MERGER AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
THE LATIN AMERICA INVESTMENT FUND, INC.
AND
THE LATIN AMERICA EQUITY FUND, INC.
DATED AS OF JUNE [ ], 2000
TABLE OF CONTENTS
1. DEFINITIONS...............................................................1
2. BASIC TRANSACTION.........................................................1
2.1. The Merger..........................................................1
2.2. Actions at Closing..................................................2
2.3. Effect of Merger....................................................2
3. REPRESENTATIONS AND WARRANTIES OF THE LATIN AMERICA INVESTMENT FUND.......2
3.1. Organization........................................................2
3.2. Registrations and Qualifications....................................2
3.3. Regulatory Consents and Approvals...................................2
3.4. Noncontravention....................................................3
3.5. Financial Statements................................................3
3.6. Annual Report.......................................................3
3.7. Qualification, Corporate Power, Authorization of Transaction........3
3.8. Legal Compliance....................................................4
3.9. Material Contracts..................................................4
3.10. Undisclosed Liabilities.............................................4
3.11. Tax Filings.........................................................4
3.12. Qualification under Subchapter M....................................4
3.13. Form N-14 and Exemptive Application.................................5
3.14. Capitalization......................................................5
3.15. Books and Records...................................................5
4. REPRESENTATIONS AND WARRANTIES OF THE LATIN AMERICA EQUITY FUND...........6
4.1. Organization........................................................6
4.2. Registrations and Qualifications....................................6
4.3. Regulatory Consents and Approvals...................................6
4.4. Noncontravention....................................................6
4.5. Financial Statements................................................6
4.6. Annual Report.......................................................7
4.7. Qualification, Corporate Power, Authorization of Transaction........7
4.8. Legal Compliance....................................................7
4.9. Material Contracts..................................................7
4.10. Undisclosed Liabilities.............................................7
4.11. Tax Filings.........................................................8
4.12. Qualification under Subchapter M....................................8
4.13. Form N-14 and Exemptive Application.................................8
4.14. Capitalization......................................................8
4.15. Issuance of Stock...................................................9
4.16. Books and Records...................................................9
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5. CONVERSION TO LATIN AMERICA EQUITY FUND COMMON STOCK.......................9
5.1. Conversion...........................................................9
5.2. Computation of Net Asset Value.......................................9
5.3. Issuance of Latin America Equity Fund Common Stock..................10
5.4. Surrender of Latin America Investment Fund Stock Certificates.......10
6. COVENANTS OF THE PARTIES..................................................10
6.1. Shareholders' Meetings..............................................10
6.2. Operations in the Normal Course.....................................11
6.3. Articles of Merger..................................................11
6.4. Regulatory Filings..................................................11
6.5. Preservation of Assets..............................................11
6.6. Tax Matters.........................................................11
6.7. Shareholder List....................................................12
6.8. Delisting, Termination of Registration as an Investment Company.....12
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE LATIN AMERICA EQUITY FUND......12
7.1. Approval of Merger..................................................12
3. Certificates and Statements by the Latin America Investment Fund....13
7.3. Absence of Litigation...............................................13
7.4. Legal Opinions......................................................13
7.5. Auditor's Consent and Certification.................................15
7.6. Liabilities.........................................................15
7.7. Effectiveness of N-14 Registration Statement........................16
7.8. Approval of Exemptive Application; Regulatory Filings...............16
7.9. Administrative Rulings, Proceedings.................................16
7.10. Satisfaction of the Latin America Equity Fund, Inc..................16
7.11. Dividends...........................................................16
7.12. Custodian's Certificate.............................................16
7.13. Books and Records...................................................16
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LATIN AMERICA
INVESTMENT FUND...........................................................17
8.1. Approval of Merger..................................................17
8.2. Certificates and Statements by the Latin America Equity Fund........17
8.3. Absence of Litigation...............................................18
8.4. Legal Opinions......................................................18
8.5. Auditor's Consent and Certification.................................19
8.6. Effectiveness of N-14 Registration Statement........................20
8.7. Approval of Exemptive Application; Regulatory Filings...............20
8.8. Satisfaction of the Latin America Investment Fund...................20
8.9. Dividends...........................................................20
9. PAYMENT OF EXPENSES.......................................................21
9.1. Allocation..........................................................21
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10. COOPERATION FOLLOWING EFFECTIVE DATE......................................21
11. INDEMNIFICATION...........................................................21
11.1. The Latin America Investment Fund...................................21
11.2. The Latin America Equity Fund.......................................21
12. TERMINATION, POSTPONEMENT AND WAIVERS.....................................22
12.1. Termination.........................................................22
12.2. Waiver..............................................................22
12.3. Expiration of Representations and Warranties........................22
13. MISCELLANEOUS.............................................................23
13.1. Transfer Restriction................................................23
13.2. Material Provisions.................................................23
13.3. Notices.............................................................23
13.4. Amendments..........................................................25
13.5. Headings............................................................25
13.6. Counterparts........................................................25
13.7. Enforceability......................................................25
13.8. Successors and Assigns..............................................25
13.9. Governing Law.......................................................25
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THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of this day of June, 2000, between The Latin America Investment Fund,
Inc. (the "Target Fund" or the "Latin America Investment Fund"), a Maryland
corporation and a registered investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"), and The Latin America Equity Fund, Inc.
(the "Acquiring Fund" or the "Latin America Equity Fund"), a Maryland
corporation and a registered investment company under the 1940 Act.
This agreement contemplates a tax-free merger transaction which
qualifies for federal income tax purposes as a reorganization within the meaning
of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the Parties hereto agree as follows:
1. DEFINITIONS
Certain capitalized terms used in this Agreement are specifically
defined herein.
2. BASIC TRANSACTION
2.1. The Merger. On and subject to the terms and conditions of this
Agreement, the Target Fund will merge with and into the Acquiring Fund (the
"Merger") at the Effective Date (as defined in Section 2.3 below) in accordance
with the Maryland General Corporation Law ("MGCL"). The Latin America Equity
Fund shall be the surviving investment company. The Latin America Investment
Fund shall cease to exist as a separate investment company.
Each share of the Latin America Investment Fund will be converted
into an equivalent dollar amount (to the nearest one ten-thousandth of one cent)
of full shares of Common Stock of the Latin America Equity Fund, with a par
value of $0.001 per share, based on the net asset value per share of each of the
Parties at 4:00 p.m. Eastern Time on the Business Day prior to the Effective
Date (the "Valuation Time"). No fractional shares of the Latin America Equity
Fund will be issued to Latin America Investment Fund shareholders. In lieu
thereof, the Latin America Equity Fund's transfer agent will aggregate all
fractional shares of the Latin America Equity Fund and sell the resulting full
shares on the New York Stock Exchange ("NYSE") at the current market price for
shares of the Latin America Equity Fund for the account of all holders of
fractional interests, and each such holder will receive such holder's pro rata
share of the proceeds of such sale, without interest, upon surrender of such
holder's Latin America Investment Fund Common Stock certificates pursuant to
Article 5 below. The Effective Date and the Business Day prior to it must each
be a day on which the NYSE is open for trading (a "Business Day").
From and after the Effective Date, the Acquiring Company shall
possess all of the properties, assets, rights, privileges, powers and shall be
subject to all of the restrictions, liabilities, obligations, disabilities and
duties of the Latin America Investment Fund, all as provided under Maryland law.
2.2. Actions at Closing. At the closing of the transactions
contemplated by this Agreement (the "Closing") on the date thereof (the "Closing
Date"), (i) the Latin America Investment Fund will deliver to the Latin America
Equity Fund the various certificates and documents referred to in Article 7
below, (ii) the Latin America Equity Fund will deliver to the Latin America
Investment Fund the various certificates and documents referred to in Article 8
below, and (iii) the Latin America Investment Fund and the Latin America Equity
Fund will file jointly with the State Department of Assessments and Taxation of
Maryland (the "Department") articles of merger (the "Articles of Merger") and
make all other filings or recordings required by Maryland law in connection with
the Merger.
2.3. Effect of Merger. Subject to the requisite approvals of the
shareholders of the Parties, and to the other terms and conditions described
herein, the Merger shall become effective at such time as the Articles of Merger
are accepted for record by the Department or at such later time as is specified
in the Articles of Merger (the "Effective Date") and the separate corporate
existence of the Latin America Investment Fund shall cease. As promptly as
practicable after the Merger, the Latin America Investment Fund shall delist its
shares from the NYSE and its registration under the 1940 Act shall be
terminated. Any reporting responsibility of the Latin America Investment Fund
is, and shall remain, the responsibility of the Latin America Investment Fund up
to and including the Effective Date.
3. REPRESENTATIONS AND WARRANTIES OF THE LATIN AMERICA INVESTMENT FUND
The Latin America Investment Fund represents and warrants to the
Latin America Equity Fund that the statements contained in this Article 3 are
correct and complete in all material respects as of the execution of this
Agreement on the date hereof. The Latin America Investment Fund represents and
warrants to, and agrees with, the Latin America Equity Fund that:
3.1. Organization. The Latin America Investment Fund is a
corporation duly organized, validly existing under the laws of the State of
Maryland and is in good standing with the Department, and has the power to own
all of its assets and to carry on its business as it is now being conducted and
to carry out this Agreement.
3.2. Registrations and Qualifications. The Latin America Investment
Fund is duly registered under the 1940 Act as a closed-end, non-diversified
management investment company (File No. 811- ), and such registration has not
been revoked or rescinded and is in full force and effect. The Latin America
Investment Fund has elected and qualified for the special tax treatment afforded
regulated investment companies ("RICs") under Sections 851-855 of the Code at
all times since its inception. The Latin America Investment Fund is qualified as
a foreign corporation in every jurisdiction where required, except to the extent
that failure to so qualify would not have a material adverse effect on the Latin
America Investment Fund.
3.3. Regulatory Consents and Approvals. No consent, approval,
authorization, or order of any court or governmental authority is required for
the consummation by the Latin America Investment Fund of the transactions
contemplated herein, except (i) such as have been obtained or applied for under
the Securities Act of 1933, as amended (the "1933 Act"), the
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Securities Exchange Act of 1934 (the "1934 Act"), and the 1940 A ct, (ii) such
as may be required by state securities laws and (iii) such as may be required
under Maryland law for the acceptance for record of the Articles of Merger by
the Department.
3.4. Noncontravention. The Latin America Investment Fund is not, and
the execution, delivery and performance of this Agreement by the Latin America
Investment Fund will not result, in violation of the laws of the State of
Maryland or of the Articles of Incorporation or the By-laws of the Latin America
Investment Fund, or of any material agreement, indenture, instrument, contract,
lease or other undertaking to which the Latin America Investment Fund is a party
or by which it is bound, and the execution, delivery and performance of this
Agreement by the Latin America Investment Fund will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Latin America Investment Fund is a party or by which it is bound.
3.5. Financial Statements. The Latin America Equity Fund has been
furnished with a statement of assets, liabilities and capital and a schedule of
investments of the Latin America Investment Fund, each as of December 31, 1999,
said financial statements having been examined by PricewaterhouseCoopers LLP,
independent public auditors. These financial statements are in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP")
and present fairly, in all material respects, the financial position of the
Latin America Investment Fund as of such date in accordance with GAAP, and there
are no known contingent liabilities of the Latin America Investment Fund
required to be reflected on a balance sheet (including the notes thereto) in
accordance with GAAP as of such date not disclosed therein.
The Latin America Equity Fund has been furnished with an unaudited
statement of assets, liabilities and capital and a schedule of investments of
the Latin America Investment Fund, each as of March 31, 2000. This financial
statement and the schedule of investments are in accordance with GAAP and
present fairly, in all material respects, the financial position of the Latin
America Investment Fund as of such date in accordance with GAAP, and there are
no known contingent liabilities of the Latin America Investment Fund required to
be reflected on a balance sheet (including the notes thereto) in accordance with
GAAP as of such date not disclosed therein.
3.6. Annual Report. The Latin America Equity Fund has been furnished
with the Latin America Investment Fund's Annual Report to Shareholders for the
year ended December 31, 1999.
3.7. Qualification, Corporate Power, Authorization of Transaction.
The Latin America Investment Fund has full power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary action
of its Board of Directors, and, subject to shareholder approval, this Agreement
constitutes a valid and binding contract enforceable in accordance with its
terms, subject to the effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto.
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3.8. Legal Compliance. No material litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending (in which service of process has been received) or to its
knowledge threatened against the Latin America Investment Fund or any properties
or assets held by it. The Latin America Investment Fund knows of no facts which
might form the basis for the institution of such proceedings which would
materially and adversely affect its business and is not a party to or subject to
the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated.
3.9. Material Contracts. There are no material contracts outstanding
to which the Latin America Investment Fund is a party that have not been
disclosed in the N-14 Registration Statement (as defined in Section 3.13 below)
or will not be otherwise disclosed to the Latin America Equity Fund prior to the
Effective Date.
3.10. Undisclosed Liabilities. Since December 31, 1999, there has
not been any material adverse change in the Latin America Investment Fund's
financial condition, assets, liabilities or business and the Latin America
Investment Fund has no known liabilities of a material amount, contingent or
otherwise, required to be disclosed in a balance sheet in accordance with GAAP
other than those shown on the Latin America Investment Fund's statements of
assets, liabilities and capital referred to above, those incurred in the
ordinary course of its business as an investment company since January 1, 2000,
and those incurred in connection with the Merger. Prior to the Effective Date,
the Latin America Investment Fund will advise the Latin America Equity Fund in
writing of all known liabilities, contingent or otherwise, whether or not
incurred in the ordinary course of business, existing or accrued. For purposes
of this Section 3.10, a decline in net asset value per share of the Latin
America Investment Fund due to declines in market values of securities in the
Latin America Investment Fund's portfolio or the discharge of Latin America
Investment Fund liabilities will not constitute a material adverse change.
3.11. Tax Filings. All federal and other tax returns and information
reports of the Latin America Investment Fund required by law to have been filed
shall have been filed and are or will be correct in all material respects, and
all federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof, and, to the best of the Latin America Investment Fund's
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to such returns. All tax liabilities of the Latin America
Investment Fund have been adequately provided for on its books, and no tax
deficiency or liability of the Latin America Investment Fund has been asserted
and no question with respect thereto has been raised by the Internal Revenue
Service or by any state or local tax authority for taxes in excess of those
already paid, up to and including the taxable year in which the Effective Date
occurs.
3.12. Qualification under Subchapter M. For each taxable year of its
operation (including the taxable year ending on the Effective Date), the Latin
America Investment Fund has met the requirements of Subchapter M of the Code for
qualification as a RIC and has elected to be treated as such, has been eligible
to and has computed its federal income tax under Section 852 of the Code, and
will have distributed substantially all of its investment company taxable
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income and net realized capital gain (as defined in the Code) that has accrued
through the Effective Date.
3.13. Form N-14 and Exemptive Application. The exemptive application
to be filed with the Securities and Exchange Commission (the "SEC") by the
Parties regarding the Merger (the "Exemptive Application") and the registration
statement to be filed by the Latin America Equity Fund on Form N-14 relating to
the Latin America Equity Fund Common Stock to be issued pursuant to this
Agreement, and any supplement or amendment thereto or to the documents therein
(as amended, the "N-14 Registration Statement"), on the effective date of the
N-14 Registration Statement, at the time of the shareholders' meetings referred
to in Article 6 of this Agreement and at the Effective Date, insofar as it
relates to the Latin America Investment Fund (i) shall have complied or will
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder and (ii) did not
or will not contain 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 not misleading; and the prospectus included therein did not or will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this Section 3.13 shall only apply to
statements in, or omissions from, the N-14 Registration Statement made in
reliance upon and in conformity with information furnished by the Latin America
Equity Fund for use in the N-14 Registration Statement.
3.14. Capitalization.
(a) All issued and outstanding shares of the Latin America
Investment Fund (i) have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933 Act and state
securities laws, (ii) are, and on the Effective Date will be, duly and validly
issued and outstanding, fully paid and non-assessable, and (iii) will be held at
the time of the Closing by the persons and in the amounts set forth in the
records of the transfer agent as provided in Section 6.7. The Latin America
Investment Fund does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of the Latin America Investment Fund shares,
nor is there outstanding any security convertible into, or exchangeable for, any
of the Latin America Investment Fund shares.
(b) The Latin America Investment Fund is authorized to issue
100,000,000 shares of stock, par value $0.001 per share, all of which shares are
classified as Common Stock and each outstanding share of which is fully paid,
non-assessable and has full voting rights.
3.15. Books and Records. The books and records of the Latin America
Investment Fund made available to the Latin America Equity Fund are
substantially true and correct and contain no material misstatements or
omissions with respect to the operations of the Latin America Investment Fund.
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4. REPRESENTATIONS AND WARRANTIES OF THE LATIN AMERICA EQUITY FUND
The Latin America Equity Fund represents and warrants to the Latin
America Investment Fund that the statements contained in this Article 4 are
correct and complete in all material respects as of the execution of this
Agreement on the date hereof. The Latin America Equity Fund represents and
warrants to, and agrees with, the Latin America Investment Fund that:
4.1. Organization. The Latin America Equity Fund is a corporation
duly organized, validly existing under the laws of the State of Maryland and is
in good standing with the Department, and has the power to own all of its assets
and to carry on its business as it is now being conducted and to carry out this
Agreement.
4.2. Registrations and Qualifications. The Latin America Equity Fund
is duly registered under the 1940 Act as a closed-end, non-diversified
management investment company (File No. 811- ) and such registration has not
been revoked or rescinded and is in full force and effect. The Latin America
Equity Fund has elected and qualified for the special tax treatment afforded
RICs under Sections 851-855 of the Code at all times since its inception. The
Latin America Equity Fund is qualified as a foreign corporation in every
jurisdiction where required, except to the extent that failure to so qualify
would not have a material adverse effect on the Latin America Equity Fund.
4.3. Regulatory Consents and Approvals. No consent, approval,
authorization, or order of any court or governmental authority is required for
the consummation by the Latin America Equity Fund of the transactions
contemplated herein, except (i) such as have been obtained or applied for under
the 1933 Act, the 1934 Act and the 1940 Act, (ii) such as may be required by
state securities laws and (iii) such as may be required under Maryland law for
the acceptance for record of the Articles of Merger by the Department.
4.4. Noncontravention. The Latin America Equity Fund is not, and the
execution, delivery and performance of this Agreement by the Latin America
Equity Fund will not result, in violation of the laws of the State of Maryland
or of the Articles of Incorporation or the By-laws of the Latin America Equity
Fund, or of any material agreement, indenture, instrument, contract, lease or
other undertaking to which the Latin America Equity Fund is a party or by which
it is bound, and the execution, delivery and performance of this Agreement by
the Latin America Equity Fund will not result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to which the Latin America
Equity Fund is a party or by which it is bound.
4.5. Financial Statements. The Latin America Investment Fund has
been furnished with a statement of assets, liabilities and capital and a
schedule of investments of the Latin America Equity Fund, each as of December
31, 1999, said financial statements having been examined by
PricewaterhouseCoopers LLP, independent public auditors. These financial
statements are in accordance with GAAP and present fairly, in all material
respects, the financial position of the Latin America Equity Fund as of such
date in accordance with GAAP, and there are no known contingent liabilities of
the Latin America Equity Fund required to be reflected on
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a balance sheet (including the notes thereto) in accordance with GAAP as of such
date not disclosed therein.
The Latin America Investment Fund has been furnished with an
unaudited statement of assets, liabilities and capital and a schedule of
investments of the Latin America Equity Fund, each as of March 31, 2000. This
financial statement and schedule of investments are in accordance with GAAP and
present fairly, in all material respects the financial position of the Latin
America Equity Fund as of such date in accordance with GAAP, and there are no
known contingent liabilities of the Latin America Equity Fund required to be
reflected on a balance sheet (including the notes thereto) in accordance with
GAAP as of such date not disclosed therein.
4.6. Annual Report. The Latin America Investment Fund has been
furnished with the Latin America Equity Fund's Annual Report to Shareholders for
the year ended December 31, 1999.
4.7. Qualification, Corporate Power, Authorization of Transaction.
The Latin America Equity Fund has full power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary action
of its Board of Directors, and, subject to shareholder approval, this Agreement
constitutes a valid and binding contract enforceable in accordance with its
terms, subject to the effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto.
4.8. Legal Compliance. No material litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the Latin America
Equity Fund or any properties or assets held by it. The Latin America Equity
Fund knows of no facts which might form the basis for the institution of such
proceedings which would materially and adversely affect its business and is not
a party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects its business
or its ability to consummate the transactions herein contemplated.
4.9. Material Contracts. There are no material contracts outstanding
to which the Latin America Equity Fund is a party that have not been disclosed
in the N-14 Registration Statement or will not be otherwise disclosed to the
Latin America Investment Fund prior to the Effective Date.
4.10. Undisclosed Liabilities. Since December 31, 1999, there has
not been any material adverse change in the Latin America Equity Fund's
financial condition, assets, liabilities, or business and the Latin America
Equity Fund has no known liabilities of a material amount, contingent or
otherwise, required to be disclosed in a balance sheet with GAAP other than
those shown on the Latin America Equity Fund's statements of assets, liabilities
and capital referred to above, those incurred in the ordinary course of its
business as an investment company since January 1, 2000, and those incurred in
connection with the Merger. Prior to the Effective Date, the Latin America
Equity Fund will advise the Latin America Investment Fund in writing of all
known liabilities, contingent or otherwise, whether or not incurred in the
ordinary course of
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business, existing or accrued. For purposes of this Section 4.10, a decline in
net asset value per share of the Latin America Equity Fund due to declines in
market values of securities in the Latin America Equity Fund's portfolio or the
discharge of the Latin America Equity Fund liabilities will not constitute a
material adverse change.
4.11. Tax Filings. All federal and other tax returns and information
reports of the Latin America Equity Fund required by law to have been filed
shall have been filed and are or will be correct in all material respects, and
all federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof, and, to the best of the Latin America Equity Fund's
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to such returns. All tax liabilities of the Latin America
Equity Fund have been adequately provided for on its books, and no tax
deficiency or liability of the Latin America Equity Fund has been asserted and
no question with respect thereto has been raised by the Internal Revenue Service
or by any state or local tax authority for taxes in excess of those already
paid, up to and including the taxable year in which the Effective Date occurs.
4.12. Qualification under Subchapter M. For each taxable year of its
operation, the Latin America Equity Fund has met the requirements of Subchapter
M of the Code for qualification as a RIC and has elected to be treated as such,
has been eligible to and has computed its federal income tax under Section 852
of the Code, and will have distributed substantially all of its investment
company taxable income and net realized capital gain (as defined in the Code)
that has accrued through the Effective Date.
4.13. Form N-14 and Exemptive Application. The Exemptive
Application, and the N-14 Registration Statement, on the effective date of the
N-14 Registration Statement, at the time of the shareholders' meetings referred
to in Section 6 of this Agreement and at the Effective Date, insofar as it
relates to the Latin America Equity Fund (i) shall have complied or will comply
in all material respects with the provisions of the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations thereunder and (ii) did not or will
not contain 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 not misleading; and the prospectus included therein did not or will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this Section 4.13 shall not apply to
statements in, or omissions from, the N-14 Registration Statement made in
reliance upon and in conformity with information furnished by the Latin America
Investment Fund for use in the N-14 Registration Statement.
4.14. Capitalization.
(a) All issued and outstanding shares of the Latin America Equity
Fund (i) have been offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws,
(ii) are, and on the Effective Date will be, duly and validly issued and
outstanding, fully paid and non-assessable, and (iii) will be held at the time
of the Closing by the persons and in the amounts set forth in the records of the
transfer agent. The Latin America Equity Fund does not have outstanding any
options, warrants or other
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rights to subscribe for or purchase any of the Latin America Equity Fund shares,
nor is there outstanding any security convertible into, or exchangeable for, any
of the Latin America Equity Fund shares.
(b) The Latin America Equity Fund is authorized to issue 100,000,000
shares of stock, par value $0.001 per share, all of which shares are classified
as Common Stock and each outstanding share of which is fully paid,
non-assessable and has full voting rights.
4.15. Issuance of Stock.
(a) The offer and sale of the shares to be issued pursuant to this
Agreement will be in compliance with all applicable federal and state securities
laws.
(b) At or prior to the Effective Date, the Latin America Equity Fund
will have obtained any and all regulatory, director and shareholder approvals
necessary to issue the Latin America Equity Fund Common Stock.
4.16. Books and Records. The books and records of the Latin America
Equity Fund made available to the Latin America Investment Fund are
substantially true and correct and contain no material misstatements or
omissions with respect to the operations of the Latin America Equity Fund.
5. CONVERSION TO LATIN AMERICA EQUITY FUND COMMON STOCK
5.1. Conversion.
(a) Subject to the requisite approval of the shareholders of the
Parties, and the other terms and conditions contained herein, at the Effective
Date, each share of Common Stock of the Latin America Investment Fund will be
converted into an equivalent dollar amount (to the nearest one ten-thousandth of
one cent) of full shares of Latin America Equity Fund Common Stock, computed
based on the net asset value per share of each of the Parties at the Valuation
Time.
(b) No fractional shares of the Latin America Equity Fund will be
issued to Latin America Investment Fund shareholders. In lieu thereof, the Latin
America Equity Fund's transfer agent will aggregate all fractional shares of the
Latin America Equity Fund and sell the resulting full shares on the NYSE at the
current market price for shares of the Latin America Equity Fund for the account
of all holders of fractional interests, and each such holder will receive such
holder's pro rata share of the proceeds of such sale, without interest, upon
surrender of such holder's Latin America Investment Fund Common Stock
certificates.
5.2. Computation of Net Asset Value. The net asset value per share
of the Parties shall be determined as of the Valuation Time, and no formula will
be used to adjust the net asset value so determined of either of the Parties to
take into account differences in realized and unrealized gains and losses. The
value of the assets of the Latin America Investment Fund to be transferred to
the Latin America Equity Fund shall be determined by the Latin America Equity
Fund pursuant to the principles and procedures consistently utilized by the
Latin America Equity Fund in valuing its own assets and determining its own
liabilities for purposes of the
-9-
Merger, which principles and procedures are substantially similar to those
employed by the Latin America Investment Fund when valuing its own assets and
determining its own liabilities. Such valuation and determination shall be made
by the Latin America Equity Fund in cooperation with the Latin America
Investment Fund and shall be confirmed in writing by the Latin America Equity
Fund to the Latin America Investment Fund. The net asset value per share of
Latin America Equity Fund Common Stock shall be determined in accordance with
such procedures, and the Latin America Equity Fund shall certify the
computations involved.
5.3. Issuance of Latin America Equity Fund Common Stock. The Latin
America Equity Fund shall issue to the shareholders of the Latin America
Investment Fund separate certificates or share deposit receipts for the Latin
America Equity Fund Common Stock by delivering the certificates or share deposit
receipts evidencing ownership of the Latin America Equity Fund Common Stock to
BankBoston N.A., as the transfer agent and registrar for the Latin America
Equity Fund Common Stock.
5.4. Surrender of Latin America Investment Fund Stock Certificates.
With respect to any Latin America Investment Fund shareholder holding
certificates representing shares of the Common Stock of the Latin America
Investment Fund as of the Effective Date, and subject to the Latin America
Equity Fund being informed thereof in writing by the Latin America Investment
Fund, the Latin America Equity Fund will not permit such shareholder to receive
new certificates evidencing ownership of the Latin America Equity Fund Common
Stock until such shareholder has surrendered his or her outstanding certificates
evidencing ownership of the Common Stock of the Latin America Investment Fund
or, in the event of lost certificates, posted adequate bond. The Latin America
Investment Fund will request its shareholders to surrender their outstanding
certificates representing certificates of the Common Stock of the Latin America
Investment Fund or post adequate bond therefor. Dividends payable to holders of
record of shares of the Latin America Equity Fund as of any date after the
Effective Date and prior to the exchange of certificates by any shareholder of
the Latin America Investment Fund shall be paid to such shareholder, without
interest; however, such dividends shall not be paid unless and until such
shareholder surrenders his or her stock certificates of the Latin America
Investment Fund for exchange.
6. COVENANTS OF THE PARTIES
6.1. Shareholders' Meetings.
(a) Each of the Parties shall hold a meeting of its respective
shareholders for the purpose of considering the Merger as described herein,
which meeting has been called by each Party for September 15, 2000, and any
adjournments thereof.
(b) Each of the Parties agrees to mail to each of its respective
shareholders of record entitled to vote at the meeting of shareholders at which
action is to be considered regarding the Merger, in sufficient time to comply
with requirements as to notice thereof, a combined Proxy Statement and
Prospectus which complies in all material respects with the applicable
provisions of Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act,
and the rules and regulations, respectively, thereunder.
-10-
6.2. Operations in the Normal Course. Each Party covenants to
operate its business in the ordinary course between the date hereof and the
Effective Date, it being understood that such ordinary course of business will
include (i) the declaration and payment of customary dividends and other
distributions and (ii) in the case of the Latin America Investment Fund,
preparing for its deregistration, except that the distribution of dividends
pursuant to Sections 7.11 and 8.9 of this Agreement shall not be deemed to
constitute a breach of the provisions of this Section 6.2.
6.3. Articles of Merger. The Parties agree that, as soon as
practicable after satisfaction of all conditions to the Merger, they will
jointly file executed Articles of Merger with the Department and make all other
filings or recordings required by Maryland law in connection with the Merger.
6.4. Regulatory Filings.
(a) The Latin America Investment Fund undertakes that, if the Merger
is consummated, it will file, or cause its agents to file, an application
pursuant to Section 8(f) of the 1940 Act for an order declaring that the Latin
America Investment Fund has ceased to a registered investment company.
(b) The Latin America Equity Fund will file the N-14 Registration
Statement with the SEC and will use its best efforts to ensure that the N-14
Registration Statement becomes effective as promptly as practicable. The Latin
America Investment Fund agrees to cooperate fully with the Latin America Equity
Fund, and will furnish to the Latin America Equity Fund the information relating
to itself to be set forth in the N-14 Registration Statement as required by the
1933 Act, the 1934 Act, the 1940 Act, and the rules and regulations thereunder
and the state securities or blue sky laws.
(c) The Parties each agree to proceed as promptly as possible to
cause to be made the necessary filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxxxxx") if applicable, with respect to the
transactions contemplated by this Agreement and to ensure that the related
waiting period expires or is otherwise terminated at the earliest possible time.
6.5. Preservation of Assets. The Latin America Equity Fund agrees
that it has no plan or intention to sell or otherwise dispose of the assets of
the Latin America Investment Fund to be acquired in the Merger, except for
dispositions made in the ordinary course of business.
6.6. Tax Matters. Each of the Parties agrees that by the Effective
Date all of its federal and other tax returns and reports required to be filed
on or before such date shall have been filed and all taxes shown as due on said
returns either have been paid or adequate liability reserves have been provided
for the payment of such taxes. In connection with this covenant, the Parties
agree to cooperate with each other in filing any tax return, amended return or
claim for refund, determining a liability for taxes or a right to a refund of
taxes or participating in or conducting any audit or other proceeding in respect
of taxes. The Latin America Equity Fund agrees to retain for a period of ten
(10) years following the Effective Date all returns, schedules
-11-
and work papers and all material records or other documents relating to tax
matters of the Latin America Investment Fund for its final taxable year and for
all prior taxable periods. Any information obtained under this Section 6.6 shall
be kept confidential except as otherwise may be necessary in connection with the
filing of returns or claims for refund or in conducting an audit or other
proceeding. After the Effective Date, the Latin America Equity Fund shall
prepare, or cause its agents to prepare, any federal, state or local tax
returns, including any Forms 1099, required to be filed and provided to required
persons by the Latin America Investment Fund with respect to its final taxable
years ending with the Effective Date and for any prior periods or taxable years
for which the due date for such return has not passed as of the Effective Date
and further shall cause such tax returns and Forms 1099 to be duly filed with
the appropriate taxing authorities and provided to required persons.
Notwithstanding the aforementioned provisions of this Section 6.6, any expenses
incurred by the Latin America Equity Fund (other than for payment of taxes) in
excess of any accrual for such expenses by the Latin America Investment Fund in
connection with the preparation and filing of said tax returns and Forms 1099
after the Effective Date shall be borne by the Latin America Equity Fund.
6.7. Shareholder List. Prior to the Effective Date, the Latin
America Investment Fund shall have made arrangements with its transfer agent to
deliver to the Latin America Equity Fund, a list of the names and addresses of
all of the shareholders of record of the Latin America Investment Fund on the
Effective Date and the number of shares of Common Stock of the Latin America
Investment Fund owned by each such shareholder, certified by the Latin America
Investment Fund's transfer agent or President to the best of their knowledge and
belief.
6.8. Delisting, Termination of Registration as an Investment
Company. The Latin America Investment Fund agrees that the (i) delisting of the
shares of the Latin America Investment Fund with the NYSE and (ii) termination
of its registration as a RIC will be effected in accordance with applicable law
as soon as practicable following the Effective Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE LATIN AMERICA EQUITY FUND
The obligations of the Latin America Equity Fund hereunder shall be
subject to the following conditions:
7.1. Approval of Merger. This Agreement shall have been adopted by
the affirmative vote of the holders of a majority of the shares of Common Stock
of the Latin America Equity Fund issued and outstanding and entitled to vote
thereon and the affirmative vote of the holders of a majority of the shares of
Common Stock of the Latin America Investment Fund issued and outstanding and
entitled to vote thereon; and the Latin America Investment Fund shall have
delivered to the Latin America Equity Fund a copy of the resolutions approving
this Agreement adopted by its Board of Directors and shareholders, certified by
its secretary.
-12-
7.2. Certificates and Statements by the Latin America Investment
Fund.
(a) The Latin America Investment Fund shall have furnished a
statement of assets, liabilities and capital, together with a schedule of
investments with their respective dates of acquisition and tax costs, certified
on its behalf by its President (or any Vice President) and its Treasurer, and a
certificate executed by both such officers, dated the Effective Date, certifying
that there has been no material adverse change in its financial position since
March 31, 2000, other than changes in its portfolio securities since that date
or changes in the market value of its portfolio securities.
(b) The Latin America Investment Fund shall have furnished to the
Latin America Equity Fund a certificate signed by its President (or any Vice
President), dated the Effective Date, certifying that as of the Effective Dates,
all representations and warranties made in this Agreement are true and correct
in all material respects as if made at and as of such date and each has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied at or prior to such dates.
(c) The Latin America Investment Fund shall have delivered to the
Latin America Equity Fund a letter from PricewaterhouseCoopers LLP, dated the
Effective Date, stating that such firm has performed a limited review of the
federal, state and local income tax returns for the period ended December 31,
1999, and that based on such limited review, nothing came to their attention
which caused them to believe that such returns did not properly reflect, in all
material respects, the federal, state and local income taxes of the Latin
America Investment Fund for the period covered thereby; and that for the period
from December 31, 1999 to and including the Effective Date and for any taxable
year ending upon the Effective Date, such firm has performed a limited review to
ascertain the amount of such applicable federal, state and local taxes, and has
determined that either such amount has been paid or reserves have been
established for payment of such taxes, this review to be based on unaudited
financial data; and that based on such limited review, nothing has come to their
attention which caused them to believe that the taxes paid or reserves set aside
for payment of such taxes were not adequate in all material respects for the
satisfaction of federal, state and local taxes for the period from December 31,
1999, to and including the Effective Date and for any taxable year ending upon
the Effective Date or that the Latin America Investment Fund would not continue
to qualify as a RIC for federal income tax purposes.
7.3. Absence of Litigation. There shall be no material litigation
pending with respect to the matters contemplated by this Agreement.
7.4. Legal Opinions.
(a) The Latin America Equity Fund shall have received an opinion of
Xxxxxxx Xxxx & Xxxxxxxxx, as counsel to the Latin America Investment Fund, in
form and substance reasonably satisfactory to the Latin America Equity Fund and
dated the Effective Date, to the effect that (i) the Latin America Investment
Fund is a corporation duly organized, validly existing under the laws of the
State of Maryland and in good standing with the Department; (ii) the Agreement
has been duly authorized, executed and delivered by the Latin America Investment
Fund, and, assuming that the N-14 Registration Statement complies with the 1933
-13-
Act, 1934 Act and the 1940 Act, constitutes a valid and legally binding
obligation of the Latin America Investment Fund, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws pertaining to the enforcement of creditors'
rights generally and by equitable principles; (iii) to the best of such
counsel's knowledge, no consent, approval, authorization or order of any United
States federal or Maryland state court or governmental authority is required for
the consummation by the Latin America Investment Fund of the Merger, except such
as may be required under the 1933 Act, the 1934 Act, the 1940 Act, the published
rules and regulations of the SEC thereunder and under Maryland law and such as
may be required by state securities or blue sky laws; (iv) such counsel does not
know of any contracts or other documents with respect to the Latin America
Investment Fund related to the Merger of a character required to be described in
the N-14 Registration Statement which are not described therein or, if required
to be filed, filed as required; (v) the execution and delivery of this Agreement
does not, and the consummation of the Merger will not, violate any material
provision of the Articles of Incorporation, as amended, the by-laws, as amended,
or any agreement (known to such counsel) to which the Latin America Investment
Fund is a party or by which the Latin America Investment Fund is bound, except
insofar as the parties have agreed to amend such provision as a condition
precedent to the Merger; (vi) to the best of such counsel's knowledge, no
material suit, action or legal or administrative proceeding is pending or
threatened against the Latin America Investment Fund; and (vii) all corporate
actions required to be taken by the Latin America Investment Fund to authorize
this Agreement and to effect the Merger have been duly authorized by all
necessary corporate actions on behalf of the Latin America Investment Fund. Such
opinion shall also state that (A) while such counsel cannot make any
representation as to the accuracy or completeness of statements of fact in the
N-14 Registration Statement or any amendment or supplement thereto with respect
to the Latin America Investment Fund, nothing has come to their attention that
would lead them to believe that, on the respective effective dates of the N-14
Registration Statement and any amendment or supplement thereto with respect to
the Latin America Investment Fund, (1) the N-14 Registration Statement or any
amendment or supplement thereto contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading with respect to the
Latin America Investment Fund, and (2) the prospectus included in the N-14
Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading with
respect to the Latin America Investment Fund; provided that such counsel need
not express any opinion or belief as to the financial statements, other
financial data, statistical data or information relating to the Latin America
Investment Fund contained or incorporated by reference in the N-14 Registration
Statement. In giving the opinion set forth above, Xxxxxxx Xxxx & Xxxxxxxxx may
state that it is relying on certificates of officers of the Latin America
Investment Fund with regard to matters of fact and certain certificates and
written statements of governmental officials with respect to the good standing
of the Latin America Investment Fund and on the opinion of Xxxxxxx, Baetjer and
Xxxxxx, LLP, as to matters of Maryland law.
(b) The Latin America Equity Fund shall have received an opinion
from Xxxxxxx Xxxx & Xxxxxxxxx, as counsel to the Latin America Equity Fund,
dated the Effective Date, to the effect that for federal income tax purposes (i)
the Merger as provided in this Agreement will constitute a reorganization within
the meaning of Section 368(a)(1)(A) of the Code and that the Latin America
Equity Fund and the Latin America Investment Fund will each be deemed a
-14-
"party" to a reorganization within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized to the Latin America Investment Fund as
a result of the Merger or the conversion of Latin America Investment Fund shares
to Latin America Equity Fund Common Stock except to the extent such shareholders
are paid cash in lieu of fractional shares of Latin America Equity Fund in the
Merger; (iii) no gain or loss will be recognized to the Latin America Equity
Fund as a result of the Merger; (iv) in accordance with Section 354(a)(1) of the
Code, no gain or loss will be recognized to the shareholders of the Latin
America Investment Fund on the conversion of their shares into Latin America
Equity Fund Common Stock; (v) the tax basis of the Latin America Investment Fund
assets in the hands of the Latin America Equity Fund will be the same as the tax
basis of such assets in the hands of the Latin America Investment Fund prior to
the consummation of the Merger; (vi) immediately after the Merger, the tax basis
of the Latin America Equity Fund Common Stock received by the shareholders of
the Latin America Investment Fund in the Merger will be equal, in the aggregate,
to the tax basis of the shares of the Latin America Investment Fund converted
pursuant to the Merger; (vii) a shareholder's holding period for the Latin
America Equity Fund Common Stock will be determined by including the period for
which he or she held the Common Stock of the Latin America Investment Fund
converted pursuant to the Merger, provided that such Latin America Investment
Fund shares were held as a capital asset; (viii) the Latin America Equity Fund's
holding period with respect to the Latin America Investment Fund assets
transferred will include the period for which such assets were held by the Latin
America Investment Fund; and (ix) the payment of cash to the Latin America
Investment Fund shareholders in lieu of fractional shares of the Latin America
Equity Fund will be treated as though the fractional shares were distributed as
part of the Merger and then redeemed by the Latin America Equity Fund with the
result that the Latin America Investment Fund shareholder will generally have
capital gains or losses to the extent the cash distribution differs from such
shareholder's basis allocable to the fractional shares.
7.5. Auditor's Consent and Certification. The Latin America Equity
Fund shall have received from PricewaterhouseCoopers LLP a letter dated as of
the effective date of the N-14 Registration Statement and a similar letter dated
within five days prior to the Effective Date, in form and substance satisfactory
to the Latin America Equity Fund, to the effect that (i) they are independent
public auditors with respect to the Latin America Investment Fund within the
meaning of the 1933 Act and the applicable published rules and regulations
thereunder; and (ii) in their opinion, the financial statements and
supplementary information of the Latin America Investment Fund included or
incorporated by reference in the N-14 Registration Statement and reported on by
them comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the published rules and regulations thereunder.
7.6. Liabilities. The assets or liabilities of the Latin America
Investment Fund to be transferred to the Latin America Equity Fund shall not
include any assets or liabilities which the Latin America Equity Fund, by reason
of limitations in its Registration Statement or Articles of Incorporation, may
not properly acquire or assume. The Latin America Equity Fund does not
anticipate that there will be any such assets or liabilities but the Latin
America Equity Fund will notify the Latin America Investment Fund if any do
exist and will reimburse the Latin America Investment Fund for any reasonable
transaction costs incurred by the Latin America Investment Fund for the
liquidation of such assets and liabilities.
-15-
7.7. Effectiveness of N-14 Registration Statement. The N-14
Registration Statement shall have become effective under the 1933 Act and no
stop order suspending such effectiveness shall have been instituted or, to the
knowledge of the Latin America Equity Fund, contemplated by the SEC.
7.8. Approval of Exemptive Application; Regulatory Filings.
(a) The Exemptive Application shall have been approved and the Latin
America Equity Fund shall have received from the SEC such orders or
interpretations as Xxxxxxx Xxxx & Xxxxxxxxx, as counsel to the Latin America
Equity Fund, deems reasonably necessary or desirable under the 1933 Act and the
1940 Act in connection with the Merger, provided, that such counsel shall have
requested such orders as promptly as practicable, and all such orders shall be
in full force and effect.
(b) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
7.9. Administrative Rulings, Proceedings. The SEC shall not have
issued an unfavorable advisory report under Section 25(b) of the 1940 Act, nor
instituted or threatened to institute any proceeding seeking to enjoin
consummation of the Merger under Section 25(c) of the 1940 Act; no other legal,
administrative or other proceeding shall be instituted or threatened which would
materially affect the financial condition of the Latin America Investment Fund
or would prohibit the Merger.
7.10. Satisfaction of the Latin America Equity Fund, Inc. All
proceedings taken by the Latin America Investment Fund and its counsel in
connection with the Merger and all documents incidental thereto shall be
satisfactory in form and substance to the Latin America Equity Fund.
7.11. Dividends. Prior to the Effective Date, the Latin America
Investment Fund shall have declared and paid a dividend or dividends which,
together with all such previous dividends, shall have the effect of distributing
to its shareholders substantially all of its net investment company taxable
income that has accrued through the Effective Date, if any (computed without
regard to any deduction of dividends paid), and substantially all of its net
capital gain, if any, realized through the Effective Date.
7.12. Custodian's Certificate. The Latin America Investment Fund's
custodian shall have delivered to the Latin America Equity Fund a certificate
identifying all of the assets of the Latin America Investment Fund held or
maintained by such custodian as of the Valuation Time.
7.13. Books and Records. The Latin America Investment Fund's
transfer agent shall have provided to the Latin America Equity Fund (i) the
originals or true copies of all of the records of the Latin America Investment
Fund in the possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of the Latin America Investment
Fund outstanding as of the Valuation Time, and (iii) the name and address of
each holder of record of any shares and the number of shares held of record by
each such shareholder.
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8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LATIN AMERICA INVESTMENT
FUND
The obligations of the Latin America Investment Fund hereunder shall
be subject to the following conditions:
8.1. Approval of Merger. This Agreement shall have been adopted, by
the affirmative vote of the holders of a majority of the shares of Common Stock
of the Latin America Investment Fund issued and outstanding and entitled to vote
thereon and the affirmative vote of the holders of a majority of the shares of
Common Stock of the Latin America Equity Fund issued and outstanding and
entitled to vote thereon; and that the Latin America Equity Fund shall have
delivered to the Latin America Investment Fund a copy of the resolutions
approving this Agreement adopted by its Board of Directors and shareholders,
certified by its secretary.
8.2. Certificates and Statements by the Latin America Equity Fund.
(a) The Latin America Equity Fund shall have furnished a statement
of assets, liabilities and capital, together with a schedule of investments with
their respective dates of acquisition and tax costs, certified on its behalf by
its President (or any Vice President) and its Treasurer, and a certificate
executed by both such officers, dated the Effective Date, certifying that there
has been no material adverse change in its financial position since March 31,
2000, other than changes in its portfolio securities since that date or changes
in the market value of its portfolio securities.
(b) The Latin America Equity Fund shall have furnished to the Latin
America Investment Fund a certificate signed by its President (or any Vice
President), dated the Effective Date, certifying that as of the Effective Date,
all representations and warranties made in this Agreement are true and correct
in all material respects as if made at and as of such date and each has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied at or prior to such dates.
(c) The Latin America Equity Fund shall have delivered to the Latin
America Investment Fund a letter from PricewaterhouseCoopers LLP, dated the
Effective Date, stating that such firm has performed a limited review of the
federal, state and local income tax returns for the period ended December 31,
1999, and that based on such limited review, nothing came to their attention
which caused them to believe that such returns did not properly reflect, in all
material respects, the federal, state and local income taxes of the Latin
America Equity Fund for the period covered thereby; and that for the period from
December 31, 1999 to and including the Effective Date, such firm has performed a
limited review to ascertain the amount of such applicable federal, state and
local taxes, and has determined that either such amount has been paid or
reserves established for payment of such taxes, this review to be based on
unaudited financial data; and that based on such limited review, nothing has
come to their attention which caused them to believe that the taxes paid or
reserves set aside for payment of such taxes were not adequate in all material
respects for the satisfaction of federal, state and local taxes for the period
from December 31, 1999, to and including the Effective Date or that the Latin
America Equity Fund would not continue to qualify as a RIC for federal income
tax purposes.
-17-
8.3. Absence of Litigation. There shall be no material litigation
pending with respect to the matters contemplated by this Agreement.
8.4. Legal Opinions.
(a) The Latin America Investment Fund shall have received an opinion
of Xxxxxxx Xxxx & Xxxxxxxxx, as counsel to the Latin America Equity Fund, in
form and substance reasonably satisfactory to the Latin America Investment Fund
and dated the Effective Date, to the effect that (i) the Latin America Equity
Fund is a corporation duly organized, validly existing under the laws of the
State of Maryland and in good standing with the Department; (ii) the Agreement
has been duly authorized, executed and delivered by the Latin America Equity
Fund, and, assuming that the N-14 Registration Statement complies with the 1933
Act, 1934 Act and the 1940 Act, constitutes a valid and legally binding
obligation of the Latin America Equity Fund, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws pertaining to the enforcement of creditors'
rights generally and by equitable principles; (iii) to the best of such
counsel's knowledge, no consent, approval, authorization or order of any United
States federal or Maryland state court or governmental authority is required for
the consummation by the Latin America Equity Fund of the Merger, except such as
may be required under the 1933 Act, the 1934 Act, the 1940 Act and the published
rules and regulations of the SEC thereunder and under Maryland law and such as
may be required under state securities or blue sky laws; (iv) the N-14
Registration Statement has become effective under the 1933 Act, no stop order
suspending the effectiveness of the N-14 Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act, and, with respect to the Latin America Equity
Fund, the N-14 Registration Statement, and each amendment or supplement thereto,
as of their respective effective dates, appear on their face to be appropriately
responsive in all material respects to the requirements of the 1933 Act, the
1934 Act and the 1940 Act and the published rules and regulations of the SEC
thereunder; (v) such counsel does not know of any statutes, legal or
governmental proceedings or contracts with respect to the Latin America Equity
Fund or other documents related to the Merger of a character required to be
described in the N-14 Registration Statement which are not described therein or,
if required to be filed, filed as required; (vi) the execution and delivery of
this Agreement does not, and the consummation of the Merger will not, violate
any material provision of the Articles of Incorporation, as amended, the
by-laws, as amended, or any agreement (known to such counsel) to which the Latin
America Equity Fund is a party or by which the Latin America Equity Fund is
bound, except insofar as the parties have agreed to amend such provision as a
condition precedent to the Merger; (vii) to the best of such counsel's
knowledge, no material suit, action or legal or administrative proceeding is
pending or threatened against the Latin America Equity Fund; and (viii) all
corporate actions required to be taken by the Latin America Equity Fund to
authorize this Agreement and to effect the Merger have been duly authorized by
all necessary corporate actions on behalf of the Latin America Equity Fund. Such
opinion shall also state that (A) while such counsel cannot make any
representation as to the accuracy or completeness of statements of fact in the
N-14 Registration Statement or any amendment or supplement thereto with respect
to the Latin America Equity Fund, nothing has come to their attention that would
lead them to believe that, on the respective effective dates of the N-14
Registration Statement and any amendment or supplement thereto, (1) the N-14
Registration Statement or any amendment or supplement thereto contained any
untrue statement of a material fact or omitted to
-18-
state any material fact required to be stated therein or necessary to make the
statements therein not misleading with respect to the Latin America Equity Fund;
and (2) the prospectus included in the N-14 Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading with respect to the Latin America
Equity Fund; provided that such counsel need not express any opinion or belief
as to the financial statements, other financial data, statistical data or
information relating to the Latin America Equity Fund contained or incorporated
by reference in the N-14 Registration Statement. In giving the opinion set forth
above, Xxxxxxx Xxxx & Xxxxxxxxx may state that it is relying on certificates of
officers of the Latin America Equity Fund with regard to matters of fact and
certain certificates and written statements of governmental officials with
respect to the good standing of the Latin America Equity Fund and on the opinion
of Xxxxxxx, Baetjer and Xxxxxx, LLP as to matters of Maryland law.
(b) The Latin America Investment Fund shall have received an opinion
from Xxxxxxx Xxxx & Xxxxxxxxx and dated the Effective Date, to the effect that
for federal income tax purposes (i) the Merger as provided in this Agreement
will constitute a reorganization within the meaning of Section 368(a)(1)(A) of
the Code and that the Latin America Equity Fund and the Latin America Investment
Fund will each be deemed a "party" to a reorganization within the meaning of
Section 368(b) of the Code; (ii) no gain or loss will be recognized to the Latin
America Investment Fund as a result of the Merger or on the conversion of Latin
America Investment shares to Latin America Equity Fund Common Stock except to
the extent such shareholders are paid cash in lieu of fractional shares of Latin
America Equity Fund in the Merger; (iii) no gain or loss will be recognized to
the Latin America Equity Fund as a result of the Merger; (iv) no gain or loss
will be recognized to the shareholders of the Latin America Investment Fund on
the conversion of their shares into Latin America Equity Fund Common Stock; (v)
the tax basis of the Latin America Investment Fund assets in the hands of the
Latin America Equity Fund will be the same as the tax basis of such assets in
the hands of the Latin America Investment Fund prior to the consummation of the
Merger; (vi) immediately after the Merger, the tax basis of the Latin America
Equity Fund Common Stock received by the shareholders of the Latin America
Investment Fund in the Merger will be equal, in the aggregate, to the tax basis
of the shares of the Latin America Investment Fund converted pursuant to the
Merger; (vii) a shareholder's holding period for the Latin America Equity Fund
Common Stock will be determined by including the period for which he or she held
the Common Stock of the Latin America Investment Fund converted pursuant to the
Merger, provided, that such Latin America Investment Fund shares were held as a
capital asset; (viii) the Latin America Equity Fund's holding period with
respect to the Latin America Investment Fund assets transferred will include the
period for which such assets were held by the Latin America Investment Fund; and
(ix) the payment of cash to the Latin America Investment Fund shareholders in
lieu of fractional shares of the Latin America Equity Fund will be treated as
though the fractional shares were distributed as part of the Merger and then
redeemed by the Latin America Equity Fund with the result that the Latin America
Investment Fund shareholder will generally have capital gains or losses to the
extent the cash distribution differs from such shareholder's basis allocable to
the fractional shares.
8.5. Auditor's Consent and Certification. The Latin America
Investment Fund shall have received from PricewaterhouseCoopers LLP a letter
dated as of the effective date of
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the N-14 Registration Statement and a similar letter dated within five days
prior to the Effective Date, in form and substance satisfactory to the Latin
America Investment Fund, to the effect that (i) they are independent public
auditors with respect to the Latin America Equity Fund within the meaning of the
1933 Act and the applicable published rules and regulations thereunder; and (ii)
in their opinion, the financial statements and supplementary information of the
Latin America Equity Fund incorporated by reference in the N-14 Registration
Statement and reported on by them comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the published
rules and regulations thereunder.
8.6. Effectiveness of N-14 Registration Statement. The N-14
Registration Statement shall have become effective under the 1933 Act and no
stop order suspending such effectiveness shall have been instituted or, to the
knowledge of the Latin America Investment Fund, contemplated by the SEC.
8.7. Approval of Exemptive Application; Regulatory Filings.
(a) The Exemptive Application shall have been approved and the Latin
America Investment Fund shall have received from the SEC such orders or
interpretations as Xxxxxxx Xxxx & Xxxxxxxxx, as counsel to the Latin America
Investment Fund, deems reasonably necessary or desirable under the 1933 Act and
the 1940 Act in connection with the Merger, provided, that such counsel or
counsel to the Latin America Equity Fund shall have requested such orders as
promptly as practicable, and all such orders shall be in full force and effect.
Any applicable waiting period under the HSR Act relating to the transactions
contemplated hereby shall have expired or been terminated.
(b) The SEC shall not have issued an unfavorable advisory report
under Section 25(b) of the 1940 Act, nor instituted or threatened to institute
any proceeding seeking to enjoin consummation of the Merger under Section 25(c)
of the 1940 Act; no other legal, administrative or other proceeding shall be
instituted or threatened which would materially affect the financial condition
of the Latin America Investment Fund or would prohibit the Merger.
(c) The Latin America Equity Fund shall have received from any
relevant state securities administrator such order or orders as are reasonably
necessary or desirable under the 1933 Act, the 1934 Act, the 1940 Act, and any
applicable state securities or blue sky laws in connection with the transactions
contemplated hereby, and that all such orders shall be in full force and effect.
8.8. Satisfaction of the Latin America Investment Fund. All
proceedings taken by the Latin America Equity Fund and its counsel in connection
with the Merger and all documents incidental thereto shall be satisfactory in
form and substance to the Latin America Investment Fund.
8.9. Dividends. Prior to the Effective Date, the Latin America
Equity Fund shall have declared and paid a dividend or dividends which, together
with all such previous dividends, shall have the effect of distributing to its
shareholders substantially all of its net investment company taxable income that
has accrued through the Effective Date, if any
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(computed without regard to any deduction of dividends paid), and substantially
all of its net capital gain, if any, realized through the Effective Date.
9. PAYMENT OF EXPENSES
9.1. Allocation. All expenses incurred in connection with the Merger
since _______, 2000 shall be allocated equally between the Latin America Equity
Fund and the Latin America Investment Fund in the event the Merger is
consummated. Such expenses shall include, but not be limited to, all costs
related to the preparation and distribution of the N-14 Registration Statement,
the Exemptive Application, the HSR Filing for the Parties, proxy solicitation
expenses, SEC registration fees, and NYSE listing fees. Neither of the Parties
owes any broker's or finder's fees in connection with the transactions provided
for herein.
10. COOPERATION FOLLOWING EFFECTIVE DATE
In case at any time after the Effective Date any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party may reasonably request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification as described below). The Latin America Investment
Fund acknowledges and agrees that from and after the Effective Date, the Latin
America Equity Fund shall be entitled to possession of all documents, books,
records, agreements and financial data of any sort pertaining to the Latin
America Investment Fund.
11. INDEMNIFICATION
11.1. The Latin America Investment Fund. The Latin America Equity
Fund agrees to indemnify and hold harmless the Latin America Investment Fund and
each of the Latin America Investment Fund's directors and officers from and
against any and all losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Latin America Investment Fund
or any of its directors or officers may become subject, insofar as any such
loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Latin America Equity Fund of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
11.2. The Latin America Equity Fund. The Latin America Investment
Fund agrees to indemnify and hold harmless the Latin America Equity Fund and
each of the Latin America Equity Fund's directors and officers from and against
any and all losses, claims, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Latin America Equity Fund or
any of its directors or officers may become subject, insofar as any such loss,
claim, damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the Latin America Investment Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
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12. TERMINATION, POSTPONEMENT AND WAIVERS
12.1. Termination.
(a) Notwithstanding anything to the contrary in this Agreement, this
Agreement may be terminated and the Merger abandoned at any time (whether before
or after adoption by the shareholders of each of the Parties) prior to the
Effective Date, or the Effective Date may be postponed, (i) by mutual agreement
of the Parties' Board of Directors; (ii) by the Board of Directors of the Latin
America Equity Fund if any of the obligations of the Latin America Investment
Fund set forth in this Agreement has not been fulfilled or waived by such Board
or if the Latin America Investment Fund has made a material and intentional
misrepresentation herein or in connection herewith; or (iii) by the Board of
Directors of the Latin America Investment Fund if any of the obligations of the
Latin America Equity Fund set forth in this Agreement has not been fulfilled or
waived by such Board or if the Latin America Equity Fund has made a material and
intentional misrepresentation herein or in connection herewith.
(b) If the transaction contemplated by this Agreement shall not have
been consummated by December 31, 2000, this Agreement automatically shall
terminate on that date, unless a later date is mutually agreed to by the Boards
of Directors of the Parties.
(c) In the event of termination of this Agreement pursuant to the
provisions hereof, the Agreement shall become void and have no further effect,
and there shall not be any liability hereunder on the part of either of the
Parties or their respective directors or officers, except for any such material
breach or intentional misrepresentation, as to each of which all remedies at law
or in equity of the party adversely affected shall survive.
12.2. Waiver. At any time prior to the Effective Date, any of the
terms or conditions of this Agreement may be waived by the Board of Directors of
either the Latin America Investment Fund or the Latin America Equity Fund
(whichever is entitled to the benefit thereof), if, in the judgment of such
Board after consultation with its counsel, such action or waiver will not have a
material adverse effect on the benefits intended in this Agreement to the
shareholders of their respective fund, on behalf of which such action is taken.
12.3. Expiration of Representations and Warranties.
(a) The respective representations and warranties contained in
Articles 3 and 4 of this Agreement shall expire with, and be terminated by, the
consummation of the Merger, and neither of the Parties nor any of their
officers, directors, agents or shareholders shall have any liability with
respect to such representations or warranties after the Effective Date. This
provision shall not protect any officer, director, agent or shareholder of the
Parties against any liability to the entity for which that officer, director,
agent or shareholder so acts or to its shareholders to which that officer,
director, agent or shareholder would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties in
the conduct of such office.
(b) If any order or orders of the SEC with respect to this Agreement
shall be issued prior to the Effective Date and shall impose any terms or
conditions which are determined by action of the Boards of Directors of the
Parties to be acceptable, such terms and conditions
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shall be binding as if a part of this Agreement without further vote or approval
of the shareholders of the Parties, unless such terms and conditions shall
result in a change in the method of computing the number of shares of Latin
America Equity Fund Common Stock to be issued pursuant to this Agreement, in
which event, unless such terms and conditions shall have been included in the
proxy solicitation materials furnished to the shareholders of the Parties prior
to the meetings at which the Merger shall have been approved, this Agreement
shall not be consummated and shall terminate unless the Parties call special
meetings of shareholders at which such conditions so imposed shall be submitted
for approval.
13. MISCELLANEOUS
13.1. Transfer Restriction. Pursuant to Rule 145 under the 1933 Act,
and in connection with the issuance of any shares to any person who at the time
of the Merger is, to its knowledge, an affiliate of a party to the Merger
pursuant to Rule 145(c), the Latin America Equity Fund will cause to be affixed
upon the certificate(s) issued to such person (if any) a legend as follows:
THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT TO THE LATIN AMERICA EQUITY FUND, INC. (OR ITS STATUTORY
SUCCESSOR) UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR (II) IN THE OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE FUND, SUCH REGISTRATION IS
NOT REQUIRED.
and, further, that stop transfer instructions will be issued to the Latin
America Equity Fund's transfer agent with respect to such shares. The Latin
America Investment Fund will provide the Latin America Equity Fund on the
Effective Date with the name of any Latin America Investment Fund Shareholder
who is to the knowledge of the Latin America Investment Fund an affiliate of it
on such date.
13.2. Material Provisions. 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.
13.3. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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If to the Latin America Investment Fund:
Xxx Xxxxxx, Esq.
Senior Vice President
The Latin America Investment Fund, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With copies to:
Xxxxxx Xxxxxxxxxxx, Esq.
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
If to the Latin America Equity Fund:
Xxx Xxxxxx, Esq.
Senior Vice President
The Latin America Equity Fund
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With copies to:
Xxxxxx Xxxxxxxxxxx, Esq.
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may
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change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
13.4. Amendments. This Agreement may be amended, modified or
supplemented in such manner as may be mutually agreed upon in writing by the
authorized officers of the Latin America Investment Fund and the Latin America
Equity Fund; provided, however, that following the meeting of the Latin America
Investment Fund and Latin America Equity Fund shareholders to approve the
Merger, no such amendment may have the effect of changing the provisions for
determining the number of the Latin America Equity Fund shares to be issued to
the Latin America Investment Fund shareholders under this Agreement to the
detriment of such shareholders without their further approval.
13.5. Headings. The Article headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
13.7. Enforceability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
13.8. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the 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
the shareholders of the Parties and their respective successors and assigns, any
rights or remedies under or by reason of this Agreement.
13.9. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of Maryland,
without regard to its principles of conflicts of law.
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IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed by its President or Vice President and its seal to be
affixed thereto and attested by its Secretary or Assistant Secretary.
THE LATIN AMERICA EQUITY FUND, INC.
By:_____________________________________[SEAL]
Name:_________________________________________
Attest:_______________________________________
Title:________________________________________
THE LATIN AMERICA INVESTMENT FUND, INC.
By:_____________________________________[SEAL]
Name:_________________________________________
Attest:_______________________________________
Title:________________________________________
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