Exhibit (4)
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
_____________, 2003, between Xxxxx Xxxxx Series Trust II ("Xxxxx Xxxxx Trust"),
on behalf of Xxxxx Xxxxx Tax-Managed Emerging Markets Fund, a segregated
portfolio of assets ("series") thereof ("Acquiring Fund"), and PIMCO Funds:
Multi-Manager Series ("PIMCO Trust"), on behalf of its PPA Tax-Efficient
Structured Emerging Markets Fund series ("Target"). (Acquiring Fund and Target
are sometimes referred to herein individually as a "Fund" and collectively as
the "Funds"; and Xxxxx Xxxxx Trust and PIMCO Trust are sometimes referred to
herein individually as an "Investment Company" and collectively as the
"Investment Companies.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by a Fund are
made and shall be taken or undertaken by Xxxxx Xxxxx Trust on behalf of
Acquiring Fund and by PIMCO Trust on behalf of Target.
The Investment Companies, each of which is a Massachusetts business trust,
wish to effect a reorganization described in section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended ("Code"), and intend this Agreement to
be, and adopt it as, a "plan of reorganization" within the meaning of the
regulations under section 368 of the Code ("Regulations"). The reorganization
will involve Target's changing its identity -- by converting from a series of
PIMCO Trust to a series of Xxxxx Xxxxx Trust -- by transferring its assets to
Acquiring Fund (which is being established solely for the purpose of acquiring
those assets and continuing Target's business) in exchange solely for voting
shares of beneficial interest in Acquiring Fund ("Acquiring Fund Shares") and
Acquiring Fund's assumption of Target's liabilities, followed by the
distribution of those shares PRO RATA to the holders of shares of beneficial
interest in Target ("Target Shares") constructively in exchange therefor, all on
the terms and conditions set forth herein. (All such transactions are referred
to herein as the "Reorganization.")
Each of Target and Acquiring Fund currently has a single class of shares
(designated Institutional Class shares and Class I shares, respectively), the
rights, powers, privileges, and obligations of which are substantially similar.
In consideration of the mutual promises contained herein, the parties agree
as follows:
1. PLAN OF REORGANIZATION
1.1. Target agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to Acquiring Fund at the
Effective Time (as defined in paragraph 2.1). PIMCO Trust, on behalf of its
series, PIMCO Structured Emerging Markets Fund (which holds bare legal title to
the Nominee Account Securities, as described in paragraph 1.2, for the benefit
and on behalf of Target, pursuant to the letter referred to in paragraph 1.2),
agrees to assign, sell, convey, transfer, and deliver such title and all other
right, title, and interest therein, to Acquiring Fund at the Effective Time.
Acquiring Fund agrees in exchange therefor, at the Effective Time
(a) to issue and deliver to Target the number of full and fractional
(rounded to the [third] decimal place) Acquiring Fund Shares equal to
the number of full and fractional (rounded to the third decimal place)
Target Shares then outstanding, and
(b) to assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
These transactions shall take place at the Closing (as defined in paragraph
2.1).
1.2. The Assets shall consist of all property Target owns -- including all
cash, cash equivalents, securities, receivables (including interest and
dividends receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and prepaid
expenses, and all Nominee Account Securities (as such term is defined in the
Nominee Account Letter dated June , 2002 from PIMCO Trust on behalf of Target as
accepted and agreed to by PIMCO Trust on behalf of its series, PIMCO Structured
Emerging Markets Fund), each as shown as assets on Target's books at the
Effective Time.
1.3. The Liabilities shall consist of all of Target's liabilities, debts,
obligations, and duties (other than liabilities arising pursuant to paragraph
10.1) of whatever kind or nature, whether absolute, accrued, contingent, or
otherwise, whether or not arising in the ordinary course of business, whether or
not determinable at the Effective Time, and whether or not specifically referred
to in this Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares it receives
pursuant to paragraph 1.1(a) to its shareholders of record, determined as of the
Effective Time (each a "Shareholder" and collectively "Shareholders"),
constructively in exchange for their Target Shares. That distribution shall be
accomplished by Xxxxx Xxxxx Trust's transfer agent's opening accounts on
Acquiring Fund's share transfer books in the Shareholders' names and
transferring those Acquiring Fund Shares thereto. Each Shareholder's account
shall be credited with the number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares equal to the number of full and fractional
(rounded to the third decimal place) Target Shares that Shareholder held at the
Effective Time. All issued and outstanding Target Shares shall simultaneously be
canceled on Target's share transfer books. Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares issued in connection with
the Reorganization.
1.5. Any transfer taxes payable on issuance of Acquiring Fund Shares in a
name other than that of the registered holder on Target's books at the Effective
Time of the Target Shares constructively exchanged therefor shall be paid by the
person to whom those Acquiring Fund Shares are to be issued, as a condition of
that transfer.
1.6. As soon as reasonably practicable after the distribution of the
Acquiring Fund Shares pursuant to paragraph 1.4, but in all event within six
months after the Effective Time, each of Target and PIMCO Structured Emerging
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Markets Fund shall be terminated as a series of PIMCO Trust and any further
actions shall be taken in connection therewith as required by applicable law.
2. CLOSING AND EFFECTIVE TIME
2.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the principal office of Xxxxx Xxxxx Trust,
located at The Xxxxx Xxxxx Building, 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, on a date (on or before December 31, 2003) agreed upon by the Investment
Companies, or at such other place as to which the Investment Companies may
agree. All acts taking place at the Closing shall be deemed to take place
simultaneously as of the close of business (I.E., 4:00 p.m., Eastern time) on
the date thereof or at such other time as to which the Investment Companies may
agree ("Effective Time").
2.2. PIMCO Trust's custodian shall deliver at the Closing a certificate of
an authorized representative verifying the information (including adjusted basis
and holding period for federal income tax purposes, by lot) concerning the
Assets, including all portfolio securities. PIMCO Trust's custodian shall
deliver at the Closing a certificate of an authorized representative stating
that (a) the Assets it holds will be transferred to Acquiring Fund's custodian
as of the Effective Time and (b) all necessary taxes in conjunction with the
delivery of the Assets, including all applicable federal and state stock
transfer stamps and foreign transfer taxes, if any, have been paid or provision
for payment has been made.
2.3. PIMCO Trust shall deliver to Xxxxx Xxxxx Trust at the Closing a list
of the names and addresses of the Shareholders and the number of outstanding
Target Shares each Shareholder owns, all as of the Effective Time, certified by
PIMCO Trust's Secretary or an Assistant Secretary thereof. Xxxxx Xxxxx Trust's
transfer agent shall deliver at the Closing a certificate as to the opening on
Acquiring Fund's share transfer books of accounts in the Shareholders' names.
Xxxxx Xxxxx Trust shall issue and deliver a confirmation to PIMCO Trust
evidencing the Acquiring Fund Shares to be credited to Target (pursuant to
paragraph 1.1(a)) at the Effective Time or provide evidence satisfactory to
PIMCO Trust that those Acquiring Fund Shares have been credited to Target's
account on Acquiring Fund's books; and as soon as practicable after receipt of
the Shareholder list mentioned above, Xxxxx Xxxxx Trust shall issue and deliver
a confirmation to PIMCO Trust evidencing the Acquiring Fund Shares to be
credited to the Shareholders (pursuant to paragraph 1.4) or provide evidence
satisfactory to PIMCO Trust that those Acquiring Fund Shares have been credited
to the Shareholders' accounts on Acquiring Fund's books.
2.4. Xxxxx Xxxxx Trust shall deliver to PIMCO Trust an Assumption of
Liabilities, executed on Acquiring Fund's behalf, dated as of the Closing, in
form and substance reasonably acceptable to PIMCO Trust and reflecting paragraph
1.1(b).
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2.5. Each Investment Company shall deliver to the other at the Closing (a)
a certificate executed in its name by its President or any Vice President in
form and substance reasonably satisfactory to the recipient and dated the
Effective Time, to the effect that the representations and warranties it made in
this Agreement are true and correct in all material respects at the Effective
Time except as they may be affected by the transactions contemplated by this
Agreement and (b) bills of sale, assumptions of liabilities, checks,
assignments, stock certificates, receipts, and other documents the other
Investment Company or its counsel reasonably requests.
3. REPRESENTATIONS AND WARRANTIES
3.1. PIMCO Trust, on behalf of Target, represents and warrants as follows:
3.1.1. PIMCO Trust is a trust operating under a written declaration
of trust, the beneficial interest in which is divided into
transferable shares ("Business Trust"), that is duly
organized and validly existing under the laws of The
Commonwealth of Massachusetts; and a copy of its Second
Amended and Restated Agreement and Declaration of Trust, as
amended ("PIMCO Trust's Declaration"), is on file with the
Secretary of State of The Commonwealth of Massachusetts.
PIMCO Trust is qualified as a foreign association in every
jurisdiction where required, except to the extent that
failure to so qualify would not have a material adverse
effect on PIMCO Trust or Target. PIMCO Trust has all
necessary federal, state, and local authorizations to carry
on Target's business as a series of an investment company
and to carry out this Agreement;
3.1.2. PIMCO Trust is duly registered as an open-end management
investment company under the Investment Company Act of 1940,
as amended ("1940 Act"), and that registration is in full
force and effect;
3.1.3. Target is a duly established and designated series of PIMCO
Trust;
3.1.4. At the Closing, PIMCO Trust, on behalf of Target, will have
good and marketable title to the Assets and full right,
power, and authority to sell, assign, transfer, and deliver
the Assets free of any liens or other encumbrances (other
than customary liens of custodians for fees and securities
that are subject to "securities loans" as referred to in
section 851(b)(2) of the Code); and on delivery and payment
for the Assets, Acquiring Fund will acquire good and
marketable title thereto;
3.1.5. PIMCO Trust's current prospectus and statement of additional
information with respect to Target, each as from time to
time amended or supplemented (collectively, "PIMCO
Prospectuses"), conform in all material respects to the
applicable requirements of the Securities Act of 1933, as
amended ("1933 Act"), and the 1940 Act and the rules and
regulations thereunder and do not contain, with respect to
Target, 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;
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3.1.6. Target is not in violation of, and the execution and
delivery of this Agreement by PIMCO Trust, on behalf of
Target, and consummation of the transactions contemplated
hereby will not conflict with or violate, Massachusetts law
or any provision of PIMCO Trust's Declaration or By-Laws or
of any agreement, instrument, lease, or other undertaking to
which PIMCO Trust (with respect to Target) is a party or by
which it is bound or result in the acceleration of any
obligation, or the imposition of any penalty, under any
agreement, judgment, or decree to which PIMCO Trust (with
respect to Target) is a party or by which it is bound,
except as otherwise disclosed in writing to and consented to
by Xxxxx Xxxxx Trust, the consent of which shall not be
unreasonably withheld;
3.1.7. All material contracts and other commitments of or
applicable to Target (other than this Agreement and
investment contracts, including options, futures, and
forward contracts) will be terminated, or provision for
discharge of any liabilities of Target thereunder will be
made, at or prior to the Effective Time, without either
Fund's incurring any liability or penalty with respect
thereto and without diminishing or releasing any rights
Target may have had with respect to actions taken or omitted
or to be taken by any other party thereto prior to the
Closing, except as otherwise disclosed in writing to and
consented to by Xxxxx Xxxxx Trust, the consent of which
shall not be unreasonably withheld;
3.1.8. Except as otherwise disclosed in writing to and consented to
by Xxxxx Xxxxx Trust, the consent of which shall not be
unreasonably withheld: (a) no legal, administrative, or
other proceedings, or investigation of or before any court
or governmental body is presently pending or (to PIMCO
Trust's knowledge) threatened against PIMCO Trust with
respect to Target or any of Target's properties or assets
that, if adversely determined, would materially and
adversely affect Target's financial condition or the conduct
of its business; and (b) PIMCO Trust knows of no facts that
might form the basis for the institution of any such
litigation, proceeding, or investigation and is not a party
to or subject to the provisions of any order, decree, or
judgment of any court or governmental body that materially
or adversely affects its business or its ability to
consummate the transactions contemplated hereby;
3.1.9. The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all
necessary action on the part of PIMCO Trust's board of
trustees, which has made the determinations required by Rule
17a-8(a) under the 1940 Act; and assuming the due execution,
delivery, and performance of this Agreement by Xxxxx Xxxxx
Trust, on behalf of Acquiring Fund, and subject to valid
approval by Target's shareholders, this Agreement
constitutes a valid and legally binding obligation of
Target, enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and similar
laws relating to or affecting creditors' rights and by
general principles of equity;
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3.1.10. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the Securities
Exchange Act of 1934, as amended, or the 1940 Act
(collectively, "Federal Securities Laws") or any state (as
used herein, including the District of Columbia and Puerto
Rico) securities or blue sky laws (collectively, "State
Securities Laws") for the execution or performance of this
Agreement by PIMCO Trust, on behalf of Target, except for
(a) the filing with the Securities and Exchange Commission
("SEC") of a registration statement by Xxxxx Xxxxx Trust on
Form N-14 relating to the Acquiring Fund Shares issuable
hereunder, and any supplement or amendment thereto
("Registration Statement"), including therein a
prospectus/proxy statement ("Proxy Statement"), (b) the
filing with the SEC of supplements to the PIMCO Prospectuses
in connection with the Reorganization, and (c) such
consents, approvals, authorizations, and filings as have
been made or received or as may be required subsequent to
the Effective Time (including under State Securities Laws);
3.1.11. On the effective date of the Registration Statement, at the
time of the Shareholders' Meeting (as defined in paragraph
4.2), and at the Effective Time, the Proxy Statement will
(a) comply in all material respects with the applicable
provisions of the Federal Securities Laws and the rules and
regulations thereunder and (b) 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 they were made, not misleading; provided that the
foregoing shall not apply to statements in or omissions from
the Proxy Statement made in reliance on and in conformity
with information furnished by Xxxxx Xxxxx Trust for use
therein;
3.1.12. Target incurred the Liabilities, which are associated with
the Assets, in the ordinary course of its business; and
there are no Liabilities other than liabilities disclosed or
provided for in PIMCO Trust's financial statements referred
to in paragraph 3.1.17 and liabilities Target incurred in
the ordinary course of its business subsequent to June 30,
2003, or otherwise disclosed to Xxxxx Xxxxx Trust, none of
which has been materially adverse to Target's business,
assets, or the results of its operations;
3.1.13. Target is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past
taxable year since it commenced operations and will continue
to meet all the requirements for that qualification for its
current taxable year; the Assets will be invested at all
times through the Effective Time in a manner that ensures
compliance with the foregoing; and Target has no earnings
and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it;
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3.1.14. Target is not under the jurisdiction of a court in a "title
11 or similar case" (as defined in section 368(a)(3)(A) of
the Code);
3.1.15. During the five-year period ending at the Effective Time,
(a) neither Target nor any person "related" (within the
meaning of section 1.368-1(e)(3) of the Regulations) to
Target will have acquired Target Shares, either directly or
through any transaction, agreement, or arrangement with any
other person, with consideration other than Acquiring Fund
Shares or Target Shares, except for shares redeemed in the
ordinary course of Target's business as a series of an
open-end investment company as required by section 22(e) of
the 1940 Act, and (b) no distributions will have been made
with respect to Target Shares, other than normal, regular
dividend distributions made pursuant to Target's historic
dividend-paying practice and other distributions that
qualify for the deduction for dividends paid (within the
meaning of section 561 of the Code) referred to in sections
852(a)(1) and 4982(c)(1)(A) of the Code;
3.1.16. Target's federal income tax returns, and all applicable
state and local tax returns, for all taxable years through
and including the taxable year ended June 30, 2002, have
been timely filed and all taxes payable pursuant to those
returns have been timely paid;
3.1.17. PIMCO Trust's financial statements for the fiscal year ended
June 30, 2003, which have been delivered to Xxxxx Xxxxx
Trust, fairly represent Target's financial position as of
that date and the results of its operations and changes in
its net assets for the fiscal year then ended;
3.1.18. Not more than 25% of the value of Target's total assets
(excluding cash, cash items, and U.S. government securities)
is invested in the stock and securities of any one issuer,
and not more than 50% of the value of such assets is
invested in the stock and securities of five or fewer
issuers; and
3.1.19. All issued and outstanding Target Shares are, and at the
Effective Time will be, duly and validly issued and
outstanding, fully paid, and non-assessable by PIMCO Trust
and have been offered and sold in every state and the
District of Columbia in compliance in all material respects
with applicable registration requirements of the 1933 Act
and State Securities Laws; all issued and outstanding Target
Shares will, at the Effective Time, be held by the persons
and in the amounts set forth in the certified list delivered
pursuant to paragraph 2.3; and Target does not have
outstanding any options, warrants, or other rights to
subscribe for or purchase any Target Shares, nor is there
outstanding any security convertible into any Target Shares.
3.2. Xxxxx Xxxxx Trust, on behalf of Acquiring Fund, represents and
warrants as follows:
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3.2.1. Xxxxx Xxxxx Trust is a Business Trust that is duly organized
and validly existing under the laws of The Commonwealth of
Massachusetts; and a copy of its Amended and Restated
Declaration of Trust ("Xxxxx Xxxxx Trust's Declaration") is
on file with the Secretary of State of The Commonwealth of
Massachusetts. Xxxxx Xxxxx Trust is qualified as a foreign
association in every jurisdiction where required, except to
the extent that failure to so qualify would not have a
material adverse effect on Xxxxx Xxxxx Trust or Acquiring
Fund. Xxxxx Xxxxx Trust has all necessary federal, state,
and local authorizations to carry on Acquiring Fund's
business as a series of an investment company and to carry
out this Agreement;
3.2.2. Xxxxx Xxxxx Trust is duly registered as an open-end
management investment company under the 1940 Act, and that
registration is in full force and effect;
3.2.3. Before the Closing, Acquiring Fund will be a duly
established and designated series of Xxxxx Xxxxx Trust;
3.2.4. Acquiring Fund has not commenced operations and will not do
so until immediately after the Closing;
3.2.5. Except for the Ownership Share issued pursuant to paragraph
5.7, there are no (a) issued and outstanding Acquiring Fund
Shares, (b) options, warrants, or other rights to subscribe
for or purchase any Acquiring Fund Shares, (c) securities
convertible into any Acquiring Fund Shares, or (d) any other
securities issued by Acquiring Fund;
3.2.6. No consideration other than Acquiring Fund Shares (and
Acquiring Fund's assumption of the Liabilities) will be
issued in exchange for the Assets in the Reorganization;
3.2.7. The Acquiring Fund Shares to be issued and delivered to
Target hereunder will, at the Effective Time, have been duly
authorized and, when issued and delivered as provided
herein, will be duly and validly issued and outstanding
shares of Acquiring Fund, fully paid and non-assessable by
Xxxxx Xxxxx Trust;
3.2.8. The issuance of the Acquiring Fund Shares pursuant to this
Agreement will be in compliance with all applicable Federal
and State Securities Laws;
3.2.9. Acquiring Fund is not in violation of, and the execution and
delivery of this Agreement by Xxxxx Xxxxx Trust, on behalf
of Acquiring Fund, and consummation of the transactions
contemplated hereby will not conflict with or violate,
Massachusetts law or any provision of Xxxxx Xxxxx Trust's
Declaration or By-Laws or of any agreement, instrument,
lease, or other undertaking to which Xxxxx Xxxxx Trust (with
respect to Acquiring Fund) is a party or by which it is
bound or result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement,
judgment, or decree to which Xxxxx Xxxxx Trust (with respect
to Acquiring Fund) is a party or by which it is bound,
except as otherwise disclosed in writing to and consented to
by PIMCO Trust, the consent of which shall not be
unreasonably withheld;
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3.2.10. Except as otherwise disclosed in writing to and consent to
by PIMCO Trust, the consent of which shall not be
unreasonably withheld: (a) no legal, administrative, or
other proceedings, or investigation of or before any court
or governmental body is presently pending or (to Xxxxx Xxxxx
Trust's knowledge) threatened against Xxxxx Xxxxx Trust with
respect to Acquiring Fund or any of Acquiring Fund's
properties or assets that, if adversely determined, would
materially and adversely affect Acquiring Fund's financial
condition or the conduct of its business; and (b) Xxxxx
Xxxxx Trust knows of no facts that might form the basis for
the institution of any such litigation, proceeding, or
investigation and is not a party to or subject to the
provisions of any order, decree, or judgment of any court or
governmental body that materially or adversely affects its
business or its ability to consummate the transactions
contemplated hereby;
3.2.11. Acquiring Fund has no known liabilities of a material
nature, contingent or otherwise;
3.2.12. The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all
necessary action on the part of Xxxxx Xxxxx Trust's board of
trustees (together with PIMCO Trust's board of trustees, the
"Boards"), which has made the determinations required by
Rule 17a-8(a) under the 1940 Act; and, assuming the due
execution, delivery, and performance of this Agreement by
PIMCO Trust, on behalf of Target, this Agreement constitutes
a valid and legally binding obligation of Acquiring Fund,
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws
relating to or affecting creditors' rights and by general
principles of equity;
3.2.13. No governmental consents, approvals, authorizations, or
filings are required under the Federal Securities Laws or
any State Securities Laws for the execution or performance
of this Agreement by Xxxxx Xxxxx Trust, on behalf of
Acquiring Fund, except for (a) the filing with the SEC of
the Registration Statement (and the Proxy Statement included
therein) and (b) such consents, approvals, authorizations,
and filings as have been made or received or as may be
required subsequent to the Effective Time (including under
State Securities Laws);
3.2.14. On the effective date of the Registration Statement, at the
time of the Shareholders' Meeting, and at the Effective
Time, the Registration Statement will (a) comply in all
material respects with the applicable provisions of the
Federal Securities Laws and the rules and regulations
thereunder and (b) 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 they were
made, not misleading; provided that the foregoing shall not
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apply to statements in or omissions from the Proxy Statement
made in reliance on and in conformity with information
furnished by PIMCO Trust for use therein;
3.2.15. There are no material contracts outstanding to which
Acquiring Fund is a party, other than this Agreement, the
contracts, agreements, and plans referred to in paragraph
5.8, and any other contracts as are or will be disclosed in
the Registration Statement;
3.2.16. Acquiring Fund was established by the Board of Xxxxx Xxxxx
Trust in order to effect the Reorganization;
3.2.17. Acquiring Fund will be a "fund" as defined in section
851(g)(2) of the Code; it will qualify for treatment as a
RIC for the taxable year in which the Reorganization occurs;
and it intends to continue to meet all the requirements for
that qualification for the next taxable year;
3.2.18. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except
for shares issued in the ordinary course of its business as
a series of an open-end investment company; nor does
Acquiring Fund, or any person "related" (within the meaning
of section 1.368-1(e)(3) of the Regulations) to Acquiring
Fund, have any plan or intention to acquire -- during the
five-year period beginning at the Effective Time, either
directly or through any transaction, agreement, or
arrangement with any other person -- with consideration
other than Acquiring Fund Shares, any Acquiring Fund Shares
issued to the Shareholders pursuant to the Reorganization,
except for redemptions in the ordinary course of such
business as required by section 22(e) of the 1940 Act;
3.2.19. Following the Reorganization, Acquiring Fund (a) will
continue Target's "historic business" (within the meaning of
section 1.368-1(d)(2) of the Regulations) and (b) will use a
significant portion of Target's "historic business assets"
(within the meaning of section 1.368-1(d)(3) of the
Regulations) in a business; in addition, Acquiring Fund (c)
has no plan or intention to sell or otherwise dispose of any
of the Assets, except for dispositions made in the ordinary
course of that business and dispositions necessary to
maintain its status as a RIC, and (d) expects to retain
substantially all the Assets in the same form as it receives
them in the Reorganization, unless and until subsequent
investment circumstances suggest the desirability of change
or it becomes necessary to make dispositions thereof to
maintain such status;
3.2.20. There is no plan or intention for Acquiring Fund to be
dissolved or merged into another business (or a statutory)
trust or a corporation or any "fund" thereof (as defined in
section 851(g)(2) of the Code) following the Reorganization;
and
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3.2.21. During the five-year period ending at the Effective Time,
neither Acquiring Fund nor any person "related" (within the
meaning of section 1.368-1(e)(3) of the Regulations) to
Acquiring Fund will have acquired Target Shares with
consideration other than Acquiring Fund Shares; and
3.2.22. Assuming the truthfulness and correctness of the
representation and warranty in paragraph 3.1.18, immediately
after the Reorganization, (a) not more than 25% of the value
of Acquiring Fund's total assets (excluding cash, cash
items, and U.S. government securities) will be invested in
the stock and securities of any one issuer and (b) not more
than 50% of the value of such assets will be invested in the
stock and securities of five or fewer issuers.
3.3. Each Investment Company, on behalf of its Fund, represents and
warrants to the other, as follows:
3.3.1. The fair market value of the Acquiring Fund Shares each
Shareholder receives will be approximately equal to the fair
market value of its Target Shares it constructively
surrenders in exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i)
any portion of their Target Shares before the Reorganization
to any person "related" (within the meaning of section
1.368-1(e)(3) of the Regulations) to either Fund or (ii) any
portion of the Acquiring Fund Shares they receive in the
Reorganization to any person "related" (within such meaning)
to Acquiring Fund, (b) does not anticipate dispositions of
those Acquiring Fund Shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of
dispositions of shares of Target as a series of an open-end
investment company, (c) expects that the percentage of
Shareholder interests, if any, that will be disposed of as a
result of or at the time of the Reorganization will be DE
MINIMIS, and (d) does not anticipate that there will be
extraordinary redemptions of Acquiring Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
3.3.4. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount;
3.3.5. None of the compensation received by any Shareholder who is
an employee of or service provider to Target will be
separate consideration for, or allocable to, any of the
Target Shares that Shareholder held; none of the Acquiring
Fund Shares any such Shareholder receives will be separate
consideration for, or allocable to, any employment
agreement, investment advisory agreement, or other service
agreement; and the compensation paid to any such Shareholder
will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining
at arm's-length for similar services;
11
3.3.6. Immediately after consummation of the Reorganization, (a)
the Shareholders will own all the Acquiring Fund Shares and
will own such shares solely by reason of their ownership of
the Target Shares immediately before the Reorganization and
(b) Acquiring Fund will hold the same assets -- except for
assets used to pay expenses, if any, incurred in connection
with the Reorganization that are not Reorganization Expenses
(as defined in paragraph 3.3.7) -- and be subject to the
same liabilities that Target held or was subject to
immediately before the Reorganization, plus any liabilities
for the Funds' expenses incurred in connection with the
Reorganization. Such excepted assets, together with the
amount of all redemptions and distributions (other than
regular, normal dividends) Target made immediately preceding
the Reorganization, will, in the aggregate, constitute less
than 1% of its net assets;
3.3.7. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization
unless those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines
set forth in Rev. Rul. 73-54, 1973-1 C.B. 187)
("Reorganization Expenses"); and
3.3.8. The aggregate value of the acquisitions, redemptions, and
distributions limited by paragraphs 3.1.15, 3.2.18, and
3.2.21 will not exceed 50% of the value (without giving
effect to such acquisitions, redemptions, and distributions)
of the proprietary interest in Target at the Effective Time.
4. COVENANTS
4.1. PIMCO Trust covenants to operate Target's business in the ordinary
course between the date hereof and the Closing, it being understood that (a)
such ordinary course will include declaring and paying customary dividends and
other distributions, honoring redemption, subscription, and exchange requests,
and other changes in operations contemplated by its normal business activities
and (b) Target will retain exclusive control of its investments until the
Closing; provided that it shall not dispose of more than an insignificant
portion of its historic business assets (as defined above) during that period
without Xxxxx Xxxxx Trust's prior consent, which will not be unreasonably
withheld.
4.2. PIMCO Trust covenants to call a meeting of Target's shareholders to
consider and act on this Agreement ("Shareholders' Meeting") and to take all
other action necessary to obtain approval of the transactions contemplated
hereby.
4.3. PIMCO Trust covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
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4.4. PIMCO Trust covenants that it will assist Xxxxx Xxxxx Trust in
obtaining information Xxxxx Xxxxx Trust reasonably requests concerning the
beneficial ownership of Target Shares to the extent such requests comply with
PIMCO Trust's policies and procedures regarding the privacy of consumer
information.
4.5. PIMCO Trust covenants that its books and records required to be
maintained under the 1940 Act and the rules and regulations thereunder will be
turned over to Xxxxx Xxxxx Trust at the Closing.
4.6. Each Investment Company covenants to cooperate in preparing the Proxy
Statement in compliance with applicable federal and State Securities Laws.
4.7. Each Investment Company covenants that it will, from time to time, as
and when requested by the other Investment Company, execute and deliver or cause
to be executed and delivered all assignments and other instruments, and will
take or cause to be taken further action, the other Investment Company may deem
necessary or desirable to vest in, and confirm to, (a) Acquiring Fund, title to
and possession of all the Assets, and (b) Target, title to and possession of the
Acquiring Fund Shares to be delivered hereunder and Acquiring Fund's assumption
of the Liabilities, and otherwise to carry out the intent and purpose hereof.
4.8. Xxxxx Xxxxx Trust covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and
State Securities Laws it deems appropriate to continue its operations after the
Effective Time.
4.9. Subject to this Agreement, each Investment Company covenants to take
or cause to be taken all actions, and to do or cause to be done all things,
reasonably necessary, proper, or advisable to consummate and effectuate the
transactions contemplated hereby.
5. CONDITIONS PRECEDENT
Each Investment Company's obligations hereunder shall be subject to (a) the
other Investment Company's performance of all its obligations to be performed
hereunder at or before the Effective Time, (b) all representations and
warranties of the other Investment Company contained herein being true and
correct in all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated hereby, as of the Effective Time,
with the same force and effect as if made at and as of the Effective Time, and
(c) the following further conditions that, at or before the Effective Time:
5.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Board and shall have been approved by
Target's shareholders in accordance with PIMCO Trust's Declaration and By-Laws
and applicable law.
5.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The Registration Statement shall have become
effective under the 1933 Act; no stop orders suspending the effectiveness
13
thereof shall have been issued; to the best knowledge of the Investment
Companies, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened, or contemplated; and the SEC shall not
have issued an unfavorable report with respect to the Reorganization under
section 25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin
consummation of the transactions contemplated hereby under section 25(c) of the
1940 Act. All consents, orders, and permits of federal, state, and local
regulatory authorities (including the SEC and state securities authorities)
deemed reasonably necessary by either Investment Company to permit consummation,
in all material respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain same would not involve a risk of a
material adverse effect on either Fund's assets or properties, provided that
either Investment Company may for itself waive any of such conditions.
5.3. At the Effective Time, no action, suit, or other proceeding shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit, or to obtain damages or other relief in
connection with, the transactions contemplated hereby.
5.4. PIMCO Trust shall have received an opinion of Xxxxxx X. Xxxxx, Esq.,
Vice President - Legal of Xxxxx Xxxxx Management ("EV Counsel"), dated the day
of the Closing, substantially to the effect that:
5.4.1. Acquiring Fund is a duly established series of Xxxxx Xxxxx
Trust, a Business Trust duly organized and validly existing
under the laws of The Commonwealth of Massachusetts with
power under Xxxxx Xxxxx Trust's Declaration to own all its
properties and assets and, to the knowledge of EV Counsel,
to carry on its business as presently conducted;
5.4.2. This Agreement (a) has been duly authorized, executed, and
delivered by Xxxxx Xxxxx Trust on behalf of Acquiring Fund
and (b) assuming due authorization, execution, and delivery
of this Agreement by PIMCO Trust on behalf of Target, is a
valid and legally binding obligation of Xxxxx Xxxxx Trust
with respect to Acquiring Fund, enforceable in accordance
with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting the
enforcement of creditors' rights and by general principles
of equity;
5.4.3. The Acquiring Fund Shares to be issued and distributed to
the Shareholders under this Agreement, assuming their due
delivery as contemplated by this Agreement, are duly
authorized, and upon such delivery will be validly issued
and outstanding and will be fully paid and non-assessable by
Xxxxx Xxxxx Trust and Acquiring Fund, and no shareholder of
Acquiring Fund has any preemptive right to subscription or
purchase in respect thereof;
14
5.4.4. The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby
will not, materially violate Xxxxx Xxxxx Trust's Declaration
or By-Laws or any provision of any agreement (known to EV
Counsel) to which Xxxxx Xxxxx Trust (with respect to
Acquiring Fund, without any independent inquiry or
investigation) is a party or by which it is bound or (to the
knowledge of EV Counsel, without any independent inquiry or
investigation) result in the acceleration of any obligation,
or the imposition of any penalty, under any agreement,
judgment, or decree to which Xxxxx Xxxxx Trust (with respect
to Acquiring Fund) is a party or by which it is bound,
except as set forth in that opinion or as otherwise
disclosed in writing to and accepted by PIMCO Trust;
5.4.5. To the knowledge of EV Counsel (without any independent
inquiry or investigation), no consent, approval,
authorization, or order of any court or governmental
authority is required for the consummation by Xxxxx Xxxxx
Trust (on behalf of Acquiring Fund) of the transactions
contemplated herein, except those obtained under the Federal
Securities Laws and those that may be required under State
Securities Laws;
5.4.6. Xxxxx Xxxxx Trust is registered with the SEC as an
investment company, and to the knowledge of EV Counsel no
order has been issued or proceeding instituted to suspend
that registration; and
5.4.7. Except as previously disclosed to PIMCO Counsel in writing
pursuant to paragraph 3.2.10 hereof, to the knowledge of EV
Counsel (without any independent inquiry or investigation),
(a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is
pending or threatened as to Xxxxx Xxxxx Trust (with respect
to Acquiring Fund) or any of its properties or assets
attributable or allocable to Acquiring Fund and (b) Xxxxx
Xxxxx Trust (with respect to Acquiring Fund) is not a party
to or subject to the provisions of any order, decree, or
judgment of any court or governmental body that materially
and adversely affects Acquiring Fund's business, except as
set forth in that opinion or as otherwise disclosed in
writing to and accepted by PIMCO Trust.
In rendering the foregoing opinion, EV Counsel may (1) make assumptions
regarding the authenticity, genuineness, and/or conformity of documents and
copies thereof without independent verification thereof, (2) limit that opinion
to the laws of The Commonwealth of Massachusetts and the United States of
America (but not the blue sky laws of any jurisdiction, including those of The
Commonwealth of Massachusetts), and (3) rely on certain factual representations
made by Xxxxx Xxxxx Trust and its service providers
5.5. Xxxxx Xxxxx Trust shall have received an opinion of Ropes & Xxxx LLP
("PIMCO Counsel"), dated the day of the Closing, substantially to the effect
that:
15
5.5.1. Target is a duly established series of PIMCO Trust, an
unincorporated voluntary association validly existing under
and by virtue of the laws of The Commonwealth of
Massachusetts with power under PIMCO Trust's Declaration to
own all its properties and assets and, to the knowledge of
PIMCO Counsel, to carry on its business as presently
conducted;
5.5.2. This Agreement (a) has been duly authorized, executed, and
delivered by PIMCO Trust on behalf of Target and (b)
assuming due authorization, execution, and delivery of this
Agreement by Xxxxx Xxxxx Trust on behalf of Acquiring Fund,
is a valid and legally binding obligation of PIMCO Trust
with respect to Target, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium,
and similar laws relating to or affecting the enforcement of
creditors' rights and by general principles of equity;
5.5.3. The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby
will not, materially violate PIMCO Trust's Declaration or
By-Laws or any provision of any agreement (known to PIMCO
Counsel, without any independent inquiry or investigation)
to which PIMCO Trust (with respect to Target) is a party or
by which it is bound or (to the knowledge of PIMCO Counsel,
without any independent inquiry or investigation) result in
the acceleration of any obligation, or the imposition of any
penalty, under any agreement, judgment, or decree to which
PIMCO Trust (with respect to Target) is a party or by which
it is bound, except as set forth in that opinion or as
otherwise disclosed in writing to and accepted by Xxxxx
Xxxxx Trust, it being understood that with respect to
investment restrictions contained in the PIMCO Trust's
Declaration, By-Laws or Prospectuses, PIMCO Counsel may rely
upon a certificate of an officer of PIMCO Trust whose
responsibility it is to advise PIMCO Trust and Target with
respect to such matters;
5.5.4. To the knowledge of PIMCO Counsel (without any independent
inquiry or investigation), no consent, approval,
authorization, or order of any court or governmental
authority is required for the consummation by PIMCO Trust
(on behalf of Target) of the transactions contemplated
herein, except those obtained under the Federal Securities
Laws and those that may be required under State Securities
Laws;
5.5.5. PIMCO Trust is registered with the SEC as an investment
company, and to the knowledge of PIMCO Counsel no order has
been issued or proceeding instituted to suspend that
registration; and
5.5.6. Except as previously disclosed to EV Counsel in writing
pursuant to paragraph 3.1.8 hereof, to the knowledge of
PIMCO Counsel (without any independent inquiry or
investigation), (a) no litigation, administrative
proceeding, or investigation of or before any court or
governmental body is pending or threatened as to PIMCO Trust
(with respect to Target) or any of its properties or assets
attributable or allocable to Target and (b) PIMCO Trust
16
(with respect to Target) is not a party to or subject to the
provisions of any order, decree, or judgment of any court or
governmental body that materially and adversely affects
Target's business, except as set forth in that opinion or as
otherwise disclosed in writing to and accepted by Xxxxx
Xxxxx Trust.
In rendering the foregoing opinion, PIMCO Counsel may (1) make assumptions
regarding the authenticity, genuineness, and/or conformity of documents and
copies thereof without independent verification thereof, (2) limit that opinion
to the laws of The Commonwealth of Massachusetts and the United States of
America (but not the blue sky laws of any jurisdiction, including those of The
Commonwealth of Massachusetts), and (3) rely on certain factual representations
made by PIMCO Trust and its service providers.
5.6. Each Investment Company shall have received an opinion of Xxxxxxxxxxx
& Xxxxxxxx LLP ("Tax Counsel"), addressed to and in form and substance
reasonably satisfactory to it, as to the federal income tax consequences
mentioned below ("Tax Opinion"). In rendering the Tax Opinion, Tax Counsel may
rely as to factual matters, exclusively and without independent verification, on
the representations and warranties made in this Agreement, which Tax Counsel may
treat as representations and warranties made to it, or in separate letters
addressed to Tax Counsel and the certificates delivered pursuant to paragraph
2.4. The Tax Opinion shall be substantially to the effect that, based on the
facts and assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income tax
purposes:
5.6.1. Acquiring Fund's acquisition of the Assets in exchange
solely for Acquiring Fund Shares and Acquiring Fund's
assumption of the Liabilities, followed by Target's
distribution of those shares PRO RATA to the Shareholders
constructively in exchange for their Target Shares, will
qualify as a "reorganization" (as defined in section
368(a)(1)(F) of the Code), and each Fund will be "a party to
a reorganization" (within the meaning of section 368(b) of
the Code);
5.6.2. Target will recognize no gain or loss on the transfer of the
Assets to Acquiring Fund in exchange solely for Acquiring
Fund Shares and Acquiring Fund's assumption of the
Liabilities or on the subsequent distribution of those
shares to the Shareholders in constructive exchange for
their Target Shares;
5.6.3. Acquiring Fund will recognize no gain or loss on its receipt
of the Assets in exchange solely for Acquiring Fund Shares
and its assumption of the Liabilities;
5.6.4. Acquiring Fund's basis in each Asset will be the same as
Target's basis therein immediately before the
Reorganization, and Acquiring Fund's holding period for each
Asset will include Target's holding period therefor;
5.6.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for
Acquiring Fund Shares pursuant to the Reorganization;
17
5.6.6. A Shareholder's aggregate basis in the Acquiring Fund Shares
it receives in the Reorganization will be the same as the
aggregate basis in its Target Shares it constructively
surrenders in exchange for those Acquiring Fund Shares, and
its holding period for those Acquiring Fund Shares will
include, in each instance, its holding period for those
Target Shares, provided the Shareholder held them as capital
assets at the Effective Time; and
5.6.7. For purposes of section 381 of the Code, Acquiring Fund will
be treated as if there had been no Reorganization.
Accordingly, the Reorganization will not result in the
termination of Target's taxable year, Target's tax
attributes enumerated in section 381(c) of the Code will be
taken into account by Acquiring Fund as if there had been no
Reorganization, and the part of Target's taxable year before
the Reorganization will be included in Acquiring Fund's
taxable year after the Reorganization.
Notwithstanding subparagraphs 5.6.2 and 5.6.4, the Tax Opinion may state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
Shareholder with respect to any Asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a xxxx-to-market
system of accounting.
5.7. Before the Closing, Xxxxx Xxxxx Trust's Board shall have authorized
the issuance of, and Acquiring Fund shall have issued, one Acquiring Fund Share
("Ownership Share") to Xxxxx Xxxxx Management or an affiliate thereof in
consideration of the payment of $10.00 to vote on the management contract and
investment sub-advisory contract referred to in paragraph 5.8. After such vote,
but in any event prior to the Closing, the Ownership Share will be redeemed for
the same amount.
5.8. Xxxxx Xxxxx Trust (on behalf of and with respect to Acquiring Fund)
shall have entered into, or adopted, as appropriate, a management contract,
investment sub-advisory contract, and other agreements and plans necessary for
Acquiring Fund's operation as a series of an open-end investment company. Each
such contract and agreement shall have been approved by Xxxxx Xxxxx Trust's
Board and, to the extent required by law (as interpreted by SEC staff
positions), by such of the Board members who are not "interested persons" (as
defined in the 0000 Xxx) thereof and by Xxxxx Xxxxx Management or its affiliate
as Acquiring Fund's sole shareholder.
5.9. That the shareholders of Target, by approving this Agreement pursuant
to paragraph 5.1, shall have acknowledged Acquiring Fund's investment objective,
fundamental investment policies, and investment advisory arrangement.
5.10. At any time before the Closing, either Investment Company may waive
any of the foregoing conditions (except that set forth in paragraph 5.1) if, in
the judgment of its Board, that waiver will not have a material adverse effect
on its Fund's shareholders' interests.
18
6. BROKERAGE FEES AND EXPENSES
6.1. Each Investment Company represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
6.2. ______________________________________________________________ agrees
that it will bear and promptly pay any and all Reorganization Expenses incurred
by the Funds (including all brokerage commissions, dealer xxxx-ups, transfer
taxes, and similar expenses incurred by Target in connection with the
Reorganization).
7. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. Except as indicated below, the representations, warranties, and
covenants contained herein or in any document delivered pursuant hereto or in
connection herewith shall not survive the Closing. The covenants to be performed
after the Closing on behalf of Target and Acquiring Fund in paragraphs 10.1 and
10.2, respectively, shall survive the Closing.
8. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Target's shareholders:
8.1. By either Investment Company (a) in the event of the other Investment
Company's material breach of any representation, warranty, or covenant contained
herein to be performed at or prior to the Effective Time, (b) if a condition to
its obligations has not been met and it reasonably appears that such condition
will not or cannot be met, (c) if a governmental body issues an order, decree,
or ruling having the effect of permanently enjoining, restraining, or otherwise
prohibiting the consummation of the Reorganization, or (d) if the Closing has
not occurred on or before _____________________; or
8.2. By the Investment Companies' mutual agreement.
In the event of termination under paragraphs 8.1(b), (c) or (d) or 8.2, there
shall be no liability for damages on the part of either Investment Company, or
their trustees or officers, to the other Investment Company.
9. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's shareholders, in any manner
mutually agreed on in writing by the parties; provided that following that
approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
19
10. INDEMNIFICATION
10.1. Target shall indemnify and hold harmless, out of the assets of Target
(which shall be deemed to include the part of the assets of Acquiring Fund
represented by the Acquiring Fund Shares following the Effective Time), Xxxxx
Xxxxx Trust and the trustees and officers of Xxxxxx Xxxxx Trust (collectively,
for purposes of this paragraph 10.1, "Indemnified Parties") against any and all
expenses, losses, claims, damages, and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parties in connection
with, arising out of, or resulting from any claim, action, suit, or proceeding
in which any one or more of the Indemnified Parties may be involved or with
which any one or more of the Indemnified Parties may be threatened by reason of
any untrue statement or alleged untrue statement of a material fact relating to
PIMCO Trust or Target contained in this Agreement or the Registration Statement
or any amendment or supplement to any of the foregoing, or arising out of or
based upon the omission or alleged omission to state in any of the foregoing a
material fact relating to PIMCO Trust or Target required to be stated therein or
necessary to make the statements relating to PIMCO Trust or Target therein not
misleading, including, without limitation, any amounts paid by any one or more
of the Indemnified Parties in a reasonable compromise or settlement of any such
claim, action, suit, or proceeding, or threatened claim, action, suit, or
proceeding, made with the consent of PIMCO Trust or Target. An Indemnified Party
will notify PIMCO Trust (and Target if before the Effective Time) in writing
within ten days after the receipt by such Indemnified Party of any notice of
legal process or any suit brought against or claim made against such Indemnified
Party as to any matters covered by this paragraph 10.1. Target shall be entitled
to participate at its own expense in the defense of any claim, action, suit, or
proceeding covered by this paragraph 10.1, or, if it so elects, to assume at its
expense by counsel satisfactory to such Indemnified Party the defense of any
such claim, action, suit, or proceeding, and if Target elects to assume such
defense, such Indemnified Party shall be entitled to participate in the defense
of any such claim, action, suit, or proceeding at its, his, or her own expense.
Target's obligation under this paragraph 10.1 to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that Target will
pay in the first instance any expenses, losses, claims, damages, and liabilities
required to be paid by it under this paragraph 10.1 without the necessity of the
Indemnified Parties' first paying the same.
10.2. Acquiring Fund shall indemnify and hold harmless, out of the assets
of Acquiring Fund, PIMCO Trust and the trustees and officers of PIMCO Trust
(collectively, for purposes of this paragraph 10.2, "Indemnified Parties")
against any and all expenses, losses, claims, damages, and liabilities at any
time imposed upon or reasonably incurred by any one or more of the Indemnified
Parties in connection with, arising out of, or resulting from any claim, action,
suit, or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement of a
material fact relating to Xxxxx Xxxxx Trust or Acquiring Fund contained in this
Agreement or the Registration Statement or any amendment or supplement to any of
the foregoing, or arising out of or based upon the omission or alleged omission
to state in any of the foregoing a material fact relating to Xxxxx Xxxxx Trust
20
or Acquiring Fund required to be stated therein or necessary to make the
statements relating to Xxxxx Xxxxx Trust or Acquiring Fund therein not
misleading, including, without limitation, any amounts paid by any one or more
of the Indemnified Parties in a reasonable compromise or settlement of any such
claim, action, suit, or proceeding, or threatened claim, action, suit, or
proceeding, made with the consent of Xxxxx Xxxxx Trust or Acquiring Fund. An
Indemnified Party will notify Xxxxx Xxxxx Trust and Acquiring Fund in writing
within ten days after the receipt by such Indemnified Party of any notice of
legal process or any suit brought against or claim made against such Indemnified
Party as to any matters covered by this paragraph 10.2. Acquiring Fund shall be
entitled to participate at its own expense in the defense of any claim, action,
suit, or proceeding covered by this paragraph 10.2, or, if it so elects, to
assume at its expense by counsel satisfactory to such Indemnified Party the
defense of any such claim, action, suit, or proceeding, and if Acquiring Fund
elects to assume such defense, such Indemnified Party shall be entitled to
participate in the defense of any such claim, action, suit, or proceeding at
its, his, or her own expense. Acquiring Fund's obligation under this paragraph
10.2 to indemnify and hold harmless the Indemnified Parties shall constitute a
guarantee of payment so that Acquiring Fund will pay in the first instance any
expenses, losses, claims, damages, and liabilities required to be paid by it
under this paragraph 10.2 without the necessity of the Indemnified Parties'
first paying the same.
11. RULE 145
If, notwithstanding paragraph 1.4, Acquiring Fund issues any share
certificates in connection with the Reorganization, then pursuant to Rule 145
under the 1933 Act, Acquiring Fund will, in connection with the issuance of any
Acquiring Fund Shares to any person who at the time of the Reorganization is
deemed to be an affiliate of a party to the transaction pursuant to Rule 145(c),
cause to be affixed upon any certificate(s) issued to such person (if any) a
legend as follows:
"THESE SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO XXXXX
XXXXX TAX-MANAGED EMERGING MARKETS FUND OR ITS PRINCIPAL UNDERWRITER
UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (II) IN THE OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE FUND SUCH REGISTRATION IS
NOT REQUIRED."
and, further, Acquiring Fund will issue stop transfer instructions to its
transfer agent with respect to such shares. Target will provide Acquiring Fund
as of the Effective Time with the name of any Shareholder who is to the
knowledge of Target an affiliate of Target at such time.
21
12. COVENANTS, ETC. DEEMED MATERIAL
All covenants, agreements, representations, and warranties made under this
Agreement and any certificates delivered pursuant to this Agreement shall be
deemed to have been material and relied upon by each of the parties,
notwithstanding any investigation made by them or on their behalf.
13. NOTICES
Any notice, report, statement, or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given personally or
by prepaid telegraph, telecopy, or certified mail addressed to Xxxxx Xxxxx Trust
at The Xxxxx Xxxxx Building, 000 Xxxxx Xxxxxx, Xxxxxx, XX 00000, and to PIMCO
Trust at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000.
14. MISCELLANEOUS
14.1. This Agreement shall be governed by and construed in accordance with
the internal laws of The Commonwealth of Massachusetts; provided that, in the
case of any conflict between those laws and the federal securities laws, the
latter shall govern.
14.2. This Agreement shall be binding upon an 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
either party without the prior written consent of the other party. Nothing
expressed or implied herein is intended or shall be construed to confer on or
give any person, firm, trust, or corporation other than the parties and their
respective successors and assigns any rights or remedies under or by reason of
this Agreement.
14.3. Each Investment Company acknowledges that the other is a Business
Trust organized in series form. This Agreement is executed by Xxxxx Xxxxx Trust
on behalf of Acquiring Fund and by its trustees and/or officers in their
capacity as such, and not individually. Xxxxx Xxxxx Trust's obligations under
this Agreement are not binding on or enforceable against any of its trustees,
officers, or shareholders but are only binding on and enforceable against the
assets and property of Acquiring Fund and no other series thereof, and a trustee
of Xxxxx Xxxxx Trust shall not be personally liable hereunder to PIMCO Trust or
its trustees or shareholders for any act, omission, or obligation of Xxxxx Xxxxx
Trust or any other trustee thereof. Xxxxx Xxxxx Trust agrees that, in asserting
any rights or claims under this Agreement on behalf of Acquiring Fund, it shall
look only to Target's assets and property in settlement of those rights and
claims and not to the trustees, officers, or shareholders thereof.
14.4. A copy of the PIMCO Trust's Declaration is 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 PIMCO Trust on behalf
of Target as trustees and not individually and that the obligations of this
instrument are not binding upon any of the trustees, officers, or shareholders
of PIMCO Trust individually but are binding only upon the assets and property of
Target. PIMCO Trust agrees that, in asserting any rights or claims under this
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Agreement on behalf of Target, it shall look only to Acquiring Fund's assets and
property in settlement of those rights and claims and not to the trustees,
officers, or shareholders thereof.
14.5. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by each Investment Company and
delivered to the other party. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officer as of the day and year first written
above.
XXXXX XXXXX SERIES TRUST II, on behalf of
Xxxxx Xxxxx Tax-Managed Emerging Markets Fund
By:
----------------------------------
PIMCO FUNDS: MULTI-MANAGER SERIES, on behalf
of PPA Tax-Efficient Structured Emerging
Markets Fund
By:
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