement of additional information, such counsel may rely
upon a certificate of an officer of Paragon whose responsibility it is to advise
Paragon with respect to such matters and (v) no consent, approval, authorization
or order of any court or governmental authority is required for the consummation
by Paragon or any Paragon Fund of the transactions contemplated hereby, except
such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities or blue sky laws and the H-S-R
Act, and it being understood that such opinion shall not be deemed to apply to
One Group's compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state
securities or blue sky laws and H-S-R Act. For purposes of analysis regarding
the 1940 Act, Xxxx & Xxxx may assume as fact that the Paragon Funds and the One
Group Funds may be considered affiliated persons or affiliated persons of an
affiliated person solely by reason of having a common investment adviser.
(g) One Group shall have received an opinion of Ropes & Xxxx, counsel to
One Group addressed to The One Group and each One Group Fund, in form reasonably
satisfactory to One Group and dated the Exchange Date, to the effect that for
Federal income tax purposes (i) no gain or loss will be recognized by any
Paragon Fund upon the transfer of the assets to the corresponding One Group Fund
in exchange for Shares and the assumption, by such One Group Fund of
the liabilities of the Paragon Fund or upon the distribution of Shares by the
Paragon Fund to its shareholders in liquidation; (ii) no gain or loss will be
recognized by the shareholders of any Paragon Fund upon the exchange of their
shares for Shares (iii) the basis of the Shares a Paragon shareholder receives
in connection with the transaction will be the same as the basis of his or her
Paragon Fund shares exchanged therefor; (iv) a Paragon shareholder's holding
period for his or her Shares will be determined by including the period for
which he or she held the Paragon Fund shares exchanged therefor, provided that
he or she held such Paragon Fund shares as capital assets; (v) no gain or loss
will be recognized by any One Group Fund upon the receipt of the assets of the
corresponding Paragon Fund in exchange for Shares and the assumption by the One
Group Fund of the liabilities of the corresponding Paragon Fund; and (vi) the
basis in the hands of the One Group Fund of the assets of the corresponding
Paragon Fund transferred to the One Group Fund will be the same as the basis of
the assets in the hands of the corresponding Paragon Fund immediately prior to
the transfer.
(h) The assets of each Paragon Fund to be acquired by the corresponding
One Group Fund will include no assets which the corresponding One Group Fund, by
reason of limitations contained in its Declaration of Trust or of investment
restrictions disclosed in the One Group Prospectuses in effect on the Exchange
Date, may not properly acquire.
(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of One Group
contemplated by the Commission and or any state regulatory authority.
(j) All proceedings taken by Paragon in connection with the transactions
contemplated by this Agreement and all documents incidental thereto reasonably
shall be satisfactory in form and substance to One Group and Ropes & Xxxx.
(k) Prior to the Exchange Date, each Paragon Fund shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its shareholders all of its investment
company taxable income for its taxable year ended November 30, 1995 and the
short taxable year beginning on December 1, 1995 and ending on the Exchange Date
(computed without regard to any deduction for dividends paid), and all of its
net capital gain realized in its taxable year ended November 30, 1995 and the
short taxable year beginning on December 1, 1995 and ending on the Exchange Date
(after reduction for any capital loss carryover).
(l) Paragon shall have furnished to One Group a certificate, signed by the
President (or any Vice President) and the Treasurer of Paragon, as to the tax
cost to One Group of the securities delivered to One Group pursuant to this
Agreement, together with any such other evidence as to such tax cost as One
Group may reasonably request.
(m) Paragon's custodian shall have delivered to One Group a certificate
identifying all of the assets of each Paragon Fund held by such custodian as of
the Valuation Time.
(n) Paragon's transfer agent shall have provided to One Group (i) the
originals or true copies of all of the records of each Paragon Fund in the
possession of such transfer agent as of the Exchange Date, (ii) a certificate
setting forth the number of shares of each class of Paragon Fund outstanding as
of the Valuation Time and (iii) the name and address of each holder of record of
any such shares of each Paragon Fund and the number of shares of each class held
of record by each such shareholder.
(o) All of the issued and outstanding shares of beneficial interest of
each Paragon Fund shall have been offered for sale and sold in conformity with
all applicable federal or state securities or blue sky laws and, to the extent
that any audit of the records of Paragon or any Paragon Fund or its transfer
agent by One Group or its agents shall have revealed otherwise, either (i)
Paragon and each Paragon Fund shall have taken all actions that in the
reasonable opinion of One Group or Ropes & Xxxx are necessary to remedy any
prior failure on the part of Paragon to have offered for sale and sold such
shares in conformity with such laws or (ii) Paragon shall have furnished (or
caused to be furnished) surety, or deposited (or caused to be deposited) assets
in escrow, for the benefit of One Group in amounts sufficient and upon terms
satisfactory, in the opinion of One Group or its counsel, to indemnify One Group
against any expense, loss, claim, damage or liability whatsoever that may be
asserted or threatened by reason of such failure on the part of Paragon to have
offered and sold such shares in conformity with such laws.
(p) Paragon shall have duly executed and delivered to One Group bills of
sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as One Group may deem necessary or desirable to transfer all of
Paragon's and each Paragon Fund's entire right, title and interest in and to the
Investments and all other assets of each Paragon Fund.
10. CONDITIONS TO PARAGON'S OBLIGATIONS. The obligations of Paragon and
each Paragon Fund hereunder shall be subject to the following conditions:
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the Paragon
Funds, shall have been approved as described in Section 8(a).
(b) One Group shall have furnished to Paragon a Statement of each One
Group Fund's net assets, together with a list of portfolio holdings with values
determined as provided in Section 4, all as of the Valuation Time, certified on
One Group's behalf by its President (or any Vice President) and Treasurer (or
any Assistant Treasurer), and a certificate of both such officers, dated the
Exchange Date, to the effect that as of the Valuation Time and as of the
Exchange Date there has been no material adverse change in the financial
position of any One Group Fund since December 31, 1995, other than changes in
its portfolio securities since that date, changes in the market value of its
portfolio securities, changes due to net redemptions, dividends paid or losses
from operations.
(c) One Group shall have executed and delivered to Paragon an Assumption
of Liabilities dated as of the Exchange Date pursuant to which each One Group
Fund will assume all of the liabilities of the corresponding Paragon Fund
existing at the Valuation Time in connection with the transactions contemplated
by this Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of One Group and each One Group Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, One Group and each One Group Fund has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to each of such dates, and One Group shall have furnished
to Paragon a statement, dated the Exchange Date, signed by One Group's President
(or any Vice President) and Treasurer certifying those facts as of such dates.
(e) There shall not be any material litigation pending with respect to the
matters contemplated by this Agreement.
(f) Paragon shall have received an opinion of Ropes & Xxxx, in form
reasonably satisfactory to Paragon and dated the Exchange Date, to the effect
that (i) One Group is a business trust and validly existing in conformity with
the laws of The Commonwealth of Massachusetts, and, (to the knowledge of such
counsel), neither One Group nor any One Group Fund is required to qualify to do
business as a foreign association in any jurisdiction, (ii) the Shares to be
delivered to Paragon as provided for by this Agreement are duly authorized and
upon such delivery will be validly issued and will be fully paid and
nonassessable by One Group and no shareholder of One Group has any preemptive
right to subscription or purchase in respect thereof, (iii) this Agreement has
been duly authorized, executed and delivered by One Group and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Paragon, is a valid and binding
obligation of One Group, (iv) the execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated hereby will not,
violate One Group's Declaration of Trust, as amended, or Code of Regulations, or
any provision of any agreement known to such counsel to which One Group or any
One Group Fund is a party or by which it is bound, it being understood that with
respect to investment restrictions as contained in One Group's Declaration of
Trust, as amended, Code of Regulations or then-current prospectus or statement
of additional information of each One Group Fund, such counsel may rely upon a
certificate of an officer of One Group whose responsibility it is to advise One
Group with respect to such matters, (v) no consent, approval, authorization or
order of any court or governmental authority is required for the consummation by
One Group or any One Group 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 under state securities or blue sky laws and the H-S-
R Act and it being understood that such opinion shall not be deemed to apply to
Paragon's compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state
securities or blue sky laws and the H-S-R Act; and (vi) the Registration
Statement has become effective under the 1933 Act, and to the best of the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the 1933 Act.
(g) Paragon shall have received an opinion of Ropes & Xxxx addressed to
Paragon, each Paragon Fund, and in a form reasonably satisfactory to Paragon
dated the Exchange Date, with respect to the matters specified in Section 9(g)
of this Agreement.
(h) All proceedings taken by One Group in connection with the transactions
contemplated by this Agreement and all documents incidental thereto reasonably
shall be satisfactory in form and substance to Paragon and Xxxx and Xxxx.
(i) The Registration Statement shall have become effective under the 1933
Act and applicable blue sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of Paragon,
contemplated by the Commission or any state regulatory authority.
11. INDEMNIFICATION. (a) The Paragon Funds will indemnify and hold
harmless One Group, its trustees and its officers (for purposes of this
subsection, the "Indemnified Parties") against any and all expenses, losses,
claims, damages and liabilities at any time imposed upon or reasonably incurred
by any one or more of the Indemnified Parties in connection with, arising out
of, or resulting from any claim, action, suit or proceeding in which any one or
more of the Indemnified Parties may be involved or with which any one or more of
the Indemnified
Parties may be threatened by reason of any untrue statement or alleged untrue
statement of a material fact relating to Paragon or any Paragon Fund contained
in the Registration Statement, the Prospectus or the Proxy Statement or any
amendment or supplement to any of the foregoing, or arising out of or based upon
the omission or alleged omission to state in any of the foregoing a material
fact relating to Paragon or any Paragon Fund required to be stated therein or
necessary to make the statements relating to Paragon or any Paragon Fund therein
not misleading, including, without limitation, any amounts paid by any one or
more of the Indemnified Parties in a reasonable compromise or settlement of any
such claim, action, suit or proceeding or threatened claim, action, suit or
proceeding made with the prior consent of Paragon. The Indemnified Parties will
notify Paragon in writing within ten days after the receipt by any one or more
of the Indemnified Parties of any notice of legal process or any suit brought
against or claim made against such Indemnified Party as to any matters covered
by this Section 11(a). Paragon shall be entitled to participate at its own
expense in the defense of any claim, action, suit or proceeding covered by this
Section 11(a), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and if Paragon elects to assume such defense, the
Indemnified Parties shall be entitled to participate in the defense of any such
claim, action, suit or proceeding at their expense. The Paragon Funds'
obligation under this Section 11(a) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the Paragon
Funds will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this Section 11(a) without the
necessity of the Indemnified Parties first paying the same.
(b) The One Group Funds will indemnify and hold harmless Paragon, its
trustees and its officers (for purposes of this subparagraph, the "Indemnified
Parties") against any and all expenses, losses, claims, damages and liabilities
at any time imposed upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or resulting from any
claim, action, suit or proceeding in which any one or more of the Indemnified
Parties may be involved or with which any one or more of the Indemnified Parties
may be threatened by reason of any untrue statement or alleged untrue statement
of a material fact relating to One Group or any One Group Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any amendment
or supplement to any of the foregoing, or arising out of or based upon the
omission or alleged omission to state in any of the foregoing a material fact
relating to One Group or any One Group Fund required to be stated therein or
necessary to make the statements relating to One Group or any One Group Fund
therein not misleading, including, without limitation, any amounts paid by any
one or more of the Indemnified Parties in a reasonable compromise or settlement
of any such claim, action, suit or proceeding, or threatened claim, action,
suit or proceeding made with the prior consent of One Group. The Indemnified
Parties will notify One Group in writing within ten days after the receipt by
any one or more of the Indemnified Parties of any notice of legal process or
any suit brought against or claim made against any Indemnified Party as to
any matters covered by this Section 11(b). One Group shall be entitled to
participate at its own expense in the defense of any claim, action, suit or
proceeding covered by this Section 11(b), or, if it so elects, to assume at
its expense by counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and, if One Group elects to
assume such defense, the Indemnified Parties shall be entitled to participate
in the defense of any such claim, action, suit
or proceeding at their own expense. The One Group Funds' obligation under
this Section 11(b) to indemnify and hold harmless the Indemnified Parties
shall constitute a guarantee of payment so that the One Group Funds will pay
in the first instance any expenses, losses, claims, damages and liabilities
required to be paid by it under this Section 11(b) without the necessity of
the Indemnified Parties first paying the same.
12. NO BROKER, ETC. Each of One Group and Paragon represents that there
is no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
13. TERMINATION. One Group and Paragon may, by mutual consent of their
respective trustees, terminate this Agreement, and One Group or Paragon, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by June 30, 1996, this Agreement shall
automatically terminate on that date unless a later date is agreed to by One
Group and Paragon.
Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by this
Agreement is obtained with respect to only one or more Paragon Funds but not all
of the Paragon Funds, One Group and Paragon agree to consummate those
transactions with respect to those Paragon Funds whose shareholders have
approved this Agreement and those transactions.
In the event that shareholder approval of this Agreement and the
transactions contemplated by this Agreement is required, but not obtained with
respect to only one class of shares of a Paragon Fund, the transaction with
respect to that Paragon
Fund will not be consummated unless and until shareholder approval is obtained
with respect to both classes.
14. RULE 145. Pursuant to Rule 145 under the 1933 Act, One Group will, in
connection with the issuance of any Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a party to the
transaction pursuant to Rule 145 (c), cause to be affixed upon the certificates
issued to such person (if any) a legend as follows:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
TO THE ONE GROUP OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) IN THE OPINION OP COUNSEL
REASONABLY SATISFACTORY TO THE ONE GROUP SUCH REGISTRATION IS NOT
REQUIRED."
and, further, One Group will issue stop transfer instructions to One Group's
transfer agent with respect to such shares. Paragon will provide One Group on
the Exchange Date with the name of any shareholder of the Paragon Funds who is
to the knowledge of Paragon an affiliate of Paragon on such date.
15. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
16. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
17. AGREEMENT AND DECLARATION OF TRUST. Paragon Portfolio is a business
trust organized under Massachusetts law and under a Declaration of Trust, to
which reference is hereby made and a copy of which is on file at the office of
the Secretary of The Commonwealth of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or hereafter filed. The
obligations of "Paragon Funds" entered into in the name or on behalf thereof
by any of the 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 Paragon personally, but bind only the
assets of Paragon, and all persons dealing with any of the series or funds of
Paragon, such as Paragon Funds, must look solely to the assets of Paragon
belonging to such series or funds for the enforcement of any claims against
Paragon.
The names "The One Group" and "Trustees of The One Group" refer
respectively to One Group and the Trustees, as trustees but not individually or
personally, acting from time to time under a Declaration of Trust dated May 23,
1985 to which reference is hereby made and a copy of which is on file at the
office of the Secretary of The Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The One Group" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are
not binding upon any of the Trustees, Shareholders or representatives of One
Group personally, but bind only the assets of One Group such as the One Group
Funds, must look solely to the assets of One Group belonging to such series for
the enforcement of any claims against One Group.
This Agreement may be executed in any number of counter-parts, each of
which, when executed and delivered, shall be deemed to be an original.
PARAGON PORTFOLIO
By: _______________________________
THE ONE GROUP
By: _______________________________
