AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as
of the 20th day of May 1999, by and between Fidelity Commonwealth
Trust (Commonwealth Trust), on behalf of Fidelity Small Cap Selector
(the Fund), a separate series of Commonwealth Trust, and Fidelity
Capital Trust (Capital Trust), each a business trust duly formed under
the laws of the Commonwealth of Massachusetts.
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the Code). The
reorganization will comprise (a) the transfer of all of the assets of
the Fund to a series of Capital Trust (the Series) solely in exchange
for shares of beneficial interest of the Series (the Series Shares)
and the assumption by the Series of the Fund's liabilities; and (b)
the constructive distribution of such Series Shares by the Fund to its
shareholders (Fund Shareholder(s)) in complete liquidation and
termination of the Fund, in exchange for all of the Fund's outstanding
shares (Fund Shares). The Fund shall receive shares of the Series
equal to the number of Fund Shares on the Closing Date (as defined
below). Immediately thereafter, the Fund shall then distribute to each
Fund Shareholder one Series Share for each Fund Share held by the
shareholder on the Closing Date. The foregoing transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE FUND
Commonwealth Trust, on behalf of the Fund, represents and warrants as
follows:
(a) The Fund is a series of Commonwealth Trust, a business trust duly
formed, 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 its obligations under this
Agreement. It has all necessary federal, state, and local
authorizations to carry out its business as now being conducted and to
carry out this Agreement;
(b) The Fund is a series of Commonwealth Trust, which is duly
registered as an open-end management investment company under the
Investment Company Act of 0000 (xxx 0000 Xxx), as amended, and such
registration is in full force and effect;
(c) The Fund is not in, and the execution, delivery and performance
of this Agreement will not result in a violation of any provision of
the Restated Declaration of Trust or the Bylaws of Commonwealth Trust,
or, to the Fund's knowledge, of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Fund is a party or
by which the Fund is bound or result in the acceleration of any
obligation or the imposition of any penalty under any agreement,
judgment or decree to which the Fund is a party or is bound;
(d) The Fund has no material contracts or other commitments (other
than this Agreement) that will not be terminated without liability to
the Fund on or prior to the Closing Date;
(e) To the Fund's knowledge, no material legal, administrative, or
other proceeding or investigation of, or before, any court or
governmental body presently is pending or threatened against the Fund
or any of its properties or assets that assert liability on the part
of the Fund, except as previously disclosed in writing to Capital
Trust. The Fund knows of no facts that might form the basis for the
institution of such proceedings;
(f) The Fund has filed or will file all federal and state tax returns
that, to the knowledge of the Fund's officers, are required to be
filed by the Fund and has paid or will pay all federal and state taxes
shown to be due on said returns or provision shall have been made for
the payment thereof, and, to the best of the Fund's knowledge, no such
return is currently under audit and no assessment has been asserted
with respect to such returns;
(g) All of the issued and outstanding shares of the Fund are, and at
the Closing Date will be, duly and validly issued and outstanding and
fully paid and nonassessable as a matter of Massachusetts law (except
as disclosed in the Fund's Statement of Additional Information) and
have been offered for sale in conformity with all applicable federal
securities laws. All of the issued and outstanding shares of the Fund
will, at the Closing Date, be held by the persons and in the amounts
as certified in accordance with the provisions of this Agreement;
(h) The information to be furnished by the Fund for use in
applications for orders, registration statements, proxy materials and
other documents that 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;
(i) At both the Valuation Time (as defined in Section 4) and the
Closing Date (as defined in Section 6), the Fund will have the full
right, power, and authority to sell, assign, transfer, and deliver its
portfolio securities and any other assets of the Fund to be
transferred to the Series pursuant to this Agreement. As of the
Closing Date, subject only to the delivery of the Fund's portfolio
securities and any such other assets as contemplated by this
Agreement, the Series will acquire the Fund's portfolio securities and
any such other assets subject to no encumbrances, liens, or security
interests (except for those that may arise in the ordinary course and
are disclosed to the Series) and without any restrictions upon the
transfer thereof;
(j) The execution, delivery, and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of the Fund, and this Agreement
constitutes a valid and binding obligation of the Fund enforceable in
accordance with its terms, subject to shareholder approval;
(k) To the best knowledge of the Fund's management, there is no plan
or intention by any of the Fund's shareholders to sell, exchange or
otherwise dispose of any of the Series Shares to be received in the
Reorganization;
(l) The Fund shares are widely held and may be purchased and redeemed
upon request;
(m) Immediately following consummation of the Reorganization, the
Fund Shareholders will own all of the Series Shares and will own such
shares solely by reason of their ownership of the Fund Shares
immediately prior to the Reorganization;
(n) Immediately following the consummation of the Reorganization,
Capital Trust will hold, on behalf of the Series, the same assets and
be subject to the same liabilities that the Fund held or was subject
to immediately prior thereto, except for assets used to pay expenses
incurred in connection with the Reorganization. Assets used to pay
expenses and all distributions (except for distributions and
redemptions arising in the ordinary course of the Fund's business as
an open-end investment company) made by the Fund immediately preceding
the Reorganization will, in the aggregate, constitute less than 1% of
the net assets of the Fund;
(o) At the time of the Reorganization, the Fund will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire shares
of beneficial interest in the Fund;
(p) The Fund's liabilities to be assumed by the Series in the
Reorganization were incurred by the Fund in the ordinary course of its
business and are associated with the assets to be transferred;
(q) Fund Shareholders each will pay their own expenses, if any,
incurred in connection with the Reorganization;
(r) The fair market value of the Fund's assets to be transferred by
the Fund to the Series will equal or exceed the Fund's liabilities to
be assumed by the Series plus the liabilities to which the transferred
assets are subject;
(s) The Fund is a regulated investment company as defined in Section
851 of the Code;
(t) The Fund is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the
meaning of Section 368(a)(3)(A) of the Code;
(u) To the Fund's knowledge, no consent, approval, authorization, or
order of any court or governmental authority is required for the
consummation by the Fund of the transactions contemplated by this
Agreement, except such as shall have been obtained under the
Securities Act of 0000 (xxx 0000 Xxx), the Securities Exchange Act of
0000 (xxx 0000 Xxx), and the 1940 Act;
(v) The Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of April 30, 1999 and those
incurred in the ordinary course of the Fund's business as an
investment company since same date as determined above; and
(w) The Fund will be liquidated immediately after the Reorganization.
2. REPRESENTATIONS AND WARRANTIES OF CAPITAL TRUST
Capital Trust represents and warrants as follows:
(a) Capital Trust is a business trust duly formed, validly existing,
and in good standing under the laws of the Commonwealth of
Massachusetts. It has all necessary federal, state, and local
authorizations to carry out its business as now being conducted and to
carry out this Agreement;
(b) Capital Trust is duly registered as an open-end management
investment company under the 1940 Act, and the Series is a duly
established and designated series of Capital Trust;
(c) Capital Trust is not in, and the execution, delivery and
performance of this Agreement will not result in a violation of any
provision of the Amended and Restated Declaration of Trust or Capital
Trust's Bylaws, or, to Capital Trust's knowledge, of any agreement,
indenture, instrument, contract, lease or other undertaking to which
Capital Trust is a party or by which Capital Trust is bound or result
in the acceleration of any obligation or the imposition of any penalty
under any agreement, judgment or decree to which Capital Trust is a
party or is bound;
(d) To Capital Trust's knowledge, no material legal, administrative,
or other proceeding or investigation of, or before, any court or
governmental body presently is pending or threatened against Capital
Trust or any of its properties or assets that assert liability on the
part of Capital Trust, except as previously disclosed in writing to
Capital Trust. Capital Trust knows of no facts that might form the
basis for the institution of such proceedings;
(e) Capital Trust intends for the Series to be a regulated investment
company under Section 851 of the Code;
(f) Prior to the Closing Date, there shall be no issued and
outstanding Series Shares or any other securities issued by the Series
(except for the one share that may be issued to FMR); Series Shares
issued in connection with the transactions contemplated herein will be
duly and validly issued and outstanding, fully paid and non-assessable
under Massachusetts law on the Closing Date;
(g) The execution, delivery, and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Capital Trust, and, upon its proper
execution, this Agreement will constitute a valid and binding
obligation of Capital Trust enforceable against the Series in
accordance with its terms;
(h) As of the Closing Date, the Series Shares will have been duly
authorized and, when so issued and delivered, will be duly and validly
issued shares of the Series, fully paid and non-assessable under
Massachusetts law, except that under Massachusetts law, shareholders
of a Massachusetts business trust, under certain circumstances, may be
held personally liable for obligations of Capital Trust;
(i) The fair market value of the Series Shares to be received by the
Fund Shareholders will be equal to the fair market value of their Fund
Shares surrendered in exchange therefor;
(j) Capital Trust has no plan or intention on behalf of the Series to
issue additional Series Shares following the Reorganization other than
in the ordinary course of the business of the Series as a series of a
registered open-end investment company;
(k) Capital Trust has no plan or intention to redeem or otherwise
reacquire any of the Series Shares issued to the Fund Shareholders
pursuant to the Reorganization other than through redemptions arising
in the ordinary course of the business of the Series as a series of a
registered open-end investment company;
(l) Following the Reorganization, Capital Trust, on behalf of the
Series, will continue the Fund's historic business;
(m) No consideration other than Series Shares will be issued in
exchange for the Fund shares in the Reorganization;
(n) At the time of the Reorganization, there will be no intercompany
indebtedness existing between the Series and the Fund that was issued,
acquired, or that will be settled at a discount;
(o) At the time of the Reorganization, the Series will be a regulated
investment company as defined in Section 851 of the Code;
(p) Capital Trust has no plan or intention to sell or otherwise
dispose of any of the Fund's assets to be acquired by the Series in
the Reorganization, except for dispositions made in the ordinary
course of its business or dispositions necessary to maintain the
status of the Series as a regulated investment company under Section
851 of the Code;
(q) The information to be furnished by Capital Trust with respect to
the Series for use in applications for orders, registration
statements, proxy materials and other documents that 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;
(r) Capital Trust, on behalf of the Series, shall use all reasonable
efforts to obtain the approvals and authorizations required by the
1933 Act and the 1940 Act as it may deem appropriate in order to
operate after the Closing Date;
(s) To Capital Trust's knowledge, no consent, approval,
authorization, or order of any court or governmental authority is
required for the consummation by the Series of the transactions
contemplated by this Agreement, except such as shall have been
obtained under the 1933 Act, the 1934 Act, and the 1940 Act; and
(t) Capital Trust, on behalf of the Series, will use the Employer
Identification Number that was used by the Fund.
3. REORGANIZATION
(a) Subject to the requisite approval of the Fund Shareholders, if
applicable, and to the other terms and conditions contained herein,
the Fund agrees to assign, convey, transfer, and deliver to the Series
established by Capital Trust solely for the purpose of acquiring all
of the assets of the Fund (which Series has not issued any Series
Shares (except for one share that may be issued to FMR) or commenced
operations) as of the Closing Date all of the assets of the Fund of
any kind and nature existing on the Closing Date. The Series agrees in
exchange therefor (1) to assume all of the Fund's liabilities existing
on or after the Closing Date, whether or not determinable on the
Closing Date, and (2) to issue and deliver to the Fund the number of
full and fractional Series Shares equal to the value and number of
full and fractional shares of the Fund outstanding at the time of the
closing, as described in paragraph 6, as of the Closing Date provided
for in Section 6(a).
(b) The assets of the Fund to be acquired by the Series and allocated
thereto shall include, without limitation, all cash, cash equivalents,
securities, receivables (including interest or dividends receivables),
claims, choses in action, and other property owned by the Fund, and
any deferred or prepaid expenses shown as an asset on the books of the
Fund on the Closing Date. The Fund will pay or cause to be paid to the
Series any dividend or interest payments received by it on or after
the Closing Date with respect to the assets transferred to the Series
hereunder, and the Series will retain any dividend or interest
payments received by it after the Valuation Time (as defined in
Section 4) with respect to the assets transferred hereunder without
regard to the payment date thereof. The liabilities of the Fund to be
assumed by the Series and allocated thereto, shall include (except as
otherwise provided herein) all of the Fund's liabilities, debts,
obligations, and duties, of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not determinable on the
Closing Date, and whether or not specifically referred to in this
Agreement.
(c) Immediately upon delivery to the Fund of the Series Shares, the
individual Trustees of Commonwealth Trust or any officer duly
authorized by them, on Commonwealth Trust's behalf as the then sole
shareholder of the Series, shall approve (i) a Management Contract
between Capital Trust, on behalf of the Series, and FMR, (ii)
Sub-Advisory Agreements between FMR and Fidelity Management & Research
(U.K.) Inc. and Fidelity Management & Research (Far East) Inc., (iii)
a Distribution and Service Plan under Rule 12b-1 under the 1940 Act
between Capital Trust, on behalf of the Series, and Fidelity
Distributors Corporation (FDC), substantively identical to the
contract, agreements and plan currently in effect with respect to the
Fund immediately prior to the Closing Date (as defined below), except
as to the parties to such contract, agreements and plan, (iv) the
independent accountants who currently serve in that capacity for the
Fund, and (v) the adoption of the revised fundamental policy described
in Proposal 11 of the Proxy Statement.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), the Fund will
constructively distribute to the Fund Shareholders the Series Shares
pro rata in proportion to their respective shares of beneficial
interest in the Fund, such Fund Shareholders being shareholders of
record as determined as of the Valuation Time on the Closing Date in
accordance with Commonwealth Trust's Restated Declaration of Trust, in
liquidation of such Fund. Such distribution will be accomplished by
the Fund's transfer agent opening accounts on the share records of the
Series in the names of such Fund Shareholders and transferring the
Series Shares thereto. Each Fund Shareholder's account shall be
credited with the respective pro rata number of full and fractional
(rounded to the third decimal place) Series Shares due that
shareholder. All outstanding Fund Shares, including any represented by
certificates, shall simultaneously be canceled on the Fund's share
transfer records. The Series shall not issue certificates representing
Series Shares in connection with such distribution.
(e) Immediately after the distribution of the Series Shares as set
forth in Section 3(d), the Fund shall be liquidated and terminated,
and any such further actions shall be taken in connection therewith as
required by applicable law.
(f) Any transfer taxes payable upon issuance of Series Shares in a
name other than that of the registered holder on the Fund's books of
the Fund Shares constructively exchanged for the Series Shares shall
be paid by the person to whom such Series Shares are to be issued, as
a condition of such transfer.
(g) Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the date on which it is
liquidated.
4. VALUATION
(a) The valuation time shall be the close of business of the New York
Stock Exchange on the Closing Date (the Valuation Time).
(b) The value of the Fund's net assets to be acquired by the Series
hereunder shall be the net asset value per share computed as of the
Valuation Time, using the valuation procedures set forth in the Fund's
then current Prospectus and Statement of Additional Information.
(c) The number, value, and denomination of full and fractional Series
Shares to be issued in exchange for the Fund's net assets shall be
equal to the number, value, and denomination of full and fractional
Fund Shares outstanding on the Closing Date.
(d) All computations pursuant to this Section shall be made by
Fidelity Service Company, Inc. (FSC), a wholly-owned subsidiary of FMR
Corp., in accordance with its regular practice as pricing agent for
the Fund.
5. FEES; EXPENSES
(a) Capital Trust and the Fund each represents that there is no
person who dealt with it who by reason of such dealings is entitled to
any broker's or finder's fees or commissions arising out of the
transactions contemplated hereby.
(b) The Fund shall be responsible for all expenses, fees and other
charges in connection with the transactions contemplated by the
Agreement.
6. CLOSING DATE
(a) The transfer of the Fund's assets in exchange for the assumption
by the Series of the Fund's liabilities and the issuance of Series
Shares, as described above, together with related acts necessary to
consummate the same, (the Closing), unless otherwise provided herein,
shall occur at the principal office of Commonwealth Trust and Capital
Trust, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, on December 29,
1999, or at such other place or date as the parties may agree in
writing (the Closing Date). All acts taking place at the Closing shall
be deemed to take place simultaneously as of the Valuation Time or at
such other time and/or place as the parties may agree.
(b) In the event that, on the Closing Date (i) any of the markets for
securities held by the Fund are closed to trading, or (ii) trading
thereon is restricted, or (iii) trading or reporting of trading on
said markets or elsewhere is disrupted, all so that accurate appraisal
of the total net asset value of the Fund is impracticable, the Closing
Date shall be postponed until the first business day after the day
when such trading shall have been fully resumed and reporting shall
have been restored, or such other date as the parties may agree.
(c) The Fund shall deliver at the Closing a certificate of an
authorized officer stating that it has notified Xxxxx Brothers
Xxxxxxxx & Co., as custodian for the Fund, of the Fund's
reorganization to a series of Capital Trust.
(d) FSC, as transfer agent for the Fund, shall deliver at the Closing
a certificate as to the conversion on its books and records of each
Fund Shareholder account to an account as a holder of Series Shares.
Capital Trust shall issue and deliver a confirmation to the Fund
evidencing the Series Shares to be credited as of the Closing Date or
provide evidence satisfactory to the Fund that such Series Shares have
been credited to the Fund's account on the books of Capital Trust. 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.
7. SHAREHOLDER MEETING AND TERMINATION OF THE FUND
(a) If required to do so pursuant to the terms of Commonwealth
Trust's Restated Declaration of Trust or otherwise by applicable law,
the Fund agrees to call a meeting of its shareholders (the
Shareholder's Meeting) to consider and act upon this Agreement. The
Fund shall take all other action necessary to obtain approval of the
transactions contemplated hereby.
(b) The Fund agrees that as soon as reasonably practicable after
distribution of the Series Shares, the Fund shall be liquidated and
terminated as a series of Commonwealth Trust pursuant to its Restated
Declaration of Trust, any further actions shall be taken in connection
therewith as required by applicable law, and on and after the Closing
Date the Fund shall not conduct any business except in connection with
its liquidation and termination.
8. CONDITIONS TO OBLIGATIONS OF CAPITAL TRUST
The obligations of Capital Trust hereunder shall be subject to the
following conditions:
(a) That the Fund furnishes to Capital Trust a statement, dated as of
the Closing Date, signed by an officer of Commonwealth Trust,
certifying that as of the Valuation Time and the Closing Date all
representations and warranties of the Fund made in this Agreement are
true and correct in all material respects and that the Fund has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to such dates;
(b) That the Fund furnishes Capital Trust with copies of the
resolutions, certified by an officer of Commonwealth Trust, evidencing
the adoption of this Agreement and, if applicable, the approval of the
transactions contemplated herein by the requisite vote of the holders
of the outstanding shares of beneficial interest of the Fund;
(c) That the Fund shall deliver to Capital Trust at the Closing a
statement of its assets and liabilities, together with a certificate
as to the aggregate asset value of the Fund's portfolio securities,
all as of the Valuation Time, certified on the Fund's behalf by its
Treasurer or Assistant Treasurer;
(d) That the Fund's custodian shall deliver to Capital Trust a
certificate identifying the assets of the Fund held by such custodian
as of the Valuation Time on the Closing Date and stating that at the
Valuation Time (i) the assets held by the custodian will be
transferred to the Series; (ii) the Fund's assets have been duly
endorsed in proper form for transfer in such condition as to
constitute good delivery thereof; and (iii) to the best of the
custodian's knowledge, all necessary taxes in conjunction with the
delivery of the assets, including all applicable federal and state
stock transfer stamps, if any, have been paid or provision for payment
has been made;
(e) That the Fund's transfer agent shall deliver to Capital Trust at
the Closing a certificate setting forth the number of shares of the
Fund outstanding as of the Valuation Time and the name and address of
each holder of record of any such shares and the number of shares held
of record by each such shareholder;
(f) If applicable, that the Fund calls a Shareholder's Meeting to
consider and act upon this Agreement and that the Fund takes all other
action necessary to obtain approval of the transactions contemplated
hereby;
(g) That the Fund delivers to Capital Trust a certificate of an
officer of Commonwealth Trust, dated the Closing Date, that there has
been no material adverse change in the Fund's financial position since
April 30, 1999, other than changes in the market value of its
portfolio securities, or changes due to net redemptions of its shares,
dividends paid, or losses from operations; and
(h) That all of the issued and outstanding shares of beneficial
interest of the Fund shall have been offered for sale and sold in
conformity with all applicable state securities laws and, to the
extent that any audit of the records of the Fund or its transfer agent
by Capital Trust or its agents shall have revealed otherwise, the Fund
shall have taken all actions that in the opinion of Capital Trust are
necessary to remedy any prior failure on the part of the Fund to have
offered for sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF THE FUND
The obligations of the Fund hereunder shall be subject to the
following conditions:
(a) That Capital Trust shall have executed and delivered to the Fund
an Assumption of Liabilities, certified by an officer of Capital
Trust, dated as of the Closing Date, pursuant to which Capital Trust,
on behalf of the Series, will assume all of the liabilities of the
Fund existing at the Valuation Time in connection with the
transactions contemplated by this Agreement;
(b) That Capital Trust furnishes to the Fund a statement, dated as of
the Closing Date, signed by an officer of Capital Trust, certifying
that as of the Valuation Time and the Closing Date all representations
and warranties of the Series made in this Agreement are true and
correct in all material respects, and Capital Trust has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such dates; and
(c) That the Fund shall have received an opinion of Xxxxxxxxxxx &
Xxxxxxxx LLP, counsel to the Fund and Capital Trust, to the effect
that the Series Shares are duly authorized and upon delivery to the
Fund as provided in this Agreement will be validly issued and will be
fully paid and nonassessable under Massachusetts law.
10. CONDITIONS TO OBLIGATIONS OF THE FUND AND CAPITAL TRUST
The obligations of the Fund and Capital Trust hereunder shall be
subject to the following conditions:
(a) If applicable, that this Agreement shall have been adopted 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 Fund;
(b) That all consents of other parties and all other consents,
orders, and permits of federal, state, and local regulatory
authorities (including those of the Securities and Exchange Commission
and of state blue sky and securities authorities, including "no
action" positions of such federal or state authorities) deemed
necessary by Capital Trust or the Fund to permit consummation, in all
material respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain any such consent, order,
or permit would not involve a risk of a material adverse effect on the
assets or properties of Capital Trust or the Fund, provided that
either party hereto may for itself waive any of such conditions;
(c) That all proceedings taken by either the Fund or the Series in
connection with the transactions contemplated by this Agreement and
all documents incidental thereto shall be satisfactory in form and
substance to it and its counsel, Xxxxxxxxxxx & Xxxxxxxx LLP;
(d) That Capital Trust shall have taken all necessary action so that
the Series shall be a series of a registered open-end investment
company under the 1940 Act immediately after the closing;
(e) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement; and
(f) That Capital Trust and the Fund shall have received an opinion of
Xxxxxxxxxxx & Xxxxxxxx LLP satisfactory to Capital Trust and the Fund
that for federal income tax purposes:
(i) The Reorganization will be a reorganization under Section
368(a)(1)(F) of the Code, and the Fund and the Series will each be
parties to the Reorganization under section 368(b) of the Code;
(ii) No gain or loss will be recognized by the Fund upon the
transfer of all of its assets to the Series in exchange solely for the
Series Shares and the assumption of the Fund's liabilities followed by
the distribution of the Series Shares to the shareholders of the Fund
in liquidation of the Fund;
(iii) No gain or loss will be recognized by the Series on the
receipt of the Fund's assets in exchange solely for the Series Shares
and the assumption of the Fund's liabilities;
(iv) The basis of the Fund's assets in the hands of the Series will
be the same as the basis of such assets in the Fund's hands
immediately prior to the Reorganization;
(v) The Series' holding period in the assets to be received from the
Fund will include the Fund's holding period in such assets;
(vi) A Fund Shareholder will recognize no gain or loss on the
exchange of his or her shares of beneficial interest in the Fund for
the Series Shares in the Reorganization;
(vii) A Fund Shareholder's basis in the Series Shares to be received
by him or her will be the same as his or her basis in the Fund Shares
exchanged therefor;
(viii) A Fund Shareholder's holding period for his or her Series
Shares will include the holding period of the Fund Shares exchanged,
provided that those Fund Shares were held as capital assets on the
date of the Reorganization; and
(ix) The Reorganization will not result in the termination of the
Fund's taxable year, and the Fund's tax attributes enumerated in
Section 381(c) of the Code will be taken into account by the Series as
if there had been no conversion.
Notwithstanding anything herein to the contrary, neither the Fund nor
Capital Trust may waive the conditions set forth in this subsection
10(f).
11. COVENANTS OF THE FUND
(a) The Fund covenants to operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that
such ordinary course of business will include the payment of customary
dividends and distributions.
(b) The Fund covenants that the Series Shares are not being acquired
for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
(c) The Fund covenants that it will assist Capital Trust in obtaining
such information as Capital Trust reasonably requests concerning the
beneficial ownership of Fund Shares.
(d) The Fund covenants that its liquidation and termination will be
effected in the manner provided in its Restated Declaration of Trust
in accordance with applicable law and, after the Closing Date, the
Fund will not conduct any business except in connection with its
liquidation and termination.
12. TERMINATION; WAIVER
(a) The parties hereto may terminate this Agreement by mutual
consent. In addition, either party may, at its option, terminate this
Agreement at or prior to the Closing Date because
(i) Of a material breach by the other of any representation,
warranty, or agreement contained herein to be performed at or prior to
the Closing Date; or
(ii) A condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
(b) In the event of any such termination, there shall be no liability
for damages on the part of Capital Trust or the Fund, or their
respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter
hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement
signed by each party hereto, and shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the appropriate
officers of Commonwealth Trust, Capital Trust, the Fund, or the
Series; provided, however, that following the Shareholders' Meeting,
if any, called by the Fund pursuant to Section 7 of this Agreement, no
such amendment may have the effect of changing the provisions for
determining the number of the Series Shares to be received by the Fund
Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
(c) Either party may waive any condition to its obligations
hereunder, provided that such waiver does not have any material
adverse effect on the interests of Fund Shareholders.
The representations, warranties, and covenants contained in the
Agreement, or in any document delivered pursuant hereto or in
connection herewith, shall survive the consummation of the
transactions contemplated hereunder.
14. LIMITATION OF LIABILITY
Copies of the Declarations of Trust of Capital Trust, as amended and
restated, and of Commonwealth Trust, as restated, are on file with the
Secretary of State of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the
Trustees of Capital Trust and Commonwealth Trust as trustees and not
individually and that the obligations of the Fund and the Series under
this instrument are not binding upon any of Commonwealth Trust's or
Capital Trust's Trustees, officers, or shareholders individually, but
are binding only upon the assets and property of such Fund or Series.
The Fund and Capital Trust each agrees that its obligations hereunder
apply only to such Fund and the Series, respectively, and not to its
shareholders individually or to the Trustees of such Fund or Series.
15. ASSIGNMENT
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer of any rights or obligations hereunder shall be made by
any party without the written consent of the other party. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation other than the
parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
FIDELITY COMMONWEALTH TRUST,
on behalf of Fidelity Small Cap Selector
/s/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Senior Vice President
FIDELITY CAPITAL TRUST
/s/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Senior Vice President
