AGREEMENT
and
PLAN OF REORGANIZATION
for
XXXXX QUALITY BOND FUND
a Portfolio of
THE XXXXX FUNDS, INC.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ........................................ 2
Section 1.1.Definitions.................................. 2
ARTICLE IITRANSFER OF ASSETS ................................. 5
Section 2.1.Reorganization of Xxxxx Quality Bond......... 5
Section 2.2.Computation of Net Asset Value............... 5
Section 2.3.Excluded Assets.............................. 6
Section 2.4.Valuation Date............................... 6
Section 0.0.Xxxxxxxx..................................... 6
Section 2.6.Dissolution.................................. 7
Section 2.7.Issuance of AFG Shares....................... 7
Section 2.8.Investment Securities........................ 8
Section 2.9 Liabilities and Expenses..................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TBFI .......... 8
Section 3.1.Incorporation: Qualification and
Corporate Authority .......................... 9
Section 3.2.Registration and Regulation of TBFI.......... 9
Section 0.0.Xxxxxxxxx Statements......................... 9
Section 0.0.Xx Material Adverse Changes;
Contingent Liabilities ...................... 9
Section 3.5.BQB Shares; Liabilities; Business Operations. 10
Section 0.0.Xxxxxxxxxxx.................................. 11
Section 3.7.Binding Obligation........................... 11
Section 0.0.Xx Breaches or Defaults ..................... 11
Section 3.9.Authorizations or Consents................... 12
Section 3.10.Permits..................................... 12
Section 0.00.Xx Actions, Suits or Proceedings............ 12
Section 3.12.Contracts................................... 13
Section 3.13.Properties and Assets....................... 13
Section 3.14.Ineligible Persons.......................... 13
Section 3.15.Rule 17e-1.................................. 13
Section 3.16.Taxes....................................... 14
Section 3.17.Benefit and Employment Obligations.......... 15
Section 3.18.Brokers..................................... 15
Section 0.00.Xxxxxx Requirements......................... 15
Section 3.20.State Takeover Statutes..................... 15
Section 3.21.Books and Records........................... 15
Section 3.22.Prospectus.................................. 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AFG ............ 16
Section 4.1.Organization; Authority...................... 16
Section 4.2.Binding Obligation........................... 16
Section 0.0.Xxxxxxxxx Statements......................... 16
Section 0.0.Xx Material Adverse Changes;
Contingent Liabilities ...................... 16
Section 0.0.Xx Breaches or Defaults ..................... 17
Section 0.0.Xxxxxxxxxxx.................................. 17
Section 4.7.Authorizations or Consents................... 17
Section 4.8.Permits...................................... 17
Section 0.0.Xx Actions, Suits or Proceedings............. 18
Section 4.10.Ineligible Persons.......................... 18
Section 4.11.Taxes....................................... 18
Section 4.12.Brokers..................................... 19
Section 4.13.Registration and Regulation of Company...... 19
Section 4.14.Registration of Portfolio Shares............ 20
Section 4.15.Representations Concerning
the Reorganization ......................... 21
Section 4.16.Prospectus.................................. 21
ARTICLE V COVENANTS .......................................... 21
Section 5.1.Conduct of Business.......................... 21
Section 5.2.Confidentiality and Announcements............ 23
Section 5.3.Expenses..................................... 25
Section 5.4.Further Assurances........................... 25
Section 5.5.Notice of Events............................. 25
Section 5.6.Access to Information........................ 25
Section 5.7.Consents, Approvals and Filings.............. 26
Section 5.8.Submission of Agreement to Shareholders...... 26
Section 5.9.Acquisition Proposals........................ 26
Section 5.10.Fiduciary Duties............................ 27
Section 5.11.Section 15(f) of the 1940 Act............... 28
Section 5.12.Sales Charges............................... 28
ARTICLE VI CONDITIONS PRECEDENT TO THE REORGANIZATION ....... 28
Section 6.1.Conditions Precedent of AFG.................. 28
Section 0.0.Xxxxxx Conditions............................ 29
Section 6.3.Conditions Precedent of TBFI................. 32
ARTICLE VII TERMINATION OF AGREEMENT......................... 32
Section 7.1.Termination.................................. 32
Section 7.2.Survival After Termination................... 33
ARTICLE VIII MISCELLANEOUS ................................ 34
Section 8.1.Nonsurvival of Representations and Warranties 34
Section 0.0.Xxx Governing................................ 34
Section 8.3.Binding Effect, Persons Benefiting,
No Assignment ............................... 34
Section 8.4.Obligations of AFG and TBFI.................. 34
Section 8.5.Amendments................................... 35
Section 8.6.Enforcement.................................. 35
Section 8.7.Interpretation............................... 35
Section 8.8.Counterparts................................. 35
Section 8.9.Entire Agreement; Schedules.................. 35
Section 8.10.Notices..................................... 35
Schedule 3.12(a) - Contracts
Schedule 6.1(d) - Opinion of Counsel to Xxxxx Quality Bond
Schedule 6.2(f) - Tax Opinions
Schedule 6.3(d) - Opinion of Counsel to AFG
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 20, 1995
(this "Agreement"), by and between The Xxxxx Funds, Inc., a Wisconsin
corporation ("TBFI"), acting on behalf of Xxxxx Quality Bond Fund ("Xxxxx
Quality Bond"), and AIM Funds Group, a Delaware business trust ("AFG"), acting
on behalf of AIM Income Fund (the "Portfolio").
WITNESSETH
WHEREAS, TBFI is an investment company registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
(as defined below) that offers separate classes of its shares representing
interests in two investment portfolios, including Xxxxx Quality Bond, for sale
to the public; and
WHEREAS, AFG is an investment company registered with the SEC under
the Investment Company Act that offers separate classes of its shares
representing interests in several investment portfolios, including the
Portfolio, for sale to the public; and
WHEREAS, Xxxxx Quality Bond owns securities in which the Portfolio
is permitted to invest; and
WHEREAS, Xxxxx Quality Bond desires to provide for its
reorganization through the transfer of substantially all of its assets to the
Portfolio in exchange for shares of the Portfolio issued in the manner set forth
in this Agreement; and
WHEREAS, this Agreement is intended to be and is adopted as a Plan
of Reorganization and Liquidation within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, AFG and TBFI agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. (a) For all purposes in this Agreement,
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the following terms shall have the respective meanings set forth in this Section
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1.1 (such definitions to be equally applicable to both the singular and plural
---
forms of the terms herein defined):
"Acquisition Proposal" means, except for the transactions contemplated
hereby, any proposal with respect to a merger, reorganization, consolidation,
share exchange or similar transaction involving Xxxxx Quality Bond, or any
purchase of all or any significant portion of the assets of Xxxxx Quality Bond,
or any equity interest in Xxxxx Quality Bond.
"Advisers Act" means the Investment Advisers Act of 1940, as amended,
and all rules and regulations of the SEC adopted pursuant thereto.
"AFG Registration Statement" means the registration statement on Form
N-1A of AFG, as amended, Registration No. 2-27334, that is applicable to the
Portfolio.
"Affiliated Person" means an affiliated person as defined in Section
2(a)(3) of the Investment Company Act.
"AFG" means AIM Funds Group, a Delaware business trust.
"Agreement" means this Agreement and Plan of Reorganization, together
with all schedules and exhibits attached hereto and all amendments hereto and
thereof.
"Xxxxx Quality Bond" means Xxxxx Quality Bond Fund, a portfolio of
TBFI.
"Benefit Plan" means any material "employee benefit plan" (as defined
in Section 3(3) of ERISA) and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, vacation, retirement, profit sharing, welfare plans or other plan,
arrangement or understanding maintained or contributed to by TBFI on behalf of
Xxxxx Quality Bond, or otherwise providing benefits to any current or former
employee, officer or director of TBFI.
"BQB Financial Statements" shall have the meaning set forth in Section
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3.3 of this Agreement.
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"BQB Shareholders" means the holders of record as of the Closing Date
of the issued and outstanding shares of the capital stock of Xxxxx Quality Bond.
"BQB Shareholders Meeting" means a meeting of the shareholders of
Xxxxx Quality Bond convened in accordance with applicable law and the articles
of incorporation of TBFI to consider and vote upon the approval of this
Agreement and the transactions contemplated by this Agreement.
"BQB Shares" means the issued and outstanding shares of the capital
stock of Xxxxx Quality Bond.
"Closing" means the transfer of the assets of Xxxxx Quality Bond
against the delivery of Portfolio Shares directly to the shareholders of Xxxxx
Quality Bond as described in Section 2.1 of this Agreement.
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"Closing Date" means March 29, 1996, or such other date as the parties
may mutually determine.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall have the meaning set forth in Section
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5.2(a) of this Agreement.
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"Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of the Portfolio.
"Effective Time" shall mean 2:00 p.m. Central Time on the Closing
Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations adopted by the SEC pursuant thereto.
"Excluded Assets" shall have the meaning set forth in Section 2.3 of
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this Agreement.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including the SEC)
or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the National Association of
Securities Dealers, Inc., the Commodities and Futures Trading Commission, the
National Futures Association, the Investment Management Regulatory Organization
Limited and the Office of Fair Trading).
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted by the SEC pursuant thereto.
"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a change in
the condition (financial or otherwise), properties, assets or prospects of an
entity having an adverse monetary effect in an amount equal to or greater than
$50,000.
"Person" means an individual or a corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"Portfolio" means AIM Income Fund, an investment portfolio of AFG.
"Portfolio Financial Statements" shall have the meaning set forth in
Section 4.3 of this Agreement.
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"Portfolio Shares" means Class A Shares of the Portfolio issued by
AFG, each representing an interest in the Portfolio.
"Reorganization" means the acquisition of certain of the assets of
Xxxxx Quality Bond by the Portfolio in consideration of the issuance of
Portfolio Shares directly to BQB Shareholders as described in this Agreement.
"Required BQB Shareholder Vote" shall have the meaning set forth in
Section 3.19 of this Agreement.
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"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted by the SEC pursuant thereto.
"Tax" means any tax or similar governmental charge, impost or levy
(including, without limitation, income taxes (including, without limitation,
alternative minimum tax and estimated tax), franchise taxes, transfer taxes or
fees, sales taxes, use taxes, gross receipts taxes, value added taxes,
employment taxes, excise taxes, ad valorem taxes, property taxes, withholding
taxes, payroll taxes, minimum taxes, or windfall profit taxes), together with
any related penalties, fines, additions to tax or interest, imposed by the
United States or any state, county, local or foreign government or subdivision
or agency thereof.
"TBFI" means The Xxxxx Funds, Inc., a Wisconsin corporation.
"Valuation Date" shall have the meaning set forth in Section 2.4 of
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this Agreement.
ARTICLE II
TRANSFER OF ASSETS
Section 2.1. Reorganization of Xxxxx Quality Bond. At the
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Effective Time, all of the assets of Xxxxx Quality Bond, except the Excluded
Assets, shall be delivered to the Custodian for the account of the Portfolio, in
exchange for, and against delivery by AFG directly to the BQB Shareholders at
the opening of business on the Closing Date of a number of Portfolio Shares
(including, if applicable, fractional shares rounded to the nearest thousandth)
having an aggregate net asset value equal to the net value of the assets of
Xxxxx Quality Bond so transferred, assigned and delivered, all determined and
adjusted as provided in Section 2.2 below. Upon delivery of such assets, the
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Portfolio will receive good and marketable title to such assets free and clear
of all Liens.
Section 2.2. Computation of Net Asset Value.
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(a) The net asset value of the Portfolio Shares and the net value
of the assets of Xxxxx Quality Bond subject to this Agreement shall, in each
case, be determined as of the close of business on the NYSE on the Valuation
Date.
(b) The net asset value of the Portfolio Shares shall be computed
in the manner set forth in accordance with the policies and procedures of the
Portfolio as described in the AFG Registration Statement.
(c) The net value of the assets of Xxxxx Quality Bond subject to
this Agreement shall be computed by AFG and shall be subject to adjustment by
the amount, if any, agreed to by TBFI and AFG. In determining the value of the
securities transferred by Xxxxx Quality Bond to the Portfolio, each security
shall be priced in accordance with the policies and procedures of the Portfolio
as described in the AFG Registration Statement. For such purposes, market
quotes and the security characteristics relating to establishing such quotes
shall be determined by AFG, with the approval of TBFI. Securities for which
market quotes are not available shall be valued as mutually agreed by AFG and
TBFI, provided that such value is consistent with the pricing procedures adopted
by AFG. All computations shall be made by AFG in cooperation with the auditors
of AFG and the auditors of TBFI, who will apply certain procedures agreed to by
AFG and TBFI to test such computations.
Section 2.3. Excluded Assets. There shall be deducted from the
---------------
assets of Xxxxx Quality Bond described in Section 2.1 all organizational
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expenses, any prepaid expenses that would not have value to the Portfolio and
cash in an amount estimated by TBFI to be sufficient to pay all the liabilities
of Xxxxx Quality Bond, including, without limitation, (i) amounts owed or to be
owed to any BQB Shareholder, including declared but unpaid dividends,
(ii) accounts payable, taxes and other accrued and unpaid expenses, if any,
incurred in the normal operation of its business up to and including the Closing
Date and (iii) the costs and expenses incurred by Xxxxx Quality Bond in making
and carrying out the transactions contemplated by this Agreement.
Section 2.4. Valuation Date. The assets of Xxxxx Quality Bond
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and the net asset value per share of the Portfolio Shares shall be valued as of
the close of business on the NYSE on the business day next preceding the Closing
Date (the "Valuation Date"). The stock transfer books of Xxxxx Quality Bond
will be permanently closed as of the close of business on the Valuation Date and
only requests for the redemption of shares of Xxxxx Quality Bond received in
proper form prior to the close of trading on the NYSE on the Valuation Date
shall be accepted by Xxxxx Quality Bond. Redemption requests thereafter
received by Xxxxx Quality Bond shall be deemed to be redemption requests for
Portfolio Shares (assuming that the transactions contemplated by this Agreement
have been consummated) to be distributed to BQB Shareholders under this
Agreement.
Section 2.5. Delivery.
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(a) Assets held by Xxxxx Quality Bond shall be delivered by TBFI
to the Custodian on the Closing Date. No later than three (3) business days
preceding the Closing Date, TBFI shall instruct Xxxxx Quality Bond's custodian
to make such delivery to the Custodian. TBFI shall further instruct Xxxxx
Quality Bond's custodian that any trade made by Xxxxx Quality Bond during the
three day period before the Closing Date shall settle at the Custodian. The
assets so delivered shall be duly endorsed in proper form for transfer in such
condition as to constitute a good delivery thereof, in accordance with the
custom of brokers, and shall be accompanied by all necessary state stock
transfer stamps, if any, or a check for the appropriate purchase price thereof.
Cash held by Xxxxx Quality Bond (other than cash held as part of the Excluded
Assets) shall be delivered at the Effective Time and shall be in the form of
currency or wire transfer in Federal funds, payable to the order of the account
of the Portfolio at the Custodian.
(b) If, on the Closing Date, TBFI is unable to make delivery in
the manner contemplated by Section 2.5(a) of securities held by Xxxxx Quality
--------------
Bond for the reason that any of such securities purchased prior to the Closing
Date have not yet been delivered to Xxxxx Quality Bond, its broker or brokers,
then, AFG shall waive the delivery requirements of Section 2.5(a) with respect
--------------
to said undelivered securities, if Xxxxx Quality Bond has delivered to the
Custodian by or on the Closing Date and with respect to said undelivered
securities, executed copies of an agreement of assignment and escrow agreement
and due bills executed on behalf of said broker or brokers, together with such
other documents as may be required by AFG or the Custodian, including brokers'
confirmation slips.
Section 2.6. Dissolution. As soon as reasonably practicable
-----------
after the Closing Date, Xxxxx Quality Bond shall pay or make provisions for all
of its debts, liabilities and taxes and distribute all remaining assets to the
BQB Shareholders, and Xxxxx Quality Bond's status as a designated series of
shares of TBFI shall be terminated, provided that, in the event that the
transactions contemplated herein are not approved by the BQB Shareholders, TBFI
shall not be obligated to so terminate Xxxxx Quality Bond's designation as a
series of shares.
Section 2.7. Issuance of AFG Shares. At the Closing Date, TBFI
----------------------
shall instruct AFG that the pro rata interest of each of BQB Shareholders of
record as of the close of business on the Valuation Date, as certified by Xxxxx
Quality Bond's transfer agent, in the Portfolio Shares be registered on the
books of AFG in full and fractional shares in the name of each BQB Shareholder,
and AFG agrees promptly to comply with said instruction. All issued and
outstanding shares of Xxxxx Quality Bond's capital stock shall thereupon be
canceled on the books of TBFI. AFG shall have no obligation to inquire as to
the validity, propriety or correctness of any such instruction, but shall, in
each case, assume that such instruction is valid, proper and correct. AFG shall
record on its books the ownership of the Portfolio Shares by BQB Shareholders
and shall forward a confirmation of such ownership to the BQB Shareholders. No
redemption or repurchase of such shares credited to former BQB Shareholders in
respect of Xxxxx Quality Bond shares represented by unsurrendered stock
certificates shall be permitted until such certificates have been surrendered to
AFG for cancellation, or if such certificates are lost or misplaced, until lost
certificate affidavits have been executed and delivered to AFG.
Section 2.8. Investment Securities.
---------------------
(a) It is expressly understood that TBFI may hereafter sell any
securities owned by Xxxxx Quality Bond in the ordinary course of its business as
a diversified, open-end, management investment company. Upon written request by
AFG, TBFI shall (i) prior to the Closing Date, dispose of equity securities held
by Xxxxx Quality Bond to assure that AFG does not own ten percent (10%) or more
of the outstanding voting securities of any issuer as a result of the
Reorganization, or (ii) cooperate with and assist AFG in preparing and filing on
the Closing Date the notification and report form required by the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act, in which case the Closing shall be delayed
until the end of the waiting period prescribed by such act.
(b) On or prior to the Valuation Date, TBFI shall deliver a list
setting forth the securities Xxxxx Quality Bond then owns together with the
respective Federal income tax bases thereof. TBFI shall provide to AFG on or
before the Valuation Date, detailed tax basis accounting records for each
security to be transferred to it pursuant to this Agreement. Such records shall
be prepared in accordance with the requirements for specific identification tax
lot accounting and clearly reflect the bases used for determination of gain and
loss realized on the partial sale of any security transferred to the Portfolio
hereunder. Such records shall be made available by TBFI prior to the Valuation
Date for inspection by the Treasurer (or his designee) or the auditors of AFG
upon reasonable request.
Section 2.9 Liabilities and Expenses. The Portfolio shall not
------------------------
assume any liability of Xxxxx Quality Bond and Xxxxx Quality Bond shall use its
reasonable best efforts to discharge all known liabilities, so far as may be
possible, prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TBFI
TBFI, on behalf of Xxxxx Quality Bond, represents and warrants to AFG
that:
Section 3.1. Incorporation: Qualification and Corporate Authority.
----------------------------------------------------
TBFI has been duly incorporated and is validly existing and in active status
under the laws of the State of Wisconsin with all requisite corporate power and
authority to conduct its business as presently conducted.
Section 3.2. Registration and Regulation of TBFI. TBFI is duly
-----------------------------------
registered with the SEC as an investment company under the Investment Company
Act and all BQB Shares which have been or are being offered for sale have been
duly registered under the Securities Act and have been duly registered,
qualified or are exempt from registration or qualification under the securities
laws of each state or other jurisdiction in which such shares have been or are
being offered for sale, and no action has been taken by TBFI to revoke or
rescind any such registration or qualification. Xxxxx Quality Bond is in
compliance in all material respects with all applicable laws, rules and
regulations, including, without limitation, the Investment Company Act, the
Securities Act, the Exchange Act and all applicable state securities laws.
Xxxxx Quality Bond is in compliance in all material respects with the applicable
investment policies and restrictions set forth in its registration statement
currently in effect. The value of the net assets of Xxxxx Quality Bond is
determined using portfolio valuation methods that comply in all material
respects with the requirements of the Investment Company Act and the policies of
Xxxxx Quality Bond and all purchases and redemptions of BQB Shares have been
effected at the net asset value per share calculated in such manner.
Section 3.3. Financial Statements. The books of account and related
--------------------
records of Xxxxx Quality Bond fairly reflect in reasonable detail its assets,
liabilities and transactions in accordance with generally accepted accounting
principles applied on a consistent basis. The audited financial statements
dated September 30, 1995 of Xxxxx Quality Bond previously delivered to AFG (the
"BQB Financial Statements") present fairly in all material respects the
financial position of Xxxxx Quality Bond as at the dates indicated and the
results of operations and cash flows for the periods then ended in accordance
with generally accepted accounting principles applied on a consistent basis for
the periods then ended.
Section 3.4. No Material Adverse Changes; Contingent Liabilities.
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Since September 30, 1995, no material adverse change has occurred in the
financial condition, results of operations, business, assets or liabilities of
Xxxxx Quality Bond or the status of Xxxxx Quality Bond as a regulated investment
company under the Code, other than changes resulting from any change in general
conditions in the financial or securities markets or the performance of any
investments made by Xxxxx Quality Bond or occurring in the ordinary course of
business of Xxxxx Quality Bond or TBFI. There are no contingent liabilities of
Xxxxx Quality Bond not disclosed in the BQB Financial Statements which are
required to be disclosed in accordance with generally accepted accounting
principles.
Section 3.5. BQB Shares; Liabilities; Business Operations.
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(a) The BQB Shares have been duly authorized and validly issued and
are fully paid and non-assessable (except as provided in Wisconsin Business
Corporation Law Section 180.0622(2)(b)).
(b) There is no plan or intention by the shareholders of Xxxxx
Quality Bond who own five percent (5%) or more of the BQB Shares, and to the
knowledge of TBFI's management, the remaining BQB Shareholders have no present
plan or intention of selling, exchanging, redeeming or otherwise disposing of a
number of the Portfolio Shares received by them in connection with the
Reorganization that would reduce the BQB Shareholders' ownership of Portfolio
Shares to a number of shares having a value, as of the Closing Date, of less
than fifty percent (50%) of the value of all of the formerly outstanding BQB
Shares as of the same date. For purposes of this representation, BQB Shares
exchanged for cash or other property or exchanged for cash in lieu of fractional
shares of the Portfolio will be treated as outstanding BQB Shares on the date of
the Reorganization. Moreover, BQB Shares and Portfolio Shares held by BQB
Shareholders and otherwise sold, redeemed or disposed of prior or subsequent to
the Reorganization will be considered in making this representation, except for
BQB Shares or Portfolio Shares which have been, or will be, redeemed by Xxxxx
Quality Bond or the Portfolio in the ordinary course of its business as an
open-end, diversified management investment company (or a series thereof) under
the Investment Company Act.
(c) At the time of the Reorganization, Xxxxx Quality Bond shall not
have outstanding any warrants, options, convertible securities or any other type
of right pursuant to which any Person could acquire BQB Shares, except for the
right of investors to acquire BQB Shares at net asset value in the normal course
of its business as an open-end diversified management investment company
operating under the Investment Company Act.
(d) From the date it commenced operations on October 1, 1992 and
ending on the Closing Date, Xxxxx Quality Bond will have conducted its historic
business within the meaning of Section 1.368-1(d) of the Income Tax Regulations
under the Code in a substantially unchanged manner. In anticipation of the
Reorganization, Xxxxx Quality Bond will not dispose of assets that, in the
aggregate, will result in less than fifty percent (50%) of its historic business
assets being transferred to the Portfolio.
(e) TBFI does not have, and has not had during the six (6) months
prior to the date of this Agreement any employees, and shall not hire any
employees from and after the date of this Agreement through the Closing Date.
Section 3.6. Accountants. Price Waterhouse, LLP, which has reported
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upon BQB Financial Statements for the period ended September 30, 1995, are
independent public accountants as required by the Securities Act and the
Exchange Act.
Section 3.7. Binding Obligation. This Agreement has been duly
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authorized, executed and delivered by TBFI on behalf of Xxxxx Quality Bond and,
assuming this Agreement has been duly executed and delivered by AFG and approved
by the BQB Shareholders, constitutes the legal, valid and binding obligation of
TBFI, enforceable against TBFI in accordance with its terms from and with
respect to the revenues and assets of Xxxxx Quality Bond, except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting creditors' rights generally, or by
general equity principles (whether applied in a court of law or a court of
equity and including limitations on the availability of specific performance or
other equitable remedies).
Section 3.8. No Breaches or Defaults. The execution and delivery of
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this Agreement by TBFI on behalf of Xxxxx Quality Bond and performance of its
obligations hereunder has been duly authorized by all necessary corporate action
on the part of TBFI, other than BQB Shareholder approval, and (i) does not and,
on the Closing Date, will not result in any violation of the articles of
incorporation or by-laws of TBFI and (ii) does not and, will not on the Closing
Date, result in a breach of any of the terms or provisions of, or constitute
(with or without the giving of notice or the lapse of time or both) a default
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the
creation or imposition of any Lien upon any property or assets of Xxxxx Quality
Bond (except for such breaches or defaults or Liens that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect)
under (A) any indenture, mortgage or loan agreement or any other material
agreement or instrument to which TBFI is a party or by which it may be bound and
which relates to the assets of Xxxxx Quality Bond or to which any of Xxxxx
Quality Bond's properties may be subject; (B) any Permit; or (C) any existing
applicable law, rule, regulation, judgment, order or decree of any Governmental
Authority having jurisdiction over TBFI or any of Xxxxx Quality Bond's
properties. TBFI is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
Section 3.9. Authorizations or Consents. Other than those which
--------------------------
shall have been obtained or made on or prior to the Closing Date and those that
must be made after the Closing Date to comply with Section 2.6 of this
-----------
Agreement, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority will be required to be obtained or made
by TBFI in connection with the due execution and delivery by TBFI of this
Agreement and the consummation by TBFI of the transactions contemplated hereby.
Section 3.10. Permits. TBFI has in full force and effect all
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Federal, state, local and foreign governmental approvals, consents,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights (collectively, "Permits") necessary for it to conduct its business as
presently conducted as it relates to Xxxxx Quality Bond, and there has occurred
no default under any Permit, except for the absence of Permits and for defaults
under Permits the absence or default of which would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. To the
knowledge of TBFI there are no proceedings relating to the suspension,
revocation or modification of any Permit, except for such that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
Section 3.11. No Actions, Suits or Proceedings.
--------------------------------
(a) There is no pending action, litigation or proceeding, nor, to the
knowledge of TBFI, has any litigation been overtly threatened in writing or
orally, against TBFI before any Governmental Authority which questions the
validity or legality of this Agreement or of the actions contemplated hereby or
which seeks to prevent the consummation of the transactions contemplated hereby,
including the Reorganization.
(b) There are no legal, administrative or arbitration actions, suits,
or proceedings instituted or pending or, to the knowledge of TBFI, threatened in
writing or, if probable of assertion, orally against TBFI affecting any
property, asset, interest, or right of Xxxxx Quality Bond, that could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
with respect to Xxxxx Quality Bond. There are not in existence on the date
hereof any plea agreements, judgments, injunctions, consents, decrees,
exceptions or orders that were entered by, filed with or issued by Governmental
Authority relating to TBFI's conduct of the business of Xxxxx Quality Bond
affecting in any significant respect the conduct of such business. TBFI is not,
and has not been, to the knowledge of TBFI, the target of any investigation by
the SEC or any state securities administrator with respect to its conduct of the
business of Xxxxx Quality Bond.
Section 3.12. Contracts.
---------
(a) Except for the contracts and agreements listed on Schedule
--------
3.12(a), TBFI is not a party to any material contract, debt arrangement, futures
-------
contract, plan, lease, franchise or permit of any kind or nature whatsoever
which involves or affects the business of Xxxxx Quality Bond.
(b) TBFI is not in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party
and which involves or affects the assets of Xxxxx Quality Bond, by which the
assets, business, or operations of Xxxxx Quality Bond may be bound or affected,
or under which it or the assets, business or operations of Xxxxx Quality Bond
receives benefits, and which default could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, and, to the knowledge of
TBFI, there has not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default.
Section 3.13. Properties and Assets. Xxxxx Quality Bond has good and
---------------------
marketable title to all properties and assets reflected in the BQB Financial
Statements as owned by it, free and clear of all Liens, except as described in
the BQB Financial Statements.
Section 3.14. Ineligible Persons. Except as previously disclosed to
------------------
AFG, neither TBFI nor any "Affiliated Person" of TBFI has been convicted of any
felony or misdemeanor, described in Section 9(a)(1) of the Investment Company
Act, nor has any Affiliated Person of TBFI been subject, or presently is
subject, to any disqualification that would be a basis for denial, suspension or
revocation of registration of an investment adviser under Section 203(e) of the
Advisors Act or Rule 206(4)-4(b) thereunder or of a broker-dealer under Section
15 of the Exchange Act, or for disqualification as an investment adviser,
employee, officer or director of an investment company under Section 9 of the
Investment Company Act, and, to TBFI's knowledge, there is no proceeding or
investigation that is reasonably likely to become the basis for any such
disqualification, denial, suspension or revocation.
Section 3.15. Rule 17e-1. TBFI has duly adopted procedures pursuant
----------
to Rule 17e-1 under the Investment Company Act, to the extent applicable, and
TBFI currently complies and will comply with the requirements of Section 17(e)
of the Investment Company Act and Rule 17e-1 thereunder, to the extent
applicable to Xxxxx Quality Bond.
Section 3.16. Taxes.
-----
(a) Xxxxx Quality Bond has elected to be treated as a regulated
investment company under Subchapter M of the Code. Xxxxx Quality Bond has
qualified as such for each taxable year since inception and that has ended prior
to the Closing Date and will have satisfied the requirements of Section 851(b)
of the Code for the period beginning on the first day of its current taxable
year and ending on the Closing Date. In order to (i) insure continued
qualification of Xxxxx Quality Bond as a "regulated investment company" for tax
purposes and (ii) eliminate any tax liability of Xxxxx Quality Bond arising by
reason of undistributed investment company taxable income or net taxable gain,
TBFI will declare to the BQB Shareholders of record on or prior to the Valuation
Date, a dividend or dividends that, together with all previous such dividends
shall have the effect of distributing (A) all of Xxxxx Quality Bond's investment
company taxable income (determined without regard to any deductions for
dividends paid) for the taxable year ended September 30, 1995 and for the short
taxable year beginning on October 1, 1995 and ending on the Closing Date and (B)
all of Xxxxx Quality Bond's net capital gains realized in its taxable year ended
September 30, 1995 and in such short taxable year (after reduction for any
capital loss carryover).
(b) Xxxxx Quality Bond has timely filed all Returns required to be
filed by it and all Taxes with respect thereto have been paid, except where the
failure so to file or so to pay, would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Adequate provision has
been made in the financial statements of Xxxxx Quality Bond for all Taxes in
respect of all periods ending on or before the date of such financial
statements, except where the failure to make such provisions would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No deficiencies for any Taxes have been proposed, assessed or
asserted in writing by any taxing authority against Xxxxx Quality Bond, and no
deficiency has been proposed, assessed or asserted, in writing, where such
deficiency would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. No waivers of the time to assess any such Taxes
are outstanding nor are any written requests for such waivers pending and no
Return of Xxxxx Quality Bond is currently being or has been audited since
September 30, 1990 with respect to income taxes (and since September 30, 1992
with respect to all other Taxes) by any Federal, state, local, or foreign Tax
authority.
(c) Xxxxx Quality Bond's fiscal year has not been changed for tax
purposes since October 1, 1992, the date on which it commenced operations.
Section 3.17. Benefit and Employment Obligations. Xxxxx Quality Bond
----------------------------------
has no obligation to provide any post-retirement or post-employment benefit to
any Person, including but not limited to under any Benefit Plan, and has no
obligation to provide unfunded deferred compensation or other unfunded or self-
funded benefits to any Person.
Section 3.18. Brokers. No broker, finder or similar intermediary has
-------
acted for or on behalf of TBFI or Xxxxx Quality Bond in connection with this
Agreement or the transactions contemplated hereby, and no broker, finder, agent
or similar intermediary is entitled to any broker's, finder's or similar fee or
other commission in connection therewith based on any agreement, arrangement or
understanding with TBFI or any action taken by it.
Section 3.19. Voting Requirements; Dissenter's Rights. The
---------------------------------------
affirmative votes of a majority of the holders of the outstanding BQB Shares
(the "Required BQB Shareholder Vote") are the only votes of the holders of any
class or series of Xxxxx Quality Bond's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement. The BQB
Shareholders may not exercise dissenter's rights granted under the Wisconsin
Business Corporation Law with respect to the Reorganization.
Section 3.20. State Takeover Statutes. No state takeover statute or
-----------------------
similar statute or regulation applies or purports to apply to the
Reorganization, this Agreement or any of the transactions contemplated by this
Agreement.
Section 3.21. Books and Records. The books and records of TBFI
-----------------
relating to Xxxxx Quality Bond, reflecting, among other things, the purchase and
sale of BQB Shares by BQB Shareholders, the number of issued and outstanding
shares owned by each BQB Shareholder and the state or other jurisdiction in
which such shares were offered and sold, are complete and accurate in all
material respects.
Section 3.22. Prospectus. The current prospectus and statement of
----------
additional information for Xxxxx Quality Bond as of the date on which they were
issued did not contain, and as supplemented by any supplement thereto dated
prior to or on the Closing Date, do 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
no representation or warranty is made with respect to written information
provided by AFG for inclusion in the prospectus or statement of additional
information of Xxxxx Quality Bond, or any supplement thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AFG
AFG, on behalf of the Portfolio, represents and warrants to TBFI as
follows:
Section 4.1. Organization; Authority. AFG is duly organized,
-----------------------
validly existing and in good standing under the Business Trust Act of the State
of Delaware, with all requisite trust power and authority to enter into this
Agreement and perform its obligations hereunder.
Section 4.2. Binding Obligation. This Agreement has been duly
------------------
authorized, executed and delivered by AFG and, assuming this Agreement has been
duly executed and delivered by TBFI, constitutes the legal, valid and binding
obligation of AFG, enforceable against AFG in accordance with its terms from and
with respect to the revenues and assets of the Portfolio, except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting creditors' rights generally, or by
general equity principles (whether applied in a court or law or a court of
equity and including limitations on the availability of specific performance or
other equitable remedies).
Section 4.3. Financial Statements. The books of account and related
--------------------
records of the Portfolio fairly reflect in reasonable detail its assets,
liabilities and transactions in accordance with generally accepted accounting
principles applied on a consistent basis. The audited financial statements
dated December 31, 1994 of the Portfolio previously delivered to TBFI (the
"Portfolio Financial Statements") present fairly in all material respects the
financial position of the Portfolio as at the dates indicated and the results of
operations and cash flows for the periods then ended in accordance with
generally accepted accounting principles applied on a consistent basis for the
periods then ended.
Section 4.4. No Material Adverse Changes; Contingent Liabilities.
---------------------------------------------------
Since December 31, 1994, no material adverse change has occurred in the
financial condition, results of operations, business, assets or liabilities of
the Portfolio or the status of the Portfolio as a regulated investment company
under the Code, other than changes resulting from any change in general
conditions in the financial or securities markets or the performance of any
investments made by the Portfolio or occurring in the ordinary course of
business of the Portfolio or AFG. There are no contingent liabilities of the
Portfolio not disclosed in the Portfolio Financial Statements which are required
to be disclosed in accordance with generally accepted accounting principles.
Section 4.5. No Breaches or Defaults. The execution and delivery of
-----------------------
this Agreement by AFG and performance by AFG of its obligations hereunder have
been duly authorized by all necessary trust action on the part of AFG and (i) do
not, and on the Closing Date will not, result in any violation of the Agreement
and Declaration of Trust, as amended, or by-laws, as amended, of AFG and (ii)
does not, and on the Closing Date will not, result in a breach of any of the
terms or provisions of, or constitute (with or without the giving of notice or
the lapse of time or both) a default under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation or imposition of any Lien upon
any property or assets of the Portfolio (except for such breaches or defaults or
Liens that would not reasonably be expected, individually or in the aggregate,
to adversely affect the consummation of the Reorganization) under (A) any
indenture, mortgage or loan or any other material agreement or instrument to
which AFG is a party or by which it may be bound which relates to the Portfolio
or to which any properties of the Portfolio may be subject; (B) any Permit; or
(C) any existing applicable law, rule, regulation, judgment, order or decree of
any Governmental Authority having jurisdiction over AFG or any of the
Portfolio's properties.
Section 4.6. Accountants. KPMG Peat Marwick LLP, which has reported
-----------
upon the Portfolio Financial Statements for the period ended December 31, 1994,
are independent public accountants as required by the Securities Act and the
Exchange Act.
Section 4.7. Authorizations or Consents. Other than those which
--------------------------
shall have been obtained or made on or prior to the Closing Date, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made by AFG in
connection with the due execution and delivery by AFG of this Agreement and the
consummation by AFG of the transactions contemplated hereby.
Section 4.8. Permits. AFG has in full force and effect all Permits
-------
necessary for it to conduct its business as presently conducted as it relates to
the Portfolio, and there has occurred no default under any Permit, except for
the absence of Permits and for defaults under Permits the absence or default of
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. To the knowledge of AFG there are no
proceedings relating to the suspension, revocation or modification of any
Permit, except for such that would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
Section 4.9. No Actions, Suits or Proceedings.
--------------------------------
(a) There is no pending action, suit or proceeding, nor, to the
knowledge of AFG, has any litigation been overtly threatened in writing or, if
probable of assertion, orally, against AFG before any Governmental Authority
which questions the validity or legality of this Agreement or of the
transactions contemplated hereby, or which seeks to prevent the consummation of
the transactions contemplated hereby, including the Reorganization.
(b) There are no legal, administrative or arbitration actions, suits,
or proceedings instituted or pending or, to the knowledge of AFG, threatened in
writing or, if probable of assertion, orally against AFG affecting any property,
asset, interest, or right of the Portfolio, that could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect with respect
to the Portfolio. There are not in existence on the date hereof any plea
agreements, judgments, injunctions, consents, decrees, exceptions or orders that
were entered by, filed with or issued by Governmental Authority relating to
AFG's conduct of the business of the Portfolio affecting in any significant
respect the conduct of such business. AFG is not, and has not been, to the
knowledge of AFG, the target of any investigation by the SEC or any state
securities administrator with respect to its conduct of the business of the
Portfolio.
Section 4.10. Ineligible Persons. Neither AFG nor any "Affiliated
------------------
Person" of AFG has been convicted of any felony or misdemeanor, described in
Section 9(a)(1) of the Investment Company Act, nor has any affiliated person of
AFG been subject, or presently is subject, to any disqualification that would be
a basis for denial, suspension or revocation of registration of an investment
adviser under Section 203(e) of the Advisors Act or Rule 206(4)-4(b) thereunder
or of a broker-dealer under Section 15 of the Exchange Act, or for
disqualification as an investment adviser, employee, officer or director of an
investment company under Section 9 of the Investment Company Act, and, to AFG's
knowledge, there is no proceeding or investigation that is reasonably likely to
become the basis for any such disqualification, denial, suspension or
revocation.
Section 4.11. Taxes.
-----
(a) The Portfolio has elected to be treated as a regulated investment
company under Subchapter M of the Code. The Portfolio has qualified as such for
each taxable year since inception that has ended prior to the Closing Date.
(b) The Portfolio has timely filed all Returns required to be filed
by it and all Taxes with respect thereto have been paid, except where the
failure so to file or so to pay, would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Adequate provision has
been made in the financial statements of the Portfolio for all Taxes in respect
of all periods ending on or before the date of such financial statements, except
where the failure to make such provisions would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, assessed or asserted in writing
by any taxing authority against the Portfolio, and no deficiency has been
proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of the
Portfolio is currently being or has been audited since December 31, 1989 with
respect to income taxes (and since December 31, 1991 with respect to all other
Taxes) by any Federal, state, local, or foreign Tax authority.
(c) The Portfolio's fiscal year has not been changed for tax purposes
since December 31, 1989.
Section 4.12. Brokers. No broker, finder or similar intermediary has
-------
acted for or on behalf of AFG or the Portfolio in connection with this Agreement
or the transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with AFG or any action taken by AFG.
Section 4.13. Registration and Regulation of Company. AFG is
--------------------------------------
registered with the SEC under the Investment Company Act as an open-end,
management, series, investment company and the Portfolio has elected to qualify
as a regulated investment company under Section 851 of the Code. The Portfolio
is in compliance in all material respects with all applicable laws, rules and
regulations, including without limitation the Investment Company Act, the
Securities Act, the Exchange Act and all applicable state securities laws. The
Portfolio is in compliance in all material respects with the applicable
investment policies and restrictions set forth in its registration statement
currently in effect. The value of the net assets of the Portfolio is determined
using portfolio valuation methods that comply in all material respects with the
requirements of the Investment Company Act.
Section 4.14. Registration of Portfolio Shares.
--------------------------------
(a) The shares of beneficial interest of AFG are divided into nine
portfolios, including the Portfolio. The Portfolio has two classes of shares,
Class A Shares and Class B Shares. Under the Delaware Business Trust Act and
its Agreement and Declaration of Trust, as amended, AFG is authorized to issue
an unlimited number of shares of any class representing an investment in each of
its portfolios, including the Portfolio.
(b) The Portfolio Shares of AFG to be issued pursuant to Section 2.7
-----------
shall on the Closing Date be duly registered under the Securities Act by a
Registration Statement on Form N-14 of AFG then in effect.
(c) The Portfolio Shares to be issued pursuant to Section 2.7 are
-----------
duly authorized and on the Closing Date will be validly issued and fully paid
and non-assessable and will conform to the description thereof contained in the
Registration Statement on Form N-14 then in effect. At the time of the
Reorganization, the Portfolio shall not have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any Person
could acquire Portfolio Shares, except for the right of investors to acquire
Portfolio Shares at net asset value in the normal course of its business as an
open-ended diversified management investment company operating under the
Investment Company Act.
(d) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus") which forms a part of AFG's Registration Statement on
Form N-14 shall be furnished to TBFI and BQB Shareholders entitled to vote at
the BQB Shareholders Meeting. The Combined Proxy Statement/Prospectus and
related Statement of Additional Information of the Portfolio, when they become
effective, shall conform to the applicable requirements of the Securities Act
and the Investment Company Act and shall 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, provided, however, that no
representation or warranty is made with respect to written information provided
by TBFI for inclusion in the Combined Prospectus/Proxy Statement.
(e) The shares of the Portfolio which have been or are being offered
for sale (other than Portfolio Shares to be issued in connection with the
Reorganization) have been duly registered under the Securities Act by the AFG
Registration Statement then in effect and have been duly registered, qualified
or are exempt from registration or qualification under the securities laws of
each state or other jurisdiction in which such shares have been or are being
offered for sale, and no action has been taken by AFG to revoke or rescind any
such registration or qualification.
Section 4.15. Representations Concerning the Reorganization.
---------------------------------------------
(a) AFG has no plan or intention to reacquire any of the Portfolio
Shares issued in the Reorganization, except to the extent that the Portfolio is
required by the Investment Company Act to redeem any of its shares presented for
redemption.
(b) The Portfolio has no plan or intention to sell or otherwise
dispose of any of the assets of Xxxxx Quality Bond acquired in the
Reorganization, other than in the ordinary course of its business and to the
extent necessary to maintain its status as a "regulated investment company"
under the Code.
(c) Following the Reorganization, the Portfolio will continue the
"historic business" of Xxxxx Quality Bond (within the meaning of Section 1.368-
1(d) of the Income Tax Regulations under the Code) or use a significant portion
of Xxxxx Quality Bond's historic business assets in a business.
Section 4.16. Prospectus. The current prospectus and statement of
----------
additional information for the Portfolio as of the date on which they were
issued did not contain, and as supplemented by any supplement thereto dated
prior to or on the Closing Date do 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.
ARTICLE V
COVENANTS
Section 5.1. Conduct of Business.
-------------------
(a) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article VII), TBFI shall conduct the business of Xxxxx Quality Bond only in
-----------
the ordinary course and substantially in accordance with past practices, and
shall use its reasonable best efforts to preserve intact its business
organization and material assets and maintain the rights, franchises and
business and customer relations necessary to conduct the business of Xxxxx
Quality Bond in the ordinary course in all material respects. Without limiting
the generality of the foregoing, TBFI shall not do any of the following with
respect to Xxxxx Quality Bond without the prior written consent of AFG, which
consent shall not be unreasonably withheld:
(i) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock;
(ii) amend its articles of incorporation or by-laws;
(iii) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or any
assets that are material, individually or in the aggregate, to Xxxxx
Quality Bond taken as a whole, except purchases of assets in the ordinary
course of business consistent with past practice and except as permitted
under Sections 5.9 and 5.10;
------------ ----
(iv) sell, lease or otherwise dispose of any of its material
properties or assets, or mortgage or otherwise encumber or subject to any
Lien any of its material properties or assets, other than in the ordinary
course of business;
(v) incur any indebtedness for borrowed money or guarantee any
indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Baird Quality
Bond, guarantee any debt securities of another Person, enter into any "keep
well" or other agreement to maintain any financial statement condition of
another Person, or enter into any arrangement having the economic effect of
any of the foregoing;
(vi) settle or compromise any income tax liability or make any
material tax election;
(vii) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the ordinary course of business;
(viii) change its methods of accounting, except as required by
changes in generally accepted accounting principles as concurred in by its
independent auditors, or change its fiscal year;
(ix) make or agree to make any material severance, termination,
indemnification or similar payments except pursuant to existing agreements;
or
(x) adopt any Benefit Plan.
(b) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article VII), AFG shall conduct the business of the Portfolio only in the
-----------
ordinary course and substantially in accordance with past practices, and shall
use its reasonable best efforts to preserve intact its business organization and
material assets and maintain the rights, franchises and business relations
necessary to conduct the business operations of the Portfolio in the ordinary
course in all material respects.
Section 5.2. Confidentiality and Announcements.
---------------------------------
(a) As used herein, "Confidential Information" means all information,
whether oral, written or otherwise (including any information furnished prior to
the execution of this Agreement), furnished to AFG, or its directors, officers,
partners, affiliates, employees, agents, advisors or representatives
(collectively "representatives") by TBFI or Baird Quality Bond or their
respective representatives relating to TBFI or Baird Quality Bond, and all
reports, analyses, compilations, studies and other materials prepared by AFG or
its representatives (in whatever form maintained, whether documentary, computer
storage or otherwise) containing, reflecting or based upon, in whole or in part,
any such information or reflecting its review or view of, or interest in, TBFI
or Baird Quality Bond, a possible transaction with TBFI or Baird Quality Bond or
the Confidential Information. The term "Confidential Information" does not
include information which (i) is or becomes generally available to the public
other than as a result of disclosure by AFG, its representatives or anyone to
whom AFG or its representatives transmits any Confidential Information, in
breach of this Agreement or (ii) is or becomes known or available to AFG on a
non-confidential basis from a source (other than TBFI or Baird Quality Bond or
their respective representatives) who, insofar as is known to AFG after due
inquiry, is not prohibited from transmitting the information to AFG or its
representatives by a contractual, legal, fiduciary or other obligation.
(b) Subject to Section 5.2(c) below, AFG and its representatives
--------------
shall keep the Confidential Information confidential and shall not, without
prior written consent of TBFI disclose, in whole or in part, and will not use,
Confidential Information, directly or indirectly, for any purpose other than in
connection with evaluating the transaction contemplated by this Agreement.
Moreover, AFG shall transmit Confidential Information to its representatives
only if and to the extent that such representatives need to know the
Confidential Information for the purpose of evaluating such transaction and,
prior to being furnished any Confidential Information, are informed by AFG of
the confidential nature of the Confidential Information, are provided with a
copy of the provisions of this Section 5.2 and agree to be bound hereby. In any
-----------
event, AFG shall be responsible for any actions by its representatives which are
not in accordance with the provisions hereof. AFG agrees that neither AFG nor
its representatives will make inquires of, or conduct any discussions with, any
representative of TBFI or Baird Quality Bond regarding the Confidential
Information other than with the permission of Xxxxxx X. Low, Jr., Xxxxxx X.
Xxxxxxxxxx or Xxxx X. Xxxxxxxx.
(c) In the event that AFG, its representatives or anyone to whom
AFG or its representatives supply the Confidential Information are requested or
required to disclose any Confidential Information, AFG agrees (i) to immediately
notify TBFI of the existence, terms and circumstances surrounding such a
request, (ii) to consult with TBFI on the advisability of taking legally
available steps to resist or narrow the Confidential Information which, in the
opinion of its counsel, AFG is legally compelled to disclose and, (iii) to
cooperate with any action by TBFI or Baird Quality Bond to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Confidential Information; provided, however, that this Section
-------
5.2(c) shall not prohibit AFG or its representatives from disclosing
------
Confidential Information that consists of its or their own work product to
persons that have a need to know such information in the ordinary course of
business.
(d) Upon termination of this Agreement pursuant to Article VII,
-----------
and promptly upon request from TBFI thereafter, AFG shall redeliver to TBFI or
destroy all tangible Confidential Information and any other tangible material
containing, prepared on the basis of, or reflecting any information in the
Confidential Information (whether prepared by TBFI or Baird Quality Bond, its
advisors or otherwise), and neither AFG nor its representatives will retain any
copies, extracts or other reproductions in whole or in part of such tangible
material. For purposes of this Agreement, "tangible" Confidential Information
shall include, without limitation, information contained in printed, magnetic or
other tangible media, or in information storage and retrieval systems. At the
request of TBFI, compliance with the foregoing shall be certified in writing to
TBFI by an authorized officer supervising the same.
(e) Notwithstanding the other provisions of this Section 5.2,
-----------
promptly following execution and delivery of this Agreement, TBFI and AFG shall
agree upon and release a mutually acceptable press release and TBFI shall give
any and all notices required to be given by law. Except as described in the
preceding sentence and as required by law, prior to the Closing Date, none of
TBFI, AFG or the parent or any affiliate of either will issue any press release
or make any other public statement with respect to this Agreement, without the
prior written consent of the other parties, which consent shall not be
unreasonably withheld.
(f) The provisions of this Section 5.2 shall terminate on the
-----------
closing of the Reorganization.
Section 5.3. Expenses. Baird Quality Bond and the Portfolio shall
--------
each bear the expenses it incurs in connection with this Agreement and the
Reorganization and other transactions contemplated hereby.
Section 5.4. Further Assurances. Each of the parties hereto shall
------------------
execute such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date,
use its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the Reorganization, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the Reorganization.
Section 5.5. Notice of Events. AFG shall give prompt notice to
----------------
TBFI, and TBFI shall give prompt notice to AFG, of (i) the occurrence or
nonoccurrence of any event of which to the knowledge of AFG or to the knowledge
of TBFI, the occurrence or non-occurrence of which would be likely to result in
any of the conditions specified in (x) in the case of AFG, Sections 6.1 and 6.2
------------ ---
or (y) in the case of TBFI, Sections 6.2 and 6.3, not being satisfied so as to
------------ ---
permit the consummation of the Reorganization and (ii) any material failure on
its part, or on the part of the other party hereto of which it has knowledge, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
------------------
pursuant to this Section 5.5 shall not limit or otherwise affect the remedies
-----------
available hereunder to any party.
Section 5.6. Access to Information.
---------------------
(a) TBFI will, during regular business hours and on reasonable prior
notice, allow AFG and its authorized representatives reasonable access to the
books and records of TBFI pertaining to the assets of Baird Quality Bond and to
employees of TBFI knowledgeable thereof; provided, however, that any such access
------------------
shall not significantly interfere with the business or operations of TBFI.
(b) Any information made available to or obtained by AFG or its
authorized representatives pursuant to subsection (a) above, or otherwise in
connection with this Agreement, shall be subject to the confidentiality
provisions described in Section 5.2 above.
-----------
(c) AFG will, during regular business hours and on reasonable notice,
allow TBFI and its authorized representatives reasonable access to the books and
records of AFG pertaining to the assets of the Portfolio and to employees of AFG
knowledge thereof; provided, however, that any such access shall not
-------- -------
significantly interfere with the business or operations of AFG.
Section 5.7. Consents, Approvals and Filings. Each of TBFI and AFG
-------------------------------
shall make all necessary filings, as soon as reasonably practicable, including,
without limitation, those required under the Securities Act, the Exchange Act,
the Investment Company Act and the Advisers Act, in order to facilitate prompt
consummation of the Reorganization and the other transactions contemplated by
this Agreement. In addition, each of TBFI and AFG shall use its reasonable best
efforts, and shall cooperate fully with each other (i) to comply as promptly as
reasonably practicable with all requirements of Governmental Authorities
applicable to the Reorganization and the other transactions contemplated herein
and (ii) to obtain as promptly as reasonably practicable all necessary permits,
orders or other consents of Governmental Authorities and consents of all third
parties necessary for the consummation of the Reorganization and the other
transactions contemplated herein. Each of TBFI and AFG shall use reasonable
efforts to provide such information and communications to Governmental
Authorities as such Governmental Authorities may request.
Section 5.8. Submission of Agreement to Shareholders. TBFI shall
---------------------------------------
take all action necessary in accordance with applicable law and its articles of
incorporation and by-laws to convene the BQB Shareholders Meeting. TBFI shall,
through its Board of Directors, recommend to the BQB Shareholders approval of
this Agreement and the other transactions contemplated by this Agreement, except
to the extent provided in Section 5.10 hereof. TBFI shall use its reasonable
------------
best efforts to hold the BQB Shareholders Meeting as soon as practicable after
the date hereof.
Section 5.9. Acquisition Proposals. TBFI shall not, nor shall it
---------------------
authorize any officer, director or employee of, or any investment banker,
attorney or other advisor or representative of TBFI to, directly or indirectly
(i) solicit, initiate or encourage the submission of any Acquisition Proposal or
(ii) participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Acquisition Proposal, and TBFI shall promptly
terminate any such discussions with any Person that has expressed or expresses
an interest in acquiring Baird Quality Bond or negotiations pending at the date
of this Agreement provided, however, TBFI or any officer, director or employee
------------------
of, or any investment banker, attorney or other adviser or representative of
TBFI may, following the receipt of an Acquisition Proposal that the Board of
Directors of TBFI determines in good faith, after consultation with outside
counsel, would permit the Board of Directors to take any of the actions referred
to in Section 5.10, participate in negotiations regarding such Acquisition
------------
Proposal. TBFI shall promptly notify AFG, orally and in writing, of the receipt
by it after the date hereof of any Acquisition Proposal or any inquiry from a
potential acquiror of Baird Quality Bond which could reasonably be expected to
lead to any Acquisition Proposal, the material terms and conditions of such
Acquisition Proposal or inquiry and the identity of the Person making any such
Acquisition Proposal or inquiry, except to the extent TBFI's Board of Directors
concludes, after consultations with outside counsel, that the disclosure of any
such information would be a breach of a duty of confidentiality imposed on TBFI
with respect to such information. Subject to the foregoing, TBFI shall keep AFG
informed of the status and details of any such Acquisition Proposal or inquiry.
Section 5.10. Fiduciary Duties. The Board of Directors of TBFI shall
----------------
not (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to AFG, its approval or recommendation of this Agreement or the
Reorganization, (ii) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal or (iii) authorize TBFI to enter into any agreement
with respect to any Acquisition Proposal, unless TBFI receives an Acquisition
------
Proposal and the Board of Directors of TBFI determines in good faith, after
consultation with outside counsel, that in order to comply with its fiduciary
duties to the shareholders of Baird Quality Bond under applicable law, the Board
of Directors of TBFI should withdraw or modify its approval or recommendation of
this Agreement or the Reorganization, approve, recommend or enter into
negotiations concerning such Acquisition Proposal, or authorize TBFI to enter
into an agreement with respect to such Acquisition Proposal or terminate this
Agreement. Nothing contained in this Section 5.10 shall prohibit TBFI from
------------
making any disclosure to the BQB Shareholders which, in the good faith and
reasonable judgment of the Board of Directors of TBFI based on the advice of
outside counsel, is required under applicable law. Notwithstanding any provision
of this Agreement to the contrary, any action by the Board of Directors of TBFI
permitted by this Section 5.10 shall not constitute a breach of this Agreement
------------
by TBFI.
Section 5.11. Section 15(f) of the 1940 Act.
-----------------------------
(a) Each of AFG and TBFI shall use its reasonable best efforts to
assure compliance with the conditions of Section 15(f) of the Investment Company
Act as it applies to the transactions contemplated by this Agreement.
(b) AFG shall for a period of not less than three years after the
Closing Date, use its reasonable best efforts to assure that no more than 25% of
the members of the board of trustees of AFG shall be "interested persons" (as
defined in the Investment Company Act) of the investment adviser of Baird
Quality Bond or any entity that served as investment advisor to Baird Quality
Bond or any Person that before or after the Closing Date was or is an Affiliated
Person of any of the foregoing. Without limiting the generality of the
foregoing, AFG will not take, recommend or endorse any action that would cause
more than 25% of the number of members of its board of trustees to be such
"interested persons."
(c) AFG represents and warrants that there is no express or implied
understanding, arrangement or intention on its part to impose an "unfair burden"
within the meaning of Section 15(f) of the Investment Company Act on the
Portfolio as a result of the transactions contemplated hereby, and that for a
period of not less than two years after the Closing Date, it shall not take or
recommend any act that would constitute an "unfair burden" on the Portfolio.
Section 5.12. Sales Charges. TBFI shall deliver to AFG on the Closing
-------------
Date a certificate showing (a) the Remaining Amount and Balance for Interest
relating to Asset Based Sales Charges as such terms are used in NASD Notice to
Members 93-12 at page 56, and (b) the total sales charges, and the components
thereof, paid by Baird Quality Bond shareholders, collected by Baird Quality
Bond or paid by Baird Quality Bond in connection with sales of its shares since
July 1, 1993.
ARTICLE VI
CONDITIONS PRECEDENT TO THE REORGANIZATION
Section 6.1. Conditions Precedent of AFG. The obligation of AFG to
---------------------------
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following conditions, any one or more of which may
be waived in writing by AFG.
(a) The representations and warranties of TBFI on behalf of Baird
Quality Bond set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date
with the same effect as though all such representations and warranties had been
made as of the Closing Date.
(b) TBFI shall have complied with and satisfied in all material
respects all agreements and conditions set forth herein on its part to be
performed or satisfied at or prior to the Closing Date.
(c) AFG shall have received at the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of TBFI on behalf of TBFI, in such
individual's capacity as an officer of TBFI and not as an individual, to the
effect that the conditions specified in Section 6.1(a) and (b) have been
----------------------
satisfied and (ii) a certificate, dated as of the Closing Date, from the
Secretary or Assistant Secretary of TBFI certifying as to the accuracy and
completeness of the attached articles of incorporation and by-laws, and
resolutions, consents and authorizations with respect to the execution and
delivery of this Agreement and the transactions contemplated hereby.
(d) AFG shall have received the signed opinion of Xxxxxxx & Xxxxx,
counsel to TBFI, or other counsel reasonably acceptable to AFG, in form and
substance reasonably acceptable to counsel for AFG, as to the matters set forth
in Schedule 6.1(d).
---------------
Section 6.2. Mutual Conditions. The obligation of TBFI and AFG to
-----------------
consummate the Reorganization is subject to the satisfaction, at or prior to the
Closing Date, of all of the following further conditions, any one or more may be
waived in writing by TBFI and AFG, but only if and to the extent that such
waiver is mutual.
(a) All filings required to be made prior to the Closing Date with,
and all consents, approvals, permits and authorizations required to be obtained
on or prior to the Closing Date from Governmental Authorities, in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein by TBFI and AFG shall have been made or
obtained, as the case may be; provided, however, that such consents, approvals,
------------------
permits and authorizations may be subject to conditions that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) This Agreement, the Reorganization and related corporate matters
shall have been approved and adopted at the BQB Shareholders Meeting by the
shareholders of Baird Blue Chip on the record date by the Required BQB
Shareholder Vote.
(c) The assets of Baird Quality Bond to be acquired by the Portfolio
shall constitute at least 90% of the fair market value of the net assets and at
least 70% of the fair market value of the gross assets held by Baird Quality
Bond immediately prior to the Reorganization. For purposes of this Section
6.2(c), assets used by Baird Quality Bond to pay the expenses it incurs in
connection with this Agreement and the Reorganization and to effect all
shareholder redemptions and distributions (other than regular, normal dividends
and regular, normal redemptions pursuant to the Investment Company Act, and not
in excess of the requirements of Section 852 of the Code, occurring in the
ordinary course of Baird Quality Bond's business as an open-end diversified
management investment company) after the date of this Agreement shall be
included as assets of Baird Quality Bond immediately prior to the
Reorganization.
(d) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Governmental Authority preventing the
consummation of the Reorganization on the Closing Date shall be in effect;
provided, however, that the party or parties invoking this condition shall use
------------------
reasonable efforts to have any such order or injunction vacated.
(e) The Registration Statement on Form N-14 filed by AFG with respect
to the Portfolio Shares to be issued to BQB Shareholders in connection with the
Reorganization shall have become effective under the Securities 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 Securities Act.
(f) TBFI and AFG shall have received on or before the Closing Date an
opinion of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx in form, scope and substance
satisfactory to TBFI and AFG, set forth on Schedule 6.2(f).
(g) The transactions contemplated by that certain Agreement and Plan
of Reorganization dated December 20, 1995, between Baird Blue Chip Fund, Inc.
and AIM Equity Funds, Inc. acting on behalf of AIM Blue Chip Fund, and that
certain Agreement and Plan of Reorganization dated December 20, 1995 between
Xxxxx Capital Development Fund, Inc. and AIM Equity Funds, Inc., acting on
behalf of AIM Capital Development Fund, shall be consummated on the Closing
Date.
(h) The dividend or dividends described in the last sentence of
Section 3.16(b) shall have been declared.
(i) A I M Advisors, Inc. ("AIM") shall have executed and delivered to
TBFI a certificate to the effect that:
(i) its balance sheet as at December 31, 1994 has been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis and fairly reflects the financial condition of AIM as at
the date indicated; since December 31, 1994 there has not been any change
in AIM's financial condition, assets, liabilities or business that would
have a material adverse effect upon its ability to provide investment
advisory services to the Portfolio and funds advised by AIM (the "AIM
Funds").
(ii) AIM is, and on the Closing Date shall be, registered as an
investment adviser under the Investment Advisers Act, and registered as an
investment adviser in all states where it is required to be so registered.
(iii)AIM is in compliance in all material respects with all laws,
rules and regulations applicable to its business of providing investment
advisory services to the Portfolio and the AIM Funds, including, without
limitation, federal and state securities laws.
(iv) Neither AIM nor any affiliated person of AIM is ineligible
to serve an employee, officer, director, member of an advisory board,
investment adviser, depositor or principal underwriter of any investment
company registered under the Investment Company Act by reason of any
conviction of a felony or misdemeanor, described in Section 9(a)(1) of the
Investment Company Act, and is not subject to any order issued by the SEC
under Section 9(b) of the Investment Company Act. To the best of AIM's
knowledge, no facts exist with respect to AIM, or any Affiliated Person of
AIM, which would form a basis for any such conviction or the issuance of
any such order, judgment or decree.
(v) No litigation, proceeding or governmental investigation or
inquiry is pending or, to the best of AIM's knowledge, threatened, against
AIM that, if determined against AIM would be reasonably likely to have a
material adverse effect on the Portfolio or a material adverse effect on
AIM's ability to provide investment advisory services to the Portfolio and
the AIM Funds.
(j) The transactions contemplated by that certain Acquisition
Agreement dated December 20, 1995 between Xxxxxx X. Xxxxx & Co. Incorporated and
A I M Advisors, Inc. shall be consummated on the Closing Date.
Section 6.3. Conditions Precedent of TBFI. The obligation of TBFI
----------------------------
to consummate the Reorganization is subject to the satisfaction, at or prior to
the Closing Date, of all of the following conditions, any one or more of which
may be waived in writing by TBFI.
(a) The representations and warranties of AFG on behalf of the
Portfolio set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date with the
same effect as though all such representations and warranties had been made as
of the Closing Date.
(b) AFG shall have complied with and satisfied in all material
respects all agreements and conditions set forth herein on its part to be
performed or satisfied at or prior to the Closing Date.
(c) TBFI shall have received on the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of AFG, in such individual's
capacity as an officer of AFG and not as an individual, to the effect that the
conditions specified in Section 6.3(a) and (b) have been satisfied and (ii) a
----------------------
certificate, dated as of the Closing Date, of AFG, certifying as to the accuracy
and completeness of the attached Agreement and Declaration of Trust, as amended,
and by-laws, as amended, and resolutions, consents and authorizations with
respect to the execution and delivery of this Agreement and the transactions
contemplated hereby.
(d) TBFI shall have received the signed opinion of Xxxxxxx Xxxxx
Xxxxxxx & Xxxxxxxxx, counsel to AFG, or other counsel reasonably acceptable to
TBFI, in form and substance reasonably acceptable to counsel for TBFI, as to the
matters set forth on Schedule 6.3(d).
---------------
ARTICLE VII
TERMINATION OF AGREEMENT
Section 7.1. Termination.
-----------
(a) This Agreement may be terminated on or prior to the Closing Date
as follows:
(i) by mutual written consent of TBFI and AFG; and
(ii) at the election of TBFI or AFG:
(A) if the Closing Date shall not be on or before June 30,
1996, or such later date as the parties hereto may agree upon, unless
the failure to consummate the Reorganization is the result of a
willful and material breach of this Agreement by the party seeking to
terminate this Agreement;
(B) if, upon a vote at BQB Shareholders Meeting or any
adjournment thereof, the Required BQB Shareholder Vote shall not have
been obtained as contemplated by Section 5.8; or
-----------
(C) if any Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Reorganization and
such order, decree, ruling or other action shall have become final and
nonappealable; or
(iii) by TBFI in the event TBFI receives an Acquisition
Proposal and the Board of Directors of TBFI determines in good faith, after
consultation with outside counsel, that, in order to comply with its
fiduciary duties to the BQB Shareholders under applicable law, the Board of
Directors of TBFI should authorize TBFI to terminate this Agreement; or
(iv) by AFG 45 days following the date on which TBFI first
actively participates in any discussions on negotiations regarding, or
furnishes to any Person any confidential information with respect to, any
Acquisition Proposal, unless prior to the expiration of such 45 day period
TBFI notifies AFG that such Acquisition Proposal has been rejected and any
such negotiations have been terminated.
(b) The termination of this Agreement shall be effectuated by the
delivery by the terminating party to the other party of a written notice of such
termination. If this Agreement so terminates, it shall become null and void and
have no further force or effect, except as provided in Section 7.2.
-----------
Section 7.2. Survival After Termination. If this Agreement is
--------------------------
terminated in accordance with Section 7.1 hereof and the transactions
-----------
contemplated hereby are not consummated, this Agreement shall become void and of
no further force and effect, except for the provisions of Section 5.2 and
-----------
Section 5.3.
-----------
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations and Warranties. Except
---------------------------------------------
as set forth below, none of the representations, warranties or covenants in this
Agreement or in any certificate or instrument delivered pursuant to this
Agreement shall survive the Closing Date and no party shall, therefore, have any
recourse therefor against any other party in connection therewith. This Section
-------
8.1 shall not limit any covenant or agreement of the parties which by its terms
---
contemplates performance after the Closing Date.
Section 8.2. Law Governing. This Agreement shall be construed and
-------------
interpreted according to the laws of the State of Delaware applicable to
contracts made and to be performed wholly within such state.
Section 8.3. Binding Effect, Persons Benefiting, No Assignment.
-------------------------------------------------
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and the respective successors and assigns of the parties and such
Persons. Nothing in this Agreement is intended or shall be construed to confer
upon any entity or Person other than the parties hereto and their respective
successors and permitted assigns any right, remedy or claim under or by reason
of this Agreement or any part hereof. Without the prior written consent of the
parties hereto, this Agreement may not be assigned by any of the parties hereto.
Section 8.4. Obligations of AFG and TBFI.
---------------------------
(a) TBFI and AFG hereby acknowledge and agree that the Portfolio is a
separate investment portfolio of AFG, that AFG is executing this Agreement on
behalf of the Portfolio, and that any amounts payable by AFG under or in
connection with this Agreement shall be payable solely from the revenues and
assets of the Portfolio. TBFI further acknowledges and agrees that this
Agreement has been executed by an authorized officer of AFG in his or her
capacity as an officer of AFG intending to bind AFG as provided herein, and that
no officer, trustee or shareholder of AFG shall be personally liable for the
liabilities or obligations of AFG incurred hereunder.
(b) TBFI and AFG hereby acknowledge and agree that Baird Quality Bond
is a separate investment portfolio of TBFI, that TBFI is executing this
Agreement on behalf of Baird Quality Bond and that any amounts payable by TBFI
under or in connection with this Agreement shall be payable solely from the
revenues and assets of Baird Quality Bond.
Section 8.5. Amendments. This Agreement may not be amended, altered
----------
or modified except by a written instrument executed by TBFI and AFG.
Section 8.6. Enforcement. The parties agree irreparable damage
-----------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
Section 8.7. Interpretation. When a reference is made in this
--------------
Agreement to a Section or Schedule, such reference shall be to a Section of, or
a Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". Each representation and warranty contained in Article III or IV
----------- --
that relates to a general category of a subject matter shall be deemed
superseded by a specific representation and warranty relating to a subcategory
thereof to the extent of such specific representation or warranty.
Section 8.8. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original and each of which shall
constitute one and the same instrument.
Section 8.9. Entire Agreement; Schedules. This Agreement, including
---------------------------
the Schedules, certificates and lists referred to herein, and any documents
executed by the parties simultaneously herewith or pursuant thereto, constitute
the entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, written or oral, between the parties with respect to such
subject matter.
Section 8.10. Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall he deemed to have been
duly given when delivered by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or when sent by telecopier
(with receipt confirmed), provided, in the case of a telecopied notice, a copy
is also sent by registered mail, return receipt requested, or by courier,
addressed as follows (or to such other address as a party may designate by
notice to the other):
(a) If to AFG:
AIM Funds Group
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
(b) If to TBFI:
The Baird Funds, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
THE BAIRD FUNDS, INC., acting
on behalf of Baird Quality
Bond Fund
By: /S/ M. C. LOW, JR.
AIM FUNDS GROUP, acting
on behalf of AIM Income Fund
By: /S/ XXXXXX X. XXXXXX
Schedule 3.12(a)
List of Contracts and Agreements.
---------------------------------
1. Investment Advisory Agreement dated September 16, 1992 between The
Baird Funds, Inc. ("TBFI") and Xxxxxx X. Xxxxx & Co. Incorporated
("Baird"), for the Quality Bond Fund ("BQB Fund").
2. Administration Agreement dated October 1, 1992 between TBFI and
Fiduciary Management, Inc.
3. Distribution Plan of BQB Fund.
4. Distribution Agreement dated September 16, 1992 between TBFI and
Baird for the BQB Fund.
5. Distribution Assistance Agreement dated September 16, 1992 between
TBFI and Baird for the BQB Fund.
6. Custodian Agreement dated October 1, 1992 between TBFI and Firstar
Trust Company ("Firstar").
7. Transfer Agent Agreement dated October 1, 1992 between TBFI and
Firstar.
8. Agreement dated September 14, 1994, as amended, among TBFI, Baird
Blue Chip Fund, Inc. and Xxxxx Capital Development Fund, Inc.
regarding allocation of fidelity bond coverage, pursuant to Rule
17g-1(f) under the Investment Company Act of 1940.
9. $1,600,000 Fidelity Bond issued by Reliance Insurance Company.
10. Articles of Incorporation of TBFI.
11. Bylaws of TBFI.
Schedule 6.1(d)
OPINION OF COUNSEL TO TBFI
1. TBFI is a corporation duly incorporated and validly existing under
the laws of the State of Wisconsin.
2. TBFI is an open-end, management investment company registered under
the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by TBFI
have been duly authorized and approved by all requisite corporate
action on the part of TBFI. The Agreement has been duly executed and
delivered by TBFI and constitutes the valid and binding obligation of
Baird Quality Bond.
4. The BQB Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable
(subject to Wisconsin Business Corporation Law Section
180.0622(2)(b)).
5. TBFI is not required to submit any notice, report or other filing
with or obtain any authorization consent or approval from any
governmental authority or self regulatory organization prior to the
consummation of the transactions contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer who
is the current primary contact for TBFI or who has devoted substantive attention
on behalf of TBFI during the preceding twelve months and who is still currently
employed by or is currently a member of this firm, no litigation or governmental
proceeding is pending or threatened in writing against Baird Quality Bond (i)
with respect to the Agreement or (ii) which involves in excess of $500,000 in
damages.
Schedule 6.2(g)
Tax Opinions.
------------
(i) The transfer of the assets of Baird Quality Bond
to the Portfolio in exchange for the Portfolio Shares distributed directly
to the BQB Shareholders, as provided in the Agreement, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code and that
Baird Quality Bond and AFG will each be a "party to a reorganization"
within the meaning of 368(b) of the Code.
(ii) In accordance with Section 361(a) and Section
361(c)(1) of the Code, no gain or loss will be recognized by Baird Quality
Bond as a result of such transaction.
(iii) In accordance with Section 1032 of the Code, no
gain or loss will be recognized by the Portfolio upon the receipt of assets
of Baird Quality Bond in exchange for Portfolio Shares issued directly to
the BQB Shareholders
(iv) In accordance with Section 354(a)(1) of the Code,
no gain or loss will be recognized by BQB Shareholders on issuance by AFG
of Portfolio Shares in exchange for their BQB Shares.
(v) In accordance with Section 362(b) of the Code, the
basis to the Portfolio of the assets of Baird Quality Bond transferred to
it will be the same as the basis of such assets in the hands of Baird
Quality Bond immediately prior to the exchange.
(vi) In accordance with Section 358(a) of the Code, a
BQB Shareholder's basis for Portfolio Shares issued to such BQB Shareholder
pursuant to Section 2.7 of the Agreement ("Issued Shares") will be the same
-----------
as his basis for BQB Shares.
(vii) In accordance with Section 1223(1) of the Code, a
BQB Shareholder's holding period for Portfolio Shares will be determined by
including said BQB Shareholder's holding period for BQB Shares exchanged
therefor, provided that BQB Shareholder held such BQB Shares as a capital
asset.
(viii) In accordance with Section 1223(2) of the Code,
the holding period with respect to the assets of Baird Quality Bond
transferred to the Portfolio will include the holding period for such
assets in the hands of Baird Quality Bond.
(ix) In accordance with Section 381(a)(2) of the Code,
the Portfolio will succeed to and take into account the items of Baird
Quality Bond described in Section 381(c) of the Code, subject to the
conditions and limitations specified in Sections 381 through 384 of the
Code and the Internal Revenue Service regulations thereunder.
Schedule 6.3(d)
OPINION OF COUNSEL TO AFG
1. AFG is duly organized and validly existing as a business trust
under the Business Trust Law of the State of Delaware.
2. AFG is an open-end, management investment company registered under
the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AFG
have been duly authorized and approved by all requisite trust action
on the part of AFG. The Agreement has been duly executed and
delivered by AFG and constitutes the valid and binding obligation of
the Portfolio.
4. The Portfolio Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable.
5. AFG is not required to submit any notice, report or other filing
with or obtain any authorization consent or approval from any
governmental authority or self regulatory organization prior to the
consummation of the transactions contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer who
is the current primary contact for AFG or who has devoted substantive attention
on behalf of AFG during the preceding twelve months and who is still currently
employed by or is currently a member of this firm, no litigation or governmental
proceeding is pending or threatened in writing against the Portfolio (i) with
respect to the Agreement or (ii) which involves in excess of $500,000 in
damages.
