EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made this 9th day of June, 1999, by and between Xxxx Xxxxxxx
Strategic Income Fund (the "Acquiring Fund"), a series of Xxxx
Xxxxxxx Strategic Series, a Massachusetts business trust (the
"Trust II"), and Xxxx Xxxxxxx Xxxxx-Term Strategic Income Fund
(the "Acquired Fund"), a series of Xxxx Xxxxxxx Investment Trust
III, a Massachusetts business trust (the "Trust") each with their
principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000. The Acquiring Fund and the Acquired Fund
are sometimes referred to collectively herein as the "Funds" and
individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of
"reorganization," as such term is used in Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization will consist of the transfer of all of the assets
of the Acquired Fund to the Acquiring Fund in exchange solely for
the issuance of Class A, Class B, and Class C shares of
beneficial interest of the Acquiring Fund (the "Acquiring Fund
Shares") to the Acquired Fund and the assumption by the Acquiring
Fund of all of the liabilities of the Acquired Fund, followed by
the distribution by the Acquired Fund, on or promptly after the
Closing Date hereinafter referred to, of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in liquidation
and termination of the Acquired Fund as provided herein, all upon
the terms and conditions set forth in this Agreement.
In consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR
ASSUMPTION OF LIABILITIES AND ISSUANCE OF ACQUIRING FUND
SHARES; LIQUIDATION OF THE ACQUIRED FUND
1.1 The Acquired Fund will transfer all of its assets
(consisting, without limitation, of portfolio securities and
instruments, dividends and interest receivables, cash and
other assets), as set forth in the statement of assets and
liabilities referred to in Paragraph 7.2 hereof (the
"Statement of Assets and Liabilities"), to the Acquiring Fund
free and clear of all liens and encumbrances, except as
otherwise provided herein, in exchange for (i) the assumption
by the Acquiring Fund of the known and unknown liabilities of
the Acquired Fund, including the liabilities set forth in the
Statement of Assets and Liabilities (the "Acquired Fund
Liabilities"), which shall be assigned and transferred to the
Acquiring Fund by the Acquired Fund and assumed by the
Acquiring Fund, and (ii) delivery by the Acquiring Fund to
the Acquired Fund, for distribution pro rata by the Acquired
Fund to its shareholders in proportion to their respective
ownership of Class A, Class B and/or Class C shares of
beneficial interest of the Acquired Fund, as of the close of
business on October 22, 1999 (the "Closing Date"), of a
number of the Acquiring Fund Shares having an aggregate net
asset value equal, in the case of each class of Acquiring
Fund Shares, to the value of the assets, less such
liabilities (herein referred to as the "net value of the
assets") attributable to the applicable class, assumed,
assigned and delivered, all determined as provided in
Paragraph 2.1 hereof and as of a date and time as specified
therein. Such transactions shall take place at the closing
provided for in Paragraph 3.1 hereof (the "Closing"). All
computations with respect to the Acquiring Fund shall be
provided by Investors Bank & Trust Company (the "Acquiring
Fund's Custodian"), as custodian and pricing agent for the
Acquiring Fund and, and with respect to the Acquired Fund by
State Street Bank and Trust Company (the "Acquired Fund's
Custodian).
1.2 The Acquired Fund has provided the Acquiring Fund with a list
of the current securities holdings of the Acquired Fund as of
the date of execution of this Agreement. The Acquired Fund
reserves the right to sell any of these securities (except to
the extent sales may be limited by representations made in
connection with issuance of the tax opinion provided for in
paragraph 8.6 hereof) but will not, without the prior
approval of the Acquiring Fund, acquire any additional
securities other than securities of the type in which the
Acquiring Fund is permitted to invest.
1.3 The Acquiring Fund and the Acquired Fund shall each bear its
own expenses in connection with the transactions contemplated
by this Agreement.
1.4 On or as soon after the Closing Date as is conveniently
practicable (the "Liquidation Date"), the Acquired Fund will
liquidate and distribute pro rata to shareholders of record
(the "Acquired Fund shareholders"), determined as of the
close of regular trading on the New York Stock Exchange on
the Closing Date, the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Such
liquidation and distribution will be accomplished by the
transfer of the Acquiring Fund Shares then credited to the
account of the Acquired Fund on the books of the Acquiring
Fund, to open accounts on the share records of the Acquiring
Fund in the names of the Acquired Fund shareholders and
representing the respective pro rata number and class of
Acquiring Fund Shares due such shareholders. Acquired Fund
shareholders who own Class A shares of the Acquired Fund will
receive Class A Acquiring Fund Shares, Acquired Fund
shareholders who own Class B shares of the Acquired Fund will
receive Class B Acquiring Fund Shares, and Acquired Fund
shareholders who own Class C shares of the Acquired Fund will
receive Class C Acquiring Fund Shares,. The Acquiring Fund
shall not issue certificates representing Acquiring Fund
Shares in connection with such exchange.
1.5 The Acquired Fund shareholders holding certificates
representing their ownership of shares of beneficial interest
of the Acquired Fund shall surrender such certificates or
deliver an affidavit with respect to lost certificates in
such form and accompanied by such surety bonds as the
Acquired Fund may require (collectively, an "Affidavit"), to
Xxxx Xxxxxxx Signature Services, Inc. prior to the Closing
Date. Any Acquired Fund share certificate which remains
outstanding on the Closing Date shall be deemed to be
canceled, shall no longer evidence ownership of shares of
beneficial interest of the Acquired Fund and shall evidence
ownership of Acquiring Fund Shares. Unless and until any
such certificate shall be so surrendered or an Affidavit
relating thereto shall be delivered, dividends and other
distributions payable by the Acquiring Fund subsequent to the
Liquidation Date with respect to Acquiring Fund Shares shall
be paid to the holder of such certificate(s), but such
shareholders may not redeem or transfer Acquiring Fund Shares
received in the Reorganization. The Acquiring Fund will not
issue share certificates in the Reorganization.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund
Shares in a name other than the registered holder of the
Acquired Fund Shares on the books of the Acquired Fund as of
that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.7 The existence of the Acquired Fund shall be terminated as
promptly as practicable following the Liquidation Date.
1.8 Any reporting responsibility of the Trust, including, but not
limited to, the responsibility for filing of regulatory
reports, tax returns, or other documents with the Securities
and Exchange Commission (the "Commission"), any state
securities commissions, and any federal, state or local tax
authorities or any other relevant regulatory authority, is
and shall remain the responsibility of the Trust.
2. VALUATION
2.1 The net asset values of the Class A, Class B and Class C
Acquiring Fund Shares and the net values of the assets and
liabilities of the Acquired Fund attributable to its Class A,
Class B and Class C shares to be transferred shall, in each
case, be determined as of the close of business (4:00 p.m.
Boston time) on the Closing Date. The net asset values of
the Class A, Class B, and Class C Acquiring Fund Shares shall
be computed by the Acquiring Fund's Custodian in the manner
set forth in the Acquiring Fund's Declaration of Trust as
amended and restated (the "Declaration"), or By-Laws and the
Acquiring Fund's then-current prospectus and statement of
additional information and shall be computed in each case to
not fewer than four decimal places. The net values of the
assets of the Acquired Fund attributable to its Class A,
Class B, and Class C shares to be transferred shall be
computed by the Acquired Fund's Custodian by calculating the
value of the assets of each class transferred by the Acquired
Fund and by subtracting therefrom the amount of the
liabilities of each class assigned and transferred to and
assumed by the Acquiring Fund on the Closing Date, said
assets and liabilities to be valued in the manner set forth
in the Acquired Fund's then current prospectus and statement
of additional information and shall be computed in each case
to not fewer than four decimal places.
2.2 The number of shares of each class of Acquiring Fund Shares
to be issued (including fractional shares, if any) in
exchange for the Acquired Fund's assets shall be determined
by dividing the value of the Acquired Fund's assets
attributable to a class, less the liabilities attributable to
that class assumed by the Acquiring Fund, by the Acquiring
Fund's net asset value per share of the same class, all as
determined in accordance with Paragraph 2.1 hereof.
2.3 All computations of value shall be made by each Custodian in
accordance with its regular practice as pricing agent for its
respective Fund.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be October 22, 1999 or such other date
on or before April 30, 2000 as the parties may agree. The
Closing shall be held as of 5:00 p.m. at the offices of the
Trust II and the Trust, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, or at such other time and/or place as
the parties may agree.
3.2 Portfolio securities that are not held in book-entry form in
the name of the Acquired Fund's Custodian as record holder
for the Acquired Fund shall be presented by the Acquired Fund
to the Acquiring Fund's Custodian for examination no later
than five business days preceding the Closing Date.
Portfolio securities which are not held in book-entry form
shall be delivered by the Acquired Fund to the Acquiring
Fund's Custodian for the account of the Acquiring Fund on the
Closing Date, duly endorsed in proper form for transfer, in
such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be
accompanied by all necessary federal and state stock transfer
stamps or a check for the appropriate purchase price thereof.
Portfolio securities held of record by the Acquired Fund's
Custodian in book-entry form on behalf of the Acquired Fund
shall be delivered to the Acquiring Fund by the Acquiring
Fund's Custodian by recording the transfer of beneficial
ownership thereof on its records. The cash delivered shall
be in the form of currency or by the Acquiring Fund's
Custodian crediting the Acquiring Fund's account maintained
with the Acquiring Fund's Custodian with immediately
available funds.
3.3 In the event that on the Closing Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall
be restricted or (b) trading or the reporting of trading on
said Exchange or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the
Closing Date shall be postponed until the first business day
after the day when trading shall have been fully resumed and
reporting shall have been restored; provided that if trading
shall not be fully resumed and reporting restored on or
before April 30, 2000, this Agreement may be terminated by
the Acquiring Fund or by the Acquired Fund upon the giving of
written notice to the other party.
3.4 The Acquired Fund shall deliver at the Closing a list of the
names, addresses, federal taxpayer identification numbers and
backup withholding and nonresident alien withholding status
of the Acquired Fund shareholders and the number of
outstanding shares of each class of beneficial interest of
the Acquired Fund owned by each such shareholder, all as of
the close of business on the Closing Date, certified by its
Treasurer, Secretary or other authorized officer (the
"Shareholder List"). The Acquiring Fund shall issue and
deliver to the Acquired Fund a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date, or
provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of the Acquiring Fund. At the
Closing, each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts or
other documents as such other party or its counsel may
reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Trust on behalf of the Acquired Fund represents, warrants
and covenants to the Acquiring Fund as follows:
(a) The Trust is a business trust, duly organized, validly
existing and in good standing under the laws of The
Commonwealth of Massachusetts and has the power to own all
of its properties and assets and, subject to approval by the
shareholders of the Acquired Fund, to carry out the
transactions contemplated by this Agreement. Neither the
Trust nor the Acquired Fund is required to qualify to do
business in any jurisdiction in which it is not so qualified
or where failure to qualify would subject it to any material
liability or disability. The Trust has all necessary
federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now
being conducted;
(b) The Trust is a registered investment company classified as
a management company and its registration with the
Commission as an investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), is in full
force and effect. The Acquired Fund is a diversified series
of the Trust;
(c) The Trust and the Acquired Fund are not, and the execution,
delivery and performance of their obligations under this
Agreement will not result, in violation of any provision of
the Trust's Declaration of Trust, as amended and restated
(the "Trust's Declaration") or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking
to which the Trust or the Acquired Fund is a party or by
which it is bound;
(d) Except as otherwise disclosed in writing and accepted by
the Acquiring Fund, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is currently pending or threatened against
the Trust or the Acquired Fund or any of the Acquired Fund's
properties or assets. The Trust knows of no facts which
might form the basis for the institution of such
proceedings, and neither the Trust nor the Acquired Fund is
a party to or subject to the provisions of any order, decree
or judgment of any court or governmental body which
materially and adversely affects the Acquired Fund's
business or its ability to consummate the transactions
herein contemplated;
(e) The Acquired Fund has no material contracts or other
commitments (other than this Agreement or agreements for the
purchase of securities entered into in the ordinary course
of business and consistent with its obligations under this
Agreement) which will not be terminated without liability to
the Acquired Fund at or prior to the Closing Date;
(f) The audited statement of assets and liabilities, including
the schedule of investments, of the Acquired Fund as of
October 31, 1998 and the related statement of operations
(copies of which have been furnished to the Acquiring Fund)
and the unaudited statements as of April 30, 1999, present
fairly in all material respects the financial condition of
the Acquired Fund as of October 31, 1998 and April 30, 1999
and the results of its operations for the period then ended
in accordance with generally accepted accounting principles
consistently applied, and there were no known actual or
contingent liabilities of the Acquired Fund as of the
respective dates thereof not disclosed therein;
(g) Since April 30, 1999, there has not been any material
adverse change in the Acquired Fund's financial condition,
assets, liabilities, or business other than changes
occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing
more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by
the Acquiring Fund;
(h) At the date hereof and by the Closing Date, all federal,
state and other tax returns and reports, including
information returns and payee statements, of the Acquired
Fund required by law to have been filed or furnished by such
dates shall have been filed or furnished, and all federal,
state and other taxes, interest and penalties shall have
been paid so far as due, or provision shall have been made
for the payment thereof, and to the best of the Acquired
Fund's knowledge no such return is currently under audit and
no assessment has been asserted with respect to such returns
or reports;
(i) Each of the Acquired Fund and its predecessors has
qualified as a regulated investment company for each taxable
year of its operation and the Acquired Fund will qualify as
such as of the Closing Date with respect to its taxable year
ending on the Closing Date;
(j) The authorized capital of the Acquired Fund consists of an
unlimited number of shares of beneficial interest, no par
value. All issued and outstanding shares of beneficial
interest of the Acquired Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid
and nonassessable by the Trust. All of the issued and
outstanding shares of beneficial interest of the Acquired
Fund will, at the time of Closing, be held by the persons and
in the amounts and classes set forth in the Shareholder List
submitted to the Acquiring Fund pursuant to Paragraph 3.4
hereof. The Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or
purchase any of its shares of beneficial interest, nor is
there outstanding any security convertible into any of its
shares of beneficial interest;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the assets to be transferred to the
Acquiring Fund pursuant to Paragraph 1.1 hereof, and full
right, power and authority to sell, assign, transfer and
deliver such assets hereunder, and upon delivery and payment
for such assets, the Acquiring Fund will acquire good and
marketable title thereto subject to no restrictions on the
full transfer thereof, including such restrictions as might
arise under the Securities Act of 1933, as amended (the
"1933 Act");
(l) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part
of the Trust on behalf of the Acquired Fund, and this
Agreement constitutes a valid and binding obligation of the
Trust and the Acquired Fund enforceable in accordance with
its terms, subject to the approval of the Acquired Fund's
shareholders;
(m) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders,
registration statements, proxy materials and other documents
which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall
comply in all material respects with federal securities and
other laws and regulations thereunder applicable thereto;
(n) The proxy statement of the Acquired Fund (the "Proxy
Statement") to be included in the Registration Statement
referred to in Paragraph 5.7 hereof (other than written
information furnished by the Acquiring Fund for inclusion
therein, as covered by the Acquiring Fund's warranty in
Paragraph 4.2(m) hereof), on the effective date of the
Registration Statement, on the date of the meeting of the
Acquired Fund shareholders and on the Closing Date, shall
not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading;
(o) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation
by the Acquired Fund of the transactions contemplated by
this Agreement;
(p) All of the issued and outstanding shares of beneficial
interest of the Acquired Fund have been offered for sale and
sold in conformity with all applicable federal and state
securities laws;
(q) The prospectus of the Acquired Fund, dated March 1, 1999
(the "Acquired Fund Prospectus"), previously furnished to
the Acquiring Fund, does not contain any untrue statement of
a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were
made, not misleading.
4.2 The Trust II on behalf of the Acquiring Fund represents,
warrants and covenants to the Acquired Fund as follows:
(a) The Trust II is a business trust duly organized, validly
existing and in good standing under the laws of The
Commonwealth of Massachusetts and has the power to own all
of its properties and assets and to carry out the Agreement.
Neither the Trust II nor the Acquiring Fund is required to
qualify to do business in any jurisdiction in which it is
not so qualified or where failure to qualify would subject
it to any material liability or disability. The Trust II
has all necessary federal, state and local authorizations to
own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Trust II is a registered investment company classified
as a management company and its registration with the
Commission as an investment company under the 1940 Act is in
full force and effect. The Acquiring Fund is a diversified
series of the Trust II;
(c) The prospectus (the "Acquiring Fund Prospectus") and
statement of additional information for Class A, Class B,
and Class C shares of the Acquiring Fund, each dated April
1, 1999, and any amendments or supplements thereto on or
prior to the Closing Date, and the Registration Statement on
Form N-14 to be filed in connection with this Agreement (the
"Registration Statement") (other than written information
furnished by the Acquired Fund for inclusion therein, as
covered by the Acquired Fund's warranty in Paragraph 4.1(m)
hereof) will conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the rules and regulations of the Commission thereunder, the
Acquiring Fund Prospectus does not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading and the Registration
Statement will not include any untrue statement of material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made,
not misleading;
(d) At the Closing Date, the Trust II on behalf of the
Acquiring Fund will have good and marketable title to the
assets of the Acquiring Fund;
(e) The Trust II and the Acquiring Fund are not, and the
execution, delivery and performance of their obligations
under this Agreement will not result, in violation of any
provisions of the Trust II's Declaration, or By-Laws or of
any agreement, indenture, instrument, contract, lease or
other undertaking to which the Trust II or the Acquiring
Fund is a party or by which the Trust II or the Acquiring
Fund is bound;
(f) Except as otherwise disclosed in writing and accepted by
the Acquired Fund, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is currently pending or threatened against
the Trust II or the Acquiring Fund or any of the Acquiring
Fund's properties or assets. The Trust II knows of no facts
which might form the basis for the institution of such
proceedings, and neither the Trust II nor the Acquiring Fund
is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which
materially and adversely affects the Acquiring Fund's
business or its ability to consummate the transactions herein
contemplated;
(g) The audited statement of assets and liabilities, including
the schedule of investments, of the Acquiring Fund as of May
31, 1999 and the related statement of operations (copies of
which have been furnished to the Acquired Fund) present
fairly in all material respects the financial condition of
the Acquiring Fund as of May 31, 1999 and the results of its
operations for the period then ended in accordance with
generally accepted accounting principles consistently
applied, and there were no known actual or contingent
liabilities of the Acquiring Fund as of the respective dates
thereof not disclosed therein;
(h) Since May 31, 1999, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets,
liabilities or business other than changes occurring in the
ordinary course of business, or any incurrence by the Trust
II on behalf of the Acquiring Fund of indebtedness maturing
more than one year from the date such indebtedness was
incurred, except as disclosed to and accepted by the
Acquired Fund;
(i) Each of the Acquiring Fund and its predecessors has
qualified as a regulated investment company for each taxable
year of its operation and the Acquiring Fund will qualify as
such as of the Closing Date;
(j) The authorized capital of the Trust II consists of an
unlimited number of shares of beneficial interest, no par
value per share. All issued and outstanding shares of
beneficial interest of the Acquiring Fund are, and at the
Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable by the Trust II.
The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of
its shares of beneficial interest, nor is there outstanding
any security convertible into any of its shares of beneficial
interest;
(k) The execution, delivery and performance of this Agreement
has been duly authorized by all necessary action on the part
of the Trust II on behalf of the Acquiring Fund, and this
Agreement constitutes a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms;
(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement, when
so issued and delivered, will be duly and validly issued
shares of beneficial interest of the Acquiring Fund and will
be fully paid and nonassessable by the Trust II;
(m) The information to be furnished by the Acquiring Fund for
use in applications for orders, registration statements,
proxy materials and other documents which may be necessary
in connection with the transactions contemplated hereby
shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and
regulations applicable thereto; and
(n) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation
by the Acquiring Fund of the transactions contemplated by
the Agreement, except for the registration of the Acquiring
Fund Shares under the 1933 Act and the 1940 Act.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 Except as expressly contemplated herein to the contrary, the
Trust on behalf of the Acquired Fund and the Trust II on
behalf of Acquiring Fund, will operate their respective
businesses in the ordinary course between the date hereof and
the Closing Date, it being understood that such ordinary
course of business will include customary dividends and
distributions and any other distributions necessary or
desirable to avoid federal income or excise taxes.
5.2 The Trust will call a meeting of the Acquired Fund
shareholders to consider and act upon this Agreement and to
take all other action necessary to obtain approval of the
transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to
be issued hereunder are not being acquired by the Acquired
Fund for the purpose of making any distribution thereof other
than in accordance with the terms of this Agreement.
5.4 The Trust on behalf of the Acquired Fund will provide such
information within its possession or reasonably obtainable as
the Trust II on behalf of the Acquiring Fund requests
concerning the beneficial ownership of the Acquired Fund's
shares of beneficial interest.
5.5 Subject to the provisions of this Agreement, the Acquiring
Fund and the Acquired Fund each shall take, or cause to be
taken, all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.
5.6 The Trust on behalf of the Acquired Fund shall furnish to the
Trust II on behalf of the Acquiring Fund on the Closing Date
the Statement of Assets and Liabilities of the Acquired Fund
as of the Closing Date, which statement shall be prepared in
accordance with generally accepted accounting principles
consistently applied and shall be certified by the Acquired
Fund's Treasurer or Assistant Treasurer. As promptly as
practicable but in any case within 60 days after the Closing
Date, the Acquired Fund shall furnish to the Acquiring Fund,
in such form as is reasonably satisfactory to the Trust II, a
statement of the earnings and profits of the Acquired Fund
for federal income tax purposes and of any capital loss
carryovers and other items that will be carried over to the
Acquiring Fund as a result of Section 381 of the Code, and
which statement will be certified by the President of the
Acquired Fund.
5.7 The Trust II on behalf of the Acquiring Fund will prepare and
file with the Commission the Registration Statement in
compliance with the 1933 Act and the 1940 Act in connection
with the issuance of the Acquiring Fund Shares as
contemplated herein.
5.8 The Trust on behalf of the Acquired Fund will prepare a Proxy
Statement, to be included in the Registration Statement in
compliance with the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the 1940 Act and the
rules and regulations thereunder (collectively, the "Acts")
in connection with the special meeting of shareholders of the
Acquired Fund to consider approval of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF
THE ACQUIRED FUND
The obligations of the Trust on behalf of the Acquired Fund to
complete the transactions provided for herein shall be, at its
election, subject to the performance by the Trust II on behalf of
the Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition
thereto, the following further conditions:
6.1 All representations and warranties of the Trust II on behalf
of the Acquiring Fund contained in this Agreement shall be
true and correct in all material respects as of the date
hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the
Closing Date with the same force and effect as if made on and
as of the Closing Date; and
6.2 The Trust II on behalf of the Acquiring Fund shall have
delivered to the Acquired Fund a certificate executed in its
name by the Trust II's President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquired Fund and dated as of the Closing
Date, to the effect that the representations and warranties
of the Trust II on behalf of the Acquiring Fund made in this
Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters
as the Trust on behalf of the Acquired Fund shall reasonably
request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST II ON BEHALF
OF THE ACQUIRING FUND
The obligations of the Trust II on behalf of the Acquiring Fund
to complete the transactions provided for herein shall be, at its
election, subject to the performance by the Acquired Fund of all
the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2 The Trust on behalf of the Acquired Fund shall have delivered
to the Trust II on behalf of the Acquiring Fund the Statement
of Assets and Liabilities of the Acquired Fund, together with
a list of its portfolio securities showing the federal income
tax bases and holding periods of such securities, as of the
Closing Date, certified by the Treasurer or Assistant
Treasurer of the Trust;
7.3 The Trust on behalf of the Acquired Fund shall have delivered
to the Trust II on behalf of the Acquiring Fund on the
Closing Date a certificate executed in the name of the
Acquired Fund by a President or Vice President and a
Treasurer or Assistant Treasurer of the Trust, in form and
substance satisfactory to the Trust II on behalf of the
Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the
Acquired Fund in this Agreement are true and correct at and
as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such
other matters as the Trust II on behalf of the Acquiring Fund
shall reasonably request; and
7.4 At or prior to the Closing Date, the Acquired Fund's
investment adviser, or an affiliate thereof, shall have made
all payments, or applied all credits, to the Acquired Fund
required by any applicable contractual expense limitation.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST AND
THE TRUST II
The obligations hereunder of the Trust II on behalf of the
Acquiring Fund and the Trust on behalf of the Acquired Fund are
each subject to the further conditions that on or before the
Closing Date:
8.1 The Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of
the outstanding shares of beneficial interest of the Acquired
Fund in accordance with the provisions of the Trust's
Declaration and By-Laws, and certified copies of the
resolutions evidencing such approval by the Acquired Fund's
shareholders shall have been delivered by the Acquired Fund
to the Trust II on behalf of the Acquiring Fund;
8.2 On the Closing Date no action, suit or other proceeding shall
be pending before any court or governmental agency in which
it is sought to restrain or prohibit, or obtain changes or
other relief in connection with, this Agreement or the
transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory
authorities (including those of the Commission and their "no-
action" positions) deemed necessary by the Trust or the Trust
II to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or
permit would not involve a risk of a material adverse effect
on the assets or properties of the Acquiring Fund or the
Acquired Fund, provided that either party hereto may waive
any such conditions for itself;
8.4 The Registration Statement shall have become effective under
the 1933 Act and the 1940 Act and no stop orders suspending
the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act or the
1940 Act;
8.5 The Acquired Fund shall have distributed to its shareholders,
in a distribution or distributions qualifying for the
deduction for dividends paid under Section 561 of the Code,
all of its investment company taxable income (as defined in
Section 852(b)(2) of the Code determined without regard to
Section 852(b)(2)(D) of the Code) for its taxable year ending
on the Closing Date, all of the excess of (i) its interest
income excludable from gross income under Section 103(a) of
the Code over (ii) its deductions disallowed under Sections
265 and 171(a)(2) of the Code for its taxable year ending on
the Closing Date, and all of its net capital gain (as such
term is used in Sections 852(b)(3)(A) and (C) of the Code),
after reduction by any available capital loss carryforward,
for its taxable year ending on the Closing Date; and
8.6 The parties shall have received an opinion of Xxxx and Xxxx
LLP, satisfactory to the Trust on behalf of the Acquired Fund
and the Trust II on behalf of the Acquiring Fund,
substantially to the effect that for federal income tax
purposes:
(a) The acquisition by the Acquiring Fund of all of the assets
of the Acquired Fund solely in exchange for the issuance of
Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the
Acquiring Fund, followed by the distribution by the Acquired
Fund, in liquidation of the Acquired Fund, of Acquiring Fund
Shares to the shareholders of the Acquired Fund in exchange
for their shares of beneficial interest of the Acquired Fund
and the termination of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the
Code, and the Acquired Fund and the Acquiring Fund will each
be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund
upon (i) the transfer of all of its assets to the Acquiring
Fund solely in exchange for the issuance of Acquiring Fund
Shares to the Acquired Fund and the assumption of all of the
Acquired Fund Liabilities by the Acquiring Fund; and (ii)
the distribution by the Acquired Fund of such Acquiring Fund
Shares to the shareholders of the Acquired Fund;
(c) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Acquired Fund solely
in exchange for the issuance of the Acquiring Fund Shares to
the Acquired Fund and the assumption of all of the Acquired
Fund Liabilities by the Acquiring Fund;
(d) The basis of the assets of the Acquired Fund acquired by
the Acquiring Fund will be, in each instance, the same as
the basis of those assets in the hands of the Acquired Fund
immediately prior to the transfer;
(e) The tax holding period of the assets of the Acquired Fund
in the hands of the Acquiring Fund will, in each instance,
include the Acquired Fund's tax holding period for those
assets;
(f) The shareholders of the Acquired Fund will not recognize
gain or loss upon the exchange of all of their shares of
beneficial interest of the Acquired Fund solely for Acquiring
Fund Shares as part of the transaction;
(g) The basis of the Acquiring Fund Shares received by the
Acquired Fund shareholders in the transaction will be the
same as the basis of the shares of beneficial interest of
the Acquired Fund surrendered in exchange therefor; and
(h) The tax holding period of the Acquiring Fund Shares
received by the Acquired Fund shareholders will include, for
each shareholder, the tax holding period for the shares of
the Acquired Fund surrendered in exchange therefor, provided
that the Acquired Fund shares were held as capital assets on
the date of the exchange.
The Trust II and the Trust agree to make and provide
representations with respect to the Acquiring Fund and the
Acquired Fund, respectively, which are reasonably necessary to
enable Xxxx and Xxxx LLP to deliver an opinion substantially as
set forth in this Paragraph 8.6. Notwithstanding anything herein
to the contrary, neither the Trust nor the Trust II may waive the
conditions set forth in this Paragraph 8.6.
9. BROKERAGE FEES AND EXPENSES
9.1 The Trust II on behalf of the Acquiring Fund, and the Trust
on behalf of the Acquired Fund each represent and warrant to
the other that there are no brokers or finders entitled to
receive any payments in connection with the transactions
provided for herein.
9.2 The Acquiring Fund and the Acquired Fund shall each be liable
solely for its own expenses incurred in connection with
entering into and carrying out the provisions of this
Agreement whether or not the transactions contemplated hereby
are consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust II on behalf of the Acquiring Fund, and the Trust
on behalf of the Acquired Fund agree that neither party has
made any representation, warranty or covenant not set forth
herein or referred to in Paragraph 4 hereof and that this
Agreement constitutes the entire agreement between the
parties.
10.2 The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto
or in connection herewith shall survive the consummation of
the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of
the Trust II, on behalf of the Acquiring Fund, and the Trust
on behalf of the Acquired Fund. In addition, either party
may at its option terminate this Agreement at or prior to the
Closing Date:
(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained
herein to be performed at or prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to
the obligations of the terminating party which has not been
met and which reasonably appears will not or cannot be met;
(c) by resolution of the Trust II's Board of Trustees if
circumstances should develop that, in the good faith opinion
of such Board, make proceeding with the Agreement not in the
best interests of the Acquiring Fund's shareholders; or
(d) by resolution of the Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion
of such Board, make proceeding with the Agreement not in the
best interests of the Acquired Fund's shareholders.
11.2 In the event of any such termination, there shall be no
liability for damages on the part of the Trust II, the
Acquiring Fund, the Trust, or the Acquired Fund, or the
Trustees or officers of the Trust II or the Trust, but each
party shall bear the expenses incurred by it incidental to
the preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon by the authorized officers
of the Trust and the Trust II. However, following the meeting of
shareholders of the Acquired Fund held pursuant to Paragraph 5.2
of this Agreement, no such amendment may have the effect of
changing the provisions regarding the method for determining the
number of Acquiring Fund Shares to be received by the Acquired
Fund shareholders under this Agreement to the detriment of such
shareholders without their further approval; provided that
nothing contained in this Article 12 shall be construed to
prohibit the parties from amending this Agreement to change the
Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by
any provisions of this Agreement shall be in writing and shall be
given by prepaid telegraph, telecopy or certified mail addressed
to the Acquiring Fund or to the Acquired Fund, each at 000
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention:
President, and, in either case, with copies to Xxxx and Xxxx LLP,
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx
X. Xxxxxx, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
14.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of
Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the
prior written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other
than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this
Agreement.
14.5 All persons dealing with the Trust or the Trust II must look
solely to the property of the Trust or the Trust II,
respectively, for the enforcement of any claims against the
Trust or the Trust II as the Trustees, officers, agents and
shareholders of the Trust or the Trust II assume no personal
liability for obligations entered into on behalf of the Trust
or the Trust II, respectively. None of the other series of
the Trust or the Trust II shall be responsible for any
obligations assumed by on or behalf of the Acquired Fund or
the Acquiring Fund, respectively, under this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first set forth above by
its President or Vice President and has caused its corporate seal
to be affixed hereto.
XXXX XXXXXXX STRATEGIC SERIES on behalf of
XXXX XXXXXXX STRATEGIC INCOME FUND
By:
_________________________________________
Xxxx X. Xxxxxxx
President
XXXX XXXXXXX INVESTMENT TRUST III on behalf of
XXXX XXXXXXX XXXXX-TERM STRATEGIC INCOME FUND
By:
__________________________________________
Xxxxx X. Xxxxxx
Vice President and Secretary
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