AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 29th day of October, 2004, by and between Pioneer Variable Contracts
Trust, a Delaware statutory trust (the "Acquiring Trust"), on behalf of its
series Pioneer Mid Cap Value VCT Portfolio (the "Acquiring Portfolio"), with its
principal place of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and
Safeco Resource Series Trust, a Delaware statutory trust (the "Safeco Trust"),
on behalf of its series Safeco Multi-Cap Core Portfolio (the "Acquired
Portfolio"), with its principal place of business at 0000 000xx Xxxxx X.X.,
Xxxxxxx, Xxxxxxxxxx 00000. The Acquiring Portfolio and the Acquired Portfolio
are sometimes referred to collectively herein as the "Portfolios" and
individually as a "Portfolio."
This Agreement is intended to be and is adopted as a plan of a
"reorganization" as defined in Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations thereunder. The reorganization (the "Reorganization") will consist
of (1) the transfer of all of the assets of the Acquired Portfolio to the
Acquiring Portfolio in exchange solely for (A) the issuance of Class I shares of
beneficial interest of the Acquiring Portfolio (collectively, the "Acquiring
Portfolio Shares" and each, an "Acquiring Portfolio Share") to the Acquired
Portfolio, and (B) the assumption by the Acquiring Portfolio of the liabilities
of the Acquired Portfolio that are included in the calculation of net asset
value ("NAV") on the closing date of the Reorganization (the "Closing Date")
(collectively, the "Assumed Liabilities"), and (2) the distribution by the
Acquired Portfolio, on or promptly after the Closing Date as provided herein, of
the Acquiring Portfolio Shares to the shareholders of the Acquired Portfolio in
liquidation and dissolution of the Acquired Portfolio, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquiring Trust and the Safeco Trust are each registered
investment companies classified as management companies of the open-end type.
WHEREAS, the Acquiring Portfolio is authorized to issue shares of
beneficial interest.
WHEREAS, the Board of Trustees of the Safeco Trust and the Board of
Trustees of the Acquiring Trust have determined that the Reorganization is in
the best interests of the Acquired Portfolio shareholders and the Acquiring
Portfolio shareholders, respectively, and is not dilutive of the interests of
those shareholders.
NOW, THEREFORE, in consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED PORTFOLIO IN EXCHANGE FOR THE
ACQUIRING PORTFOLIO SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES;
LIQUIDATION AND TERMINATION OF THE ACQUIRED PORTFOLIO.
1.1 Subject to the terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Portfolio will
transfer all of its assets as set forth in Paragraph 1.2 (the "Acquired Assets")
to the Acquiring Portfolio free and clear of all liens and encumbrances (other
than those arising under the Securities Act of 1933, as amended (the "Securities
Act"), liens for taxes not yet due and contractual restrictions on the transfer
of the Acquired Assets) and the Acquiring Portfolio agrees in exchange therefor:
(i) to issue to the Acquired Portfolio the number of Acquiring Portfolio Shares,
including fractional Acquiring Portfolio Shares, with an aggregate NAV equal to
the NAV of the Acquired Portfolio, as determined in the manner set forth in
Paragraphs 2.1 and 2.2; and (ii) to assume the Assumed Liabilities. Such
transactions shall take place at the Closing (as defined in Paragraph 3.1
below).
1.2 (a) The Acquired Assets shall consist of all of the Acquired Portfolio's
property, including, without limitation, all portfolio securities and
instruments, dividends and interest receivables, cash, goodwill, contractual
rights of the Acquired Portfolio or the Safeco Trust in respect of the Acquired
Portfolio, all other intangible property owned by the Acquired Portfolio,
originals or copies of all books and records of the Acquired Portfolio, and all
other assets of the Acquired Portfolio on the Closing Date. The Acquiring
Portfolio shall also be entitled to receive (or, to the extent agreed upon
between the Safeco Trust and the Acquiring Trust, be provided access to) copies
of all records that the Safeco Trust is required to maintain under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
the rules of the Securities and Exchange Commission (the "Commission")
thereunder to the extent such records pertain to the Acquired Portfolio.
(b) The Acquired Portfolio has provided the Acquiring Portfolio with a list of
all of the Acquired Portfolio's securities and other assets as of the date of
execution of this Agreement, and the Acquiring Portfolio has provided the
Acquired Portfolio with a copy of the current fundamental investment policies
and restrictions and fair value procedures applicable to the Acquiring
Portfolio. The Acquired Portfolio reserves the right to sell any of such
securities or other assets before the Closing Date (except to the extent sales
may be limited by representations of the Acquired Portfolio contained herein and
made in connection with the issuance of the tax opinion provided for in
Paragraph 8.5 hereof).
1.3 The Acquired Portfolio will endeavor to discharge all of its known
liabilities and obligations that are or will become due prior to the Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Safeco Trust shall liquidate the Acquired Portfolio and
distribute pro rata to its shareholders of record, determined as of the close of
regular trading on the New York Stock Exchange on the Closing Date (the
"Acquired Portfolio Shareholders"), the Acquiring Portfolio Shares received by
the Acquired Portfolio pursuant to Paragraph 1.1 hereof. Each Acquired Portfolio
Shareholder shall receive such number of Acquiring Portfolio Shares that have an
aggregate NAV equal to the aggregate NAV of the shares of beneficial interest of
the Acquired Portfolio (the "Acquired Portfolio Shares") held of record by such
Acquired Portfolio Shareholder on the Closing Date. Such liquidation and
distribution will be accomplished by the Safeco Trust instructing the Acquiring
Trust to transfer the Acquiring Portfolio Shares then credited to the account of
the Acquired Portfolio on the books of the Acquiring Portfolio to open accounts
on the share records of the Acquiring Portfolio established and maintained by
the Acquiring Portfolio's transfer agent in the names of the Acquired Portfolio
Shareholders and representing the respective pro rata number of the Acquiring
Portfolio Shares due the Acquired Portfolio Shareholders. The Safeco Trust shall
promptly provide the Acquiring Trust with evidence of such liquidation and
distribution. All issued and outstanding Acquired Portfolio Shares will
simultaneously be cancelled on the books of the Acquired Portfolio, and the
Acquired Portfolio will be dissolved. The Acquiring Portfolio shall not issue
certificates representing the Acquiring Portfolio Shares in connection with such
exchange.
1.5 Ownership of Acquiring Portfolio Shares will be shown on the books of the
Acquiring Portfolio's transfer agent for its Class I shares. Any certificates
representing ownership of Acquired Portfolio Shares that remain outstanding on
the Closing Date shall be deemed to be cancelled and shall no longer evidence
ownership of Acquired Portfolio Shares.
1.6 Any transfer taxes payable upon issuance of Acquiring Portfolio Shares in a
name other than the registered holder of the Acquired Portfolio Shares on the
books of the Acquired Portfolio as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Portfolio
Shares are to be issued and transferred.
1.7 Any reporting responsibility of the Safeco Trust with respect to the
Acquired Portfolio for taxable periods ending on or before the Closing Date,
including, but not limited to, the responsibility for filing of regulatory
reports, Tax Returns (as defined in Paragraph 4.1), or other documents with the
Commission, any state securities commissions, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Safeco Trust.
2. VALUATION
2.1 The NAV of the Acquiring Portfolio Shares and the NAV of the Acquired
Portfolio shall, in each case, be determined as of the close of business (4:00
p.m., Boston time) on the Closing Date (the "Valuation Time"). The NAV of each
Acquiring Portfolio Share shall be computed by Pioneer Investment Management,
Inc. (the "Acquiring Portfolio Adviser") in the manner set forth in the
Acquiring Trust's Declaration of Trust (the "Declaration"), or By-Laws, and the
Acquiring Portfolio's then-current prospectus and statement of additional
information. The NAV of the Acquired Portfolio shall be computed by Symetra
Asset Management Company (the "Acquired Portfolio Administrator") by calculating
the value of the Acquired Assets and by subtracting therefrom the amount of the
liabilities of the Acquired Portfolio on the Closing Date included on the
Statement of Assets and Liabilities of the Acquired Portfolio delivered pursuant
to Paragraph 5.7 (the "Statement of Assets and Liabilities"), said assets and
liabilities to be valued in the manner set forth in the Acquired Portfolio's
then current prospectus and statement of additional information. The Acquiring
Portfolio Adviser shall confirm to the Acquiring Portfolio the NAV of the
Acquired Portfolio.
2.2 The Acquiring Portfolio and the Acquired Portfolio shall cause the Acquiring
Portfolio Adviser and the Acquired Portfolio Administrator, respectively, to
deliver a copy of its valuation report to the other party at Closing. All
computations of value shall be made by the Acquiring Portfolio Adviser and the
Acquired Portfolio Administrator in accordance with its regular practice as
pricing agent for the Acquiring Portfolio and the Acquired Portfolio,
respectively.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be December 10, 2004, or such later date as the
parties may agree to in writing. All acts necessary to consummation the
Reorganization (the "Closing") shall be deemed to take place simultaneously as
of 5:00 p.m. (Eastern time) on the Closing Date unless otherwise provided. The
Closing shall be held at the offices of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx
LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, or at such other place as the
parties may agree.
3.2 Portfolio securities that are held other than in book-entry form in the name
of State Street Bank and Trust Company (the "Acquired Portfolio Custodian") as
record holder for the Acquired Portfolio shall be presented by the Acquired
Portfolio to Xxxxx Brothers Xxxxxxxx & Co. (the "Acquiring Portfolio Custodian")
for examination no later than three business days preceding the Closing Date.
Such portfolio securities shall be delivered by the Acquired Portfolio to the
Acquiring Portfolio Custodian for the account of the Acquiring Portfolio on the
Closing Date, duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof. Portfolio securities held of
record by the Acquired Portfolio Custodian in book-entry form on behalf of the
Acquired Portfolio shall be delivered by the Acquired Portfolio Custodian
through the Depository Trust Company to the Acquiring Portfolio Custodian and by
the Acquiring Portfolio Custodian recording the beneficial ownership thereof by
the Acquiring Portfolio on the Acquiring Portfolio Custodian's records. Any cash
shall be delivered by the Acquired Portfolio Custodian transmitting immediately
available funds by wire transfer to the Acquiring Portfolio Custodian the cash
balances maintained by the Acquired Portfolio Custodian and the Acquiring
Portfolio Custodian crediting such amount to the account of the Acquiring
Portfolio.
3.3 The Acquiring Portfolio Custodian shall deliver within one business day
after the Closing a certificate of an authorized officer stating that: (a) the
Acquired Assets have been delivered in proper form to the Acquiring Portfolio on
the Closing Date, and (b) all necessary transfer taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or provision
for payment has been made in conjunction with the delivery of portfolio
securities as part of the Acquired Assets.
3.4 If on the Closing Date (a) the New York Stock Exchange is closed to trading
or trading thereon shall be restricted or (b) trading or the reporting of
trading on such exchange or elsewhere is disrupted so that accurate appraisal of
the NAV of the Acquiring Portfolio Shares or the Acquired Portfolio pursuant to
Paragraph 2.1 is impracticable, the Closing Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.5 The Acquired Portfolio shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status and certificates of the Acquired Portfolio
Shareholders and the number and percentage ownership of outstanding Acquired
Portfolio Shares owned by each Acquired Portfolio Shareholder as of the
Valuation Time, certified by the President or a Secretary of the Safeco Trust
and its Treasurer, Secretary or other authorized officer (the "Shareholder
List") as being an accurate record of the information (a) provided by the
Acquired Portfolio Shareholders, (b) provided by the Acquired Portfolio
Custodian, or (c) derived from the Safeco Trust's records by such officers or
one of the Safeco Trust's service providers. The Acquiring Portfolio shall issue
and deliver to the Acquired Portfolio a confirmation evidencing the Acquiring
Portfolio Shares to be credited on the Closing Date, or provide evidence
satisfactory to the Acquired Portfolio that such Acquiring Portfolio Shares have
been credited to the Acquired Portfolio's account on the books of the Acquiring
Portfolio. At the Closing, each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Safeco Trust, on behalf of the Acquired Portfolio, represents, warrants
and covenants to the Acquiring Portfolio, which representations, warranties and
covenants will be true and correct on the date hereof and on the Closing Date as
though made on and as of the Closing Date, as follows:
(a) The Acquired Portfolio is a series of the Safeco Trust. The Safeco Trust is
a statutory trust validly existing and in good standing under the laws of the
State of Delaware and has the power to own all of its properties and assets and,
subject to approval by the Acquired Portfolio's shareholders, to perform its
obligations under this Agreement. The Acquired Portfolio is not required to
qualify to do business in any jurisdiction in which it is not so qualified or
where failure to qualify would subject it to any material liability or
disability. Each of the Safeco Trust and the Acquired Portfolio has all
necessary federal, state and local authorizations to own all of its properties
and assets and to carry on its business as now being conducted;
(b) The Safeco Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in full
force and effect;
(c) The Safeco Trust is not in violation of, and the execution and delivery of
this Agreement and the performance of its obligations under this Agreement in
respect of the Acquired Portfolio will not result in a violation of, any
provision of the Safeco Trust's Trust Instrument or By-Laws or any material
agreement, indenture, instrument, contract, lease or other undertaking with
respect to the Acquired Portfolio to which the Safeco Trust is a party or by
which the Acquired Portfolio or any of its assets are bound;
(d) No litigation or administrative proceeding or investigation of or before any
court or governmental body is currently pending or to its knowledge threatened
against the Acquired Portfolio or any of the Acquired Portfolio's properties or
assets. The Acquired Portfolio knows of no facts which might form the basis for
the institution of such proceedings. Neither the Safeco Trust nor the Acquired
Portfolio is a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially adversely affects
the Acquired Portfolio's business or its ability to consummate the transactions
contemplated herein or would be binding upon the Acquiring Portfolio as the
successor to the Acquired Portfolio;
(e) The Acquired Portfolio has no material contracts or other commitments (other
than this Agreement or agreements for the purchase and sale of securities
entered into in the ordinary course of business and consistent with its
obligations under this Agreement) which will not be terminated at or prior to
the Closing Date and no such termination will result in liability to the
Acquired Portfolio (or the Acquiring Portfolio);
(f) The statement of assets and liabilities of the Acquired Portfolio, and the
related statements of income and changes in NAV, as of and for the fiscal year
ended December 31, 2003, have been audited by Ernst & Young LLP, independent
registered public accounting firm, and are in accordance with generally accepted
accounting principles ("GAAP") consistently applied and fairly reflect, in all
material respects, the financial condition of the Acquired Portfolio as of such
date and the results of its operations for the period then ended, and all known
liabilities, whether actual or contingent, of the Acquired Portfolio as of the
date thereof are disclosed therein. The Statement of Assets and Liabilities will
be in accordance with GAAP consistently applied and will fairly reflect, in all
material respects, the financial condition of the Acquired Portfolio as of such
date and the results of its operations for the period then ended. Except for the
Assumed Liabilities, the Acquired Portfolio will not have any known or
contingent liabilities on the Closing Date. No significant deficiency, material
weakness, fraud, significant change or other factor that could significantly
affect the internal controls of the Acquired Portfolio has been disclosed or is
required to be disclosed in the Acquired Portfolio's reports on Form N-CSR to
enable the chief executive officer and chief financial officer or other officers
of the Acquired Portfolio to make the certifications required by the
Xxxxxxxx-Xxxxx Act, and no deficiency, weakness, fraud, change, event or other
factor exists that will be required to be disclosed in the Acquiring Portfolio's
Form N-CSR after the Closing Date;
(g) Since the most recent fiscal year end, except as specifically disclosed in
the Acquired Portfolio's prospectus, its statement of additional information as
in effect on the date of this Agreement, or its semi-annual report for the
period ended June 30, 2004, there has not been any material adverse change in
the Acquired Portfolio's financial condition, assets, liabilities, business or
prospects, or any incurrence by the Acquired Portfolio of indebtedness, except
for normal contractual obligations incurred in the ordinary course of business
or in connection with the settlement of purchases and sales of portfolio
securities. For the purposes of this subparagraph (g) (but not for any other
purpose of this Agreement), a decline in NAV per Acquired Portfolio Share
arising out of its normal investment operations or a decline in market values of
securities in the Acquired Portfolio's portfolio or a decline in net assets of
the Acquired Portfolio as a result of redemptions shall not constitute a
material adverse change;
(h) (A) For each taxable year of its operation since its inception, the Acquired
Portfolio has met, and for the current taxable year it will meet, the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company. The Acquired Portfolio will qualify as such as of
the Closing Date and will satisfy the diversification requirements of Section
851(b)(3) of the Code without regard to the last sentence of Section 851(d) of
the Code. The Acquired Portfolio has not taken any action, caused any action to
be taken or caused any action to fail to be taken which action or failure could
cause the Acquired Portfolio to fail to qualify as a regulated investment
company under the Code. To the knowledge of Safeco Trust, (i) the Acquired
Portfolio does not have, and has not ever had, any shareholder that is not a
segregated asset account within the meaning of Treasury Regulation Section
1.817-5(e) or an entity referred to in (and holding its shares in compliance
with the terms of) Treasury Regulation Section 1.817-5(f)(3)(i), (ii), or (iii);
(ii) no public investor is participating or has ever participated in the
Acquired Portfolio through such a segregated asset account other than through
purchase of a variable contract within the meaning of Treasury Regulation
Section 1.817-5(f)(2)(i)(B); and (iii) the Acquired Portfolio satisfies, and at
all times during its existence has satisfied, the diversification requirements
contained in Treasury Regulation Section 1.817-5(b)(1), (2), or (3);
(B) Within the times and in the manner prescribed by law, the Acquired Portfolio
has properly filed on a timely basis all Tax Returns (as defined below) that it
was required to file, and all such Tax Returns were complete and accurate in all
respects. The Acquired Portfolio has not been informed by any jurisdiction that
the jurisdiction believes that the Acquired Portfolio was required to file any
Tax Return that was not filed; and the Acquired Portfolio does not know of any
basis upon which a jurisdiction could assert such a position;
(C) The Acquired Portfolio has timely paid, in the manner prescribed by law, all
Taxes (as defined below), which were due and payable or which were claimed to be
due;
(D) All Tax Returns filed by the Acquired Portfolio constitute complete and
accurate reports of the respective Tax liabilities and all attributes of the
Acquired Portfolio or, in the case of information returns and payee statements,
the amounts required to be reported, and accurately set forth all items required
to be included or reflected in such returns;
(E) The Acquired Portfolio has not waived or extended any applicable statute of
limitations relating to the assessment or collection of Taxes;
(F) The Acquired Portfolio has not been notified that any examinations of the
Tax Returns of the Acquired Portfolio are currently in progress or threatened,
and no deficiencies have been asserted or assessed against the Acquired
Portfolio as a result of any audit by the Internal Revenue Service or any state,
local or foreign taxing authority, and, to its knowledge, no such deficiency has
been proposed or threatened;
(G) The Acquired Portfolio has no actual or potential liability for any Tax
obligation of any taxpayer other than itself. The Acquired Portfolio is not and
has never been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns. The
Acquired Portfolio is not a party to any Tax allocation, sharing, or
indemnification agreement;
(H) The unpaid Taxes of the Acquired Portfolio for tax periods through the
Closing Date do not exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Statement of Assets
and Liabilities, rather than in any notes thereto (the "Tax Reserves"). All
Taxes that the Acquired Portfolio is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been timely paid to the proper governmental agency;
(I) The Acquired Portfolio has delivered to the Acquiring Portfolio or made
available to the Acquiring Portfolio complete and accurate copies of all Tax
Returns of the Acquired Portfolio, together with all related examination reports
and statements of deficiency for all periods not closed under the applicable
statutes of limitations and complete and correct copies of all private letter
rulings, revenue agent reports, information document requests, notices of
proposed deficiencies, deficiency notices, protests, petitions, closing
agreements, settlement agreements, pending ruling requests and any similar
documents submitted by, received by or agreed to by or on behalf of the Acquired
Portfolio. The Acquired Portfolio has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code;
(J) The Acquired Portfolio has not undergone, has not agreed to undergo, and is
not required to undergo (nor will it be required as a result of the transactions
contemplated in this Agreement to undergo) a change in its method of accounting
resulting in an adjustment to its taxable income pursuant to Section 481 of the
Code. The Acquired Portfolio will not be required to include any item of income
in, or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any (i) change
in method of accounting for a taxable period ending on or prior to the Closing
Date under Section 481(c) of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law); (ii) "closing agreement" as
described in Section 7121 of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law) executed on or prior to the Closing
Date; (iii) installment sale or open transaction disposition made on or prior to
the Closing Date; or (iv) prepaid amount received on or prior to the Closing
Date;
(K) The Acquired Portfolio has not taken or agreed to take any action, and is
not aware of any agreement, plan or other circumstance, that is inconsistent
with the representations set forth in Annex B;
(L) There are (and as of immediately following the Closing there will be) no
liens on the assets of the Acquired Portfolio relating to or attributable to
Taxes, except for Taxes not yet due and payable;
(M) The Tax bases of the assets of the Acquired Portfolio are accurately
reflected on the Acquired Portfolio's Tax books and records;
(N) The Acquired Portfolio has not incurred (or been allocated) an "overall
foreign loss" as defined in Section 904(f)(2) of the Code which has not been
previously recaptured in full as provided in Sections 904(f)(2) and/or 904(f)(3)
of the Code;
(O) The Acquired Portfolio is not a party to a gain recognition agreement under
Section 367 of the Code;
(P) The Acquired Portfolio does not own any interest in an entity that is
characterized as a partnership for income tax purposes;
(Q) The Acquired Portfolio's Tax attributes are not limited under the Code
(including but not limited to any capital loss carry forward limitations under
Sections 382 or 383 of the Code and the Treasury Regulations thereunder) or
comparable provisions of state law; and
(R) For purposes of this Agreement, "Taxes" or "Tax" shall mean all taxes,
charges, fees, levies or other similar assessments or liabilities, including
without limitation income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, transfer, withholding,
employment, unemployment, insurance, social security, business license, business
organization, environmental, workers compensation, payroll, profits, license,
lease, service, service use, severance, stamp, occupation, windfall profits,
customs, duties, franchise and other taxes imposed by the United States of
America or any state, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such government, and any
interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or dispute
thereof; and "Tax Returns" shall mean all reports, returns, declarations,
statements or other information required to be supplied to a governmental or
regulatory authority or agency, or to any other person, in connection with Taxes
and any associated schedules or work papers produced in connection with such
items;
(i) All issued and outstanding Acquired Portfolio Shares are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid and
nonassessable by the Acquired Portfolio. All of the issued and outstanding
Acquired Portfolio Shares will, at the time of Closing, be held of record by the
persons and in the amounts set forth in the Shareholder List submitted to the
Acquiring Portfolio pursuant to Paragraph 3.5 hereof. The Acquired Portfolio
does not have outstanding any options, warrants or other rights to subscribe for
or purchase any Acquired Portfolio Shares, nor is there outstanding any security
convertible into any Acquired Portfolio Shares;
(j) At the Closing Date, the Acquired Portfolio will have good and marketable
title to the Acquired Assets, and full right, power and authority to sell,
assign, transfer and deliver the Acquired Assets to the Acquiring Portfolio,
and, upon delivery and payment for the Acquired Assets, the Acquiring Portfolio
will acquire good and marketable title thereto, subject to no restrictions on
the full transfer thereof, except such restrictions as might arise under the
Securities Act;
(k) The Safeco Trust has the trust power and authority to enter into and perform
its obligations under this Agreement. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary action on the part of
the Safeco Trust's Board of Trustees, and, subject to the approval of the
Acquired Portfolio's shareholders, assuming due authorization, execution and
delivery by the Acquiring Portfolio, this Agreement will constitute a valid and
binding obligation of the Acquired Portfolio, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(l) The information to be furnished by the Acquired Portfolio to the Acquiring
Portfolio for use in applications for orders, registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby and any information necessary to compute the
total return of the Acquired Portfolio shall be accurate and complete and shall
comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(m) The information included in the proxy statement (the "Proxy Statement")
forming part of the Acquiring Portfolio's Registration Statement on Form N-14
filed in connection with this Agreement (the "Registration Statement") that has
been furnished in writing by the Acquired Portfolio to the Acquiring Portfolio
for inclusion in the Registration Statement, on the effective date of that
Registration Statement and on the Closing Date, will conform in all material
respects to the applicable requirements of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Investment
Company Act and the rules and regulations of the Commission thereunder and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(n) Upon the effectiveness of the Registration Statement, no consent, approval,
authorization or order of any court or governmental authority is required for
the consummation by the Safeco Trust or the Acquired Portfolio of the
transactions contemplated by this Agreement;
(o) All of the issued and outstanding Acquired Portfolio Shares have been
offered for sale and sold in conformity with all applicable federal and state
securities laws, except as may have been previously disclosed in writing to the
Acquiring Portfolio;
(p) The prospectus and statement of additional information of the Acquired
Portfolio, and any amendments or supplements thereto, furnished to the Acquiring
Portfolio, did not as of their dates or the dates of their distribution to the
public contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which such statements were made, not
misleading;
(q) The Acquired Portfolio currently complies in all material respects with, and
since its organization has complied in all material respects with, the
requirements of, and the rules and regulations under, the Investment Company
Act, the Securities Act, the Exchange Act, state "Blue Sky" laws and all other
applicable federal and state laws or regulations. The Acquired Portfolio
currently complies in all material respects with, and since its organization has
complied in all material respects with, all investment objectives, policies,
guidelines and restrictions and any compliance procedures established by the
Safeco Trust with respect to the Acquired Portfolio. All advertising and sales
material used by the Acquired Portfolio complies in all material respects with
and has complied in all material respects with the applicable requirements of
the Securities Act, the Investment Company Act, the rules and regulations of the
Commission, and, to the extent applicable, the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD") and any applicable state
regulatory authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the Commission, the
NASD or any state securities authorities by the Acquired Portfolio have been
duly filed and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration statements,
prospectuses, reports, proxy materials and other filings under the Securities
Act, the Exchange Act and the Investment Company Act (i) are or were in
compliance in all material respects with the requirements of all applicable
statutes and the rules and regulations thereunder and (ii) do not or did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not false or misleading;
(r) Neither the Acquired Portfolio nor, to the knowledge of the Acquired
Portfolio, any "affiliated person" of the Acquired Portfolio has been convicted
of any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquired Portfolio, has any affiliated
person of the Acquired Portfolio been the subject, or presently is the subject,
of any proceeding or investigation with respect to any disqualification that
would be a basis for denial, suspension or revocation of registration as an
investment adviser under Section 203(e) of the Investment Advisers Act of 1940,
as amended (the "Investment Advisers Act"), or Rule 206(4)-4(b) thereunder or of
a broker-dealer under Section 15 of the Exchange Act, or for disqualification as
an investment adviser, employee, officer or director of an investment company
under Section 9 of the Investment Company Act; and
(s) The tax representation certificate to be delivered by Safeco Trust on behalf
of the Acquired Portfolio to the Acquiring Trust and Xxxxxx Xxxxxx Xxxxxxxxx
Xxxx and Xxxx LLP at the Closing pursuant to Paragraph 7.4 (the "Acquired
Portfolio Tax Representation Certificate") will not on the Closing Date contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
4.2 The Acquiring Trust, on behalf of the Acquiring Portfolio, represents,
warrants and covenants to the Acquired Portfolio, which representations,
warranties and covenants will be true and correct on the date hereof and on the
Closing Date as though made on and as of the Closing Date, as follows:
(a) The Acquiring Portfolio is a series of the Acquiring Trust. The Acquiring
Trust is a statutory trust duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Acquiring Trust has the power to
own all of its properties and assets and to perform the obligations under this
Agreement. The Acquiring Portfolio is not required to qualify to do business in
any jurisdiction in which it is not so qualified or where failure to qualify
would subject it to any material liability or disability. Each of the Acquiring
Trust and the Acquiring Portfolio has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Acquiring Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in full
force and effect;
(c) The Acquiring Portfolio's registration statement on Form N-1A that will be
in effect on the Closing Date, and the prospectus and statement of additional
information of the Acquiring Portfolio included therein, will conform in all
material respects with the applicable requirements of the Securities Act and the
Investment Company Act and the rules and regulations of the Commission
thereunder, and did not as of the effective date thereof and will not as of the
Closing Date 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, in light of the circumstances in which they were made, not
misleading;
(d) The Registration Statement, the Proxy Statement and statement of additional
information with respect to the Acquiring Portfolio, and any amendments or
supplements thereto in effect on or prior to the Closing Date included in the
Registration Statement (other than written information furnished by the Acquired
Portfolio for inclusion therein, as covered by the Acquired Portfolio's warranty
in Paragraph 4.1(m) hereof) will conform in all material respects to the
applicable requirements of the Securities Act and the Investment Company Act and
the rules and regulations of the Commission thereunder. Neither the Registration
Statement nor the Proxy Statement (other than written information furnished by
the Acquired Portfolio for inclusion therein, as covered by the Acquired
Portfolio's warranty in Paragraph 4.1(m) hereof) includes or will include any
untrue statement of a material fact or omits 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;
(e) The Acquiring Trust is not in violation of, and the execution and delivery
of this Agreement and performance of its obligations under this Agreement will
not result in a violation of, any provisions of the Declaration of Trust or
by-laws of the Acquiring Trust or any material agreement, indenture, instrument,
contract, lease or other undertaking with respect to the Acquiring Portfolio to
which the Acquiring Trust is a party or by which the Acquiring Portfolio or any
of its assets is bound;
(f) No litigation or administrative proceeding or investigation of or before any
court or governmental body is currently pending or threatened against the
Acquiring Portfolio or any of the Acquiring Portfolio's properties or assets.
The Acquiring Portfolio knows of no facts which might form the basis for the
institution of such proceedings. Neither the Acquiring Trust nor the Acquiring
Portfolio is a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially adversely affects
the Acquiring Portfolio's business or its ability to consummate the transactions
contemplated herein;
(g) The statement of assets and liabilities of the Acquiring Portfolio, and the
related statements of income and changes in NAV, as of and for the fiscal year
ended December 31, 2003, have been audited by Ernst & Young LLP, independent
registered public accounting firm, and are in accordance with GAAP consistently
applied and fairly reflect, in all material respects, the financial condition of
the Acquiring Portfolio as of such date and the results of its operations for
the period then ended, and all known liabilities, whether actual or contingent,
of the Acquiring Portfolio as of the date thereof are disclosed therein;
(h) Since the most recent fiscal year end, except as specifically disclosed in
the Acquiring Portfolio's prospectus, its statement of additional information as
in effect on the date of this Agreement, or its semi-annual report for the
period ended June 30, 2004, there has not been any material adverse change in
the Acquiring Portfolio's financial condition, assets, liabilities, business or
prospects, or any incurrence by the Acquiring Portfolio of indebtedness, except
for normal contractual obligations incurred in the ordinary course of business
or in connection with the settlement of purchases and sales of portfolio
securities. For the purposes of this subparagraph (h) (but not for any other
purpose of this Agreement), a decline in NAV per Acquiring Portfolio Share
arising out of its normal investment operations or a decline in market values of
securities in the Acquiring Portfolio's portfolio or a decline in net assets of
the Acquiring Portfolio as a result of redemptions shall not constitute a
material adverse change;
(i) (A) For each taxable year of its operation since its inception, the
Acquiring Portfolio has met, and for the current taxable year it will meet, the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company and will qualify as such as of the Closing Date and
will satisfy the diversification requirements of Section 851(b)(3) of the Code
without regard to the last sentence of Section 851(d) of the Code. The Acquiring
Portfolio has not taken any action, caused any action to be taken or caused any
action to fail to be taken which action or failure could cause the Acquiring
Portfolio to fail to qualify as a regulated investment company under the Code.
To the knowledge of the Acquiring Trust, (i) the Acquiring Portfolio does not
have, and has not ever had, any shareholder that is not a segregated asset
account within the meaning of Treasury Regulation Section 1.817-5(e) or an
entity referred to in (and holding its shares in compliance with the terms of)
Treasury Regulation Section 1.817-5(f)(3)(i), (ii), or (iii); (ii) no public
investor is participating or has ever participated in the Acquiring Portfolio
through such a segregated asset account other than through purchase of a
variable contract within the meaning of Treasury Regulation Section
1.817-5(f)(2)(i)(B); and (iii) the Acquiring Portfolio satisfies, and at all
times during its existence has satisfied, the diversification requirements
contained in Treasury Regulation Section 1.817-5(b)(1), (2), or (3);
(B) Within the times and in the manner prescribed by law, the Acquiring
Portfolio has properly filed on a timely basis all Tax Returns that it was
required to file, and all such Tax Returns were complete and accurate in all
respects. The Acquiring Portfolio has not been informed by any jurisdiction that
the jurisdiction believes that the Acquiring Portfolio was required to file any
Tax Return that was not filed; and the Acquiring Portfolio does not know of any
basis upon which a jurisdiction could assert such a position;
(C) The Acquiring Portfolio has timely paid, in the manner prescribed by law,
all Taxes that were due and payable or that were claimed to be due;
(D) All Tax Returns filed by the Acquiring Portfolio constitute complete and
accurate reports of the respective liabilities for Taxes and all attributes of
the Acquiring Portfolio or, in the case of information returns and payee
statements, the amounts required to be reported, and accurately set forth all
items required to be included or reflected in such returns;
(E) The Acquiring Portfolio has not waived or extended any applicable statute of
limitations relating to the assessment or collection of Taxes;
(F) The Acquiring Portfolio has not been notified that any examinations of the
Tax Returns of the Acquiring Portfolio are currently in progress or threatened,
and no deficiencies have been asserted or assessed against the Acquiring
Portfolio as a result of any audit by the Internal Revenue Service or any state,
local or foreign taxing authority, and, to its knowledge, no such deficiency has
been proposed or threatened;
(G) The Acquiring Portfolio has no actual or potential liability for any Tax
obligation of any taxpayer other than itself. The Acquiring Portfolio is not and
has never been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns. The
Acquiring Portfolio is not a party to any Tax allocation, sharing, or
indemnification agreement;
(H) The Acquiring Trust has delivered to Safeco Trust or made available to
Safeco Trust complete and accurate copies of all Tax Returns of the Acquiring
Portfolio, together with all related examination reports and statements of
deficiency for all periods not closed under the applicable statutes of
limitations and complete and correct copies of all private letter rulings,
revenue agent reports, information document requests, notices of proposed
deficiencies, deficiency notices, protests, petitions, closing agreements,
settlement agreements, pending ruling requests and any similar documents
submitted by, received by or agreed to by or on behalf of the Acquiring
Portfolio. The Acquiring Portfolio has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code;
(I) The Acquiring Portfolio has not undergone, has not agreed to undergo, and is
not required to undergo (nor will it be required as a result of the transactions
contemplated in this Agreement to undergo) a change in its method of accounting
resulting in an adjustment to its taxable income pursuant to Section 481 of the
Code. The Acquiring Portfolio will not be required to include any item of income
in, or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any (i) change
in method of accounting for a taxable period ending on or prior to the Closing
Date under Section 481(c) of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law); (ii) "closing agreement" as
described in Section 7121 of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law) executed on or prior to the Closing
Date; (iii) installment sale or open transaction disposition made on or prior to
the Closing Date; or (iv) prepaid amount received on or prior to the Closing
Date;
(J) The Acquiring Portfolio has not taken or agreed to take any action, and is
not aware of any agreement, plan or other circumstance, that is inconsistent
with the representations set forth in Annex A;
(K) The Acquiring Portfolio has not incurred (or been allocated) an "overall
foreign loss" as defined in Section 904(f)(2) of the Code which has not been
previously recaptured in full as provided in Sections 904(f)(2) and/or 904(f)(3)
of the Code;
(L) The Acquiring Portfolio is not a party to a gain recognition agreement
under Section 367 of the Code;
(M) The Acquiring Portfolio's Tax attributes are not limited under the Code
(including but not limited to any capital loss carry forward limitations under
Sections 382 or 383 of the Code and the Treasury Regulations thereunder) or
comparable provisions of state law, except as set forth on Schedule 4.2;
(j) The Acquiring Portfolio currently complies, and at all times since its
organization has complied, in all material respects with the requirements of,
and the rules and regulations under, the Investment Company Act, the Securities
Act, the Exchange Act, state "Blue Sky" laws and all other applicable federal
and state laws or regulations. The Acquiring Portfolio currently complies in all
material respects with, and since its organization has complied in all material
respects with, all investment objectives, policies, guidelines and restrictions
and any compliance procedures established by the Acquiring Trust with respect to
the Acquiring Portfolio. All advertising and sales material used by the
Acquiring Portfolio complies in all material respects with and has complied in
all material respects with the applicable requirements of the Securities Act,
the Investment Company Act, the rules and regulations of the Commission, and, to
the extent applicable, the Conduct Rules of the NASD and any applicable state
regulatory authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the Commission, the
NASD or any state securities authorities by the Acquiring Portfolio have been
duly filed and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration statements,
prospectuses, reports, proxy materials and other filings under the Securities
Act, the Exchange Act and the Investment Company Act (i) are or were in
compliance in all material respects with the requirements of all applicable
statutes and the rules and regulations thereunder and (ii) do not or did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not false or misleading;
(k) The authorized capital of the Acquiring Portfolio consists of an unlimited
number of shares of beneficial interest, no par value per share. As of the
Closing Date, the Acquiring Portfolio will be authorized to issue an unlimited
number of shares of beneficial interest, no par value per share. The Acquiring
Portfolio Shares to be issued and delivered to the Acquired Portfolio for the
account of the Acquired Portfolio Shareholders pursuant to the terms of this
Agreement will have been duly authorized on the Closing Date and, when so issued
and delivered, will be duly and validly issued, fully paid and non-assessable.
The Acquiring Portfolio does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquiring Portfolio shares, nor is there
outstanding any security convertible into any Acquiring Portfolio shares;
(l) The Acquiring Trust has the trust power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary action
on the part of the Acquiring Trust's Board of Trustees, and, assuming due
authorization, execution and delivery by the Acquired Portfolio, this Agreement
will constitute a valid and binding obligation of the Acquiring Portfolio,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(m) The information to be furnished in writing by the Acquiring Portfolio or the
Acquiring Portfolio Adviser for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete in all material respects and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto or the
requirements of any form for which its use is intended, and shall not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the information provided not misleading;
(n) No consent, approval, authorization or order of or filing with any court or
governmental authority is required for the execution of this Agreement or the
consummation of the transactions contemplated by the Agreement by the Acquiring
Portfolio, except for the registration of the Acquiring Portfolio Shares under
the Securities Act and the Investment Company Act;
(o) All of the issued and outstanding Acquiring Portfolio Shares have been
offered for sale and sold in conformity with all applicable federal and state
securities laws, except as may have been previously disclosed in writing to the
Acquired Portfolio;
(p) The prospectus and statement of additional information of the Acquiring
Portfolio, and any amendments or supplements thereto, furnished to the Acquired
Portfolio, did not as of their dates or the dates of their distribution to the
public contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which such statements were made, not
misleading;
(q) Neither the Acquiring Portfolio nor, to the knowledge of the Acquiring
Portfolio, any "affiliated person" of the Acquiring Portfolio has been convicted
of any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquiring Portfolio, has any
affiliated person of the Acquiring Portfolio been the subject, or presently is
the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or revocation of
registration as an investment adviser under Section 203(e) of the Investment
Advisers Act or Rule 206(4)-4(b) thereunder or of a broker-dealer under Section
15 of the Exchange Act, or for disqualification as an investment adviser,
employee, officer or director of an investment company under Section 9 of the
Investment Company Act; and
(r) The tax representation certificate to be delivered by the Acquiring Trust on
behalf of the Acquiring Portfolio to the Safeco Trust and Xxxxxx Xxxxxx
Xxxxxxxxx Xxxx and Xxxx LLP at Closing pursuant to Section 6.3 (the "Acquiring
Portfolio Tax Representation Certificate") will not on the Closing Date contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
5. COVENANTS OF THE PORTFOLIOS
5.1 The Acquired Portfolio will operate the Acquired Portfolio's business in the
ordinary course of business between the date hereof and the Closing Date. It is
understood that such ordinary course of business will include the declaration
and payment of customary dividends and other distributions and any other
dividends and other distributions necessary or advisable (except to the extent
dividends or other distributions that are not customary may be limited by
representations made in connection with the issuance of the tax opinion
described in Paragraph 8.5 hereof), in each case payable either in cash or in
additional shares.
5.2 The Safeco Trust will call a special meeting of the Acquired Portfolio's
shareholders to consider approval of this Agreement and act upon the matters set
forth in the Proxy Statement.
5.3 The Acquiring Portfolio will prepare the notice of meeting, form of proxy
and Proxy Statement (collectively, "Proxy Materials") to be used in connection
with such meeting, and will promptly prepare and file with the Commission the
Registration Statement. The Safeco Trust will provide the Acquiring Portfolio
with information reasonably requested for the preparation of the Registration
Statement in compliance with the Securities Act, the Exchange Act, and the
Investment Company Act.
5.4 The Acquired Portfolio covenants that the Acquiring Portfolio Shares to be
issued hereunder are not being acquired by the Acquired Portfolio for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.
5.5 The Acquired Portfolio will assist the Acquiring Portfolio in obtaining such
information as the Acquiring Portfolio reasonably requires concerning the
beneficial ownership of the Acquired Portfolio Shares.
5.6 Subject to the provisions of this Agreement, each Portfolio will take, or
cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
5.7 The Acquired Portfolio shall furnish to the Acquiring Portfolio on the
Closing Date a Statement of Assets and Liabilities of the Acquired Portfolio as
of the Closing Date setting forth the NAV (as computed pursuant to Paragraph
2.1) of the Acquired Portfolio as of the Valuation Time, which statement shall
be prepared in accordance with GAAP consistently applied and certified by the
Safeco Trust's Treasurer or Assistant Treasurer. As promptly as practicable, but
in any case within 30 days after the Closing Date, the Safeco Trust shall
furnish to the Acquiring Trust, in such form as is reasonably satisfactory to
the Acquiring Trust, a statement of the earnings and profits of the Acquired
Portfolio for federal income tax purposes, and of any capital loss carryovers
and other items that will be carried over to the Acquiring Portfolio under the
Code, and which statement will be certified by the Treasurer of the Safeco
Trust.
5.8 Neither Portfolio shall take any action that is inconsistent with the
representations set forth in, with respect to the Acquired Portfolio, the
Acquired Portfolio Tax Representation Certificate and, with respect to the
Acquiring Portfolio, the Acquiring Portfolio Tax Representation Certificate.
5.9 From and after the date of this Agreement and until the Closing Date, each
of the Portfolios and the Safeco Trust and the Acquiring Trust shall use its
commercially reasonable efforts to cause the Reorganization to qualify, and will
not knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken, which action or failure to act
could prevent the Reorganization from qualifying, as a reorganization under the
provisions of Section 368(a) of the Code. The parties hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the income tax regulations promulgated under the
Code. Unless otherwise required pursuant to a "determination" within the meaning
of Section 1313(a) of the Code, the parties hereto shall treat and report the
transactions contemplated hereby as a reorganization within the meaning of
Section 368(a)(1)(C) of the Code and shall not take any position inconsistent
with such treatment.
5.10 From and after the date of this Agreement and through the time of the
Closing, each Portfolio shall use its commercially reasonable efforts to cause
it to qualify, and will not knowingly take any action, cause any action to be
taken, fail to take any action or cause any action to fail to be taken, which
action or failure to act could prevent it from qualifying as a regulated
investment company under the provisions of Subchapter M of the Code.
5.11 Each Portfolio shall prepare, or cause to be prepared, all of its Tax
Returns for taxable periods that end on or before the Closing Date and shall
timely file, or cause to be timely filed, all such Tax Returns. Each Portfolio
shall make any payments of Taxes required to be made by it with respect to any
such Tax Returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED PORTFOLIO
The obligations of the Acquired Portfolio to complete the transactions
provided for herein shall be, at its election, subject to the performance by the
Acquiring Portfolio of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions, unless waived by the Acquired Portfolio in writing:
6.1 All representations and warranties by the Acquiring Trust on behalf of the
Acquiring Portfolio contained in this Agreement shall be true and correct as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
6.2 The Acquiring Trust shall have delivered to the Safeco Trust on the Closing
Date a certificate of the Acquiring Trust on behalf of the Acquiring Portfolio
executed in its name by its President or Vice President and its Treasurer or
Assistant Treasurer, in form and substance satisfactory to the Safeco Trust and
dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Trust made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 6 have been met, and as to such other matters as the Safeco Trust shall
reasonably request;
6.3 The Acquiring Trust on behalf of the Acquiring Portfolio shall have
delivered to the Safeco Trust and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP an
Acquiring Portfolio Tax Representation Certificate, satisfactory to the Safeco
Trust and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, substantially in the form
attached to this Agreement as Annex A, concerning certain tax-related matters
with respect to the Acquiring Portfolio;
6.4 With respect to the Acquiring Portfolio, the Board of Trustees of the
Acquiring Trust shall have determined that the Reorganization is in the best
interests of the Acquiring Portfolio and, based upon such determination, shall
have approved this Agreement and the transactions contemplated hereby; and
6.5 The Safeco Trust shall have received at the Closing a favorable opinion as
to the due authorization of this Agreement by the Acquiring Trust and related
matters of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, dated as of the Closing
Date, in a form reasonably satisfactory to the Safeco Trust.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING PORTFOLIO
The obligations of the Acquiring Portfolio to complete the transactions
provided for herein shall be, at its election, subject to the performance by the
Acquired Portfolio of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquiring Portfolio in writing:
7.1 All representations and warranties of the Safeco Trust on behalf of the
Acquired Portfolio contained in this Agreement shall be true and correct as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2 The Safeco Trust shall have delivered to the Acquiring Portfolio the
Statement of Assets and Liabilities of the Acquired Portfolio pursuant to
Paragraph 5.7, together with a list of its portfolio securities showing the
federal income tax bases and holding periods of such securities, as of the
Closing Date, certified by the Safeco Trust's Treasurer or Assistant Treasurer;
7.3 The Safeco Trust shall have delivered to the Acquiring Trust on the Closing
Date a certificate of the Safeco Trust on behalf of the Acquired Portfolio
executed in its name by its President or Vice President and a Treasurer or
Assistant Treasurer, in form and substance reasonably satisfactory to the
Acquiring Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Safeco Trust contained in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, that each of the
conditions to Closing in this Article 7 have been met, and as to such other
matters as the Acquiring Trust shall reasonably request;
7.4 The Safeco Trust on behalf of the Acquired Portfolio shall have delivered to
the Acquiring Trust and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP an Acquired
Portfolio Tax Representation Certificate, satisfactory to the Acquiring Trust
and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, substantially in the form
attached to this Agreement as Annex B, concerning certain tax-related matters
with respect to the Acquired Portfolio;
7.5 The Acquiring Trust shall have received at the Closing a favorable opinion
as to the due authorization of this Agreement by the Safeco Trust and related
matters of Xxxxxxxxxxx & Xxxxxxxx LLP, dated as of the Closing Date, in a form
reasonably satisfactory to the Acquiring Trust; and
7.6 With respect to the Acquired Portfolio, the Board of Trustees of the Safeco
Trust shall have determined that the Reorganization is in the best interests of
the Acquired Portfolio and, based upon such determination, shall have approved
this Agreement and the transactions contemplated hereby.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below does not exist on or before
the Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the Acquired Portfolio's shareholders in
accordance with the provisions of the Safeco Trust's Trust Instrument and
By-Laws, and certified copies of the resolutions evidencing such approval by the
Acquired Portfolio's shareholders shall have been delivered by the Acquired
Portfolio to the Acquiring Portfolio. Notwithstanding anything herein to the
contrary, neither party hereto may waive the conditions set forth in this
Paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and permits of
federal, state and local regulatory authorities (including those of the
Commission and of state Blue Sky and securities authorities) deemed necessary by
either party hereto to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of either party hereto,
provided that either party may waive any such conditions for itself;
8.4 The Acquiring Trust's Registration Statement on Form N-14 shall have become
effective under the Securities Act and no stop orders suspending the
effectiveness of such Registration Statement shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened or contemplated
under the Securities Act;
8.5 The parties shall have received an opinion of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx
and Xxxx LLP, satisfactory to the Safeco Trust and the Acquiring Trust and
subject to customary assumptions and qualifications, substantially to the effect
that for federal income tax purposes the acquisition by the Acquiring Portfolio
of the Acquired Assets solely in exchange for the issuance of Acquiring
Portfolio Shares to the Acquired Portfolio and the assumption of the Assumed
Liabilities by the Acquiring Portfolio, followed by the distribution by the
Acquired Portfolio, in liquidation of the Acquired Portfolio, of Acquiring
Portfolio Shares to the Acquired Portfolio Shareholders in exchange for their
Acquired Portfolio Shares and the termination of the Acquired Portfolio Shares,
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code;
8.6 The Acquired Portfolio shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for dividends paid
under Section 561 of the Code, all of its investment company taxable income (as
defined in Section 852(b)(2) of the Code determined without regard to Section
852(b)(2)(D) of the Code) for its taxable year ending on the Closing Date, all
of the excess of (i) its interest income excludable from gross income under
Section 103(a) of the Code over (ii) its deductions disallowed under Sections
265 and 171(a)(2) of the Code for its taxable year ending on the Closing Date,
and all of its net capital gain (as such term is used in Sections 852(b)(3)(A)
and (C) of the Code), after reduction by any available capital loss
carryforward, for its taxable year ending on the Closing Date; and
8.7 The Acquiring Portfolio shall have made a distribution of capital gains to
its shareholders in November 2004 in accordance with its normal practices and,
unless the Acquiring Portfolio distributes income monthly, the dividend
distribution that the Acquiring Portfolio normally would make in December of
2004 shall have been made to shareholders of record prior to the Closing.
9. BROKERAGE FEES AND EXPENSES
9.1 Each party hereto represents and warrants to the other party hereto that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
9.2 The parties have been informed by Symetra Financial Corporation and the
Acquiring Portfolio Adviser -- and the parties have entered into this Agreement
in reliance on such information -- that such non-parties will pay (with each of
Symetra Financial Corporation and the Acquiring Portfolio Adviser being
responsible for 50% of such amounts) all expenses of the Portfolios associated
with the Reorganization including, but not limited to, the expenses associated
with the preparation, printing and mailing of any and all shareholder notices,
communications, proxy statements, and necessary filings with the SEC or any
other governmental authority in connection with the transactions contemplated by
this Agreement, the fees and expenses of any proxy solicitation firm retained in
connection with the Reorganization, the fees and expenses of counsel to the
independent trustees of the Safeco Trust in connection with the Reorganization,
and the trustees' fees and expenses as a result of the Reorganization. Except
for the foregoing, the Acquiring Portfolio and the Acquired Portfolio shall each
bear its own expenses in connection with the transactions contemplated by this
Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Trust and the Safeco Trust each agrees that neither party has
made any representation, warranty or covenant not set forth herein or referred
to in Paragraphs 4.1 or 4.2 hereof and that this Agreement constitutes the
entire agreement between the parties.
10.2 The representations and warranties contained in this Agreement or in any
document delivered pursuant hereto or in connection herewith shall not survive
the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring
Trust and Safeco Trust. In addition, either party may at its option terminate
this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any representation, warranty,
covenant or agreement contained herein to be performed at or prior to the
Closing Date;
(b) because of a condition herein expressed to be precedent to the obligations
of the terminating party which has not been met and which reasonably appears
will not or cannot be met;
(c) by resolution of the Acquiring Trust's Board of Trustees if circumstances
should develop that, in the good faith opinion of such Board, make proceeding
with the Agreement not in the best interests of the Acquiring Portfolio's
shareholders;
(d) by resolution of the Safeco Trust's Board of Trustees if circumstances
should develop that, in the good faith opinion of such Board, make proceeding
with the Agreement not in the best interests of the Acquired Portfolio's
shareholders; or
(e) if the transactions contemplated by this Agreement shall not have occurred
on or prior to December 31, 2004 or such other date as the parties may mutually
agree upon in writing.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Acquiring Portfolio, the Acquiring Trust, the Safeco
Trust or the Acquired Portfolio, or the trustees or officers of the Safeco
Trust, or the Acquiring Trust, but, subject to Paragraph 9.2, each party shall
bear the expenses incurred by it incidental to the preparation and carrying out
of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Safeco Trust and the Acquiring Trust; provided, however, that following the
meeting of the Acquired Portfolio's shareholders called by the Safeco Trust
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Portfolio Shares to be received by the Acquired Portfolio
Shareholders under this Agreement to their detriment without their further
approval; provided that nothing contained in this Section 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquired Portfolio, c/o Symetra
Financial Corporation, 0000 000xx Xxxxx, X.X., Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx X. Xxxxxx, with copies to R. Xxxxxxx Xxxxxx, Xxxxxxxxxxx &
Xxxxxxxx LLP, 0000 Xxxxxxxxxxxxx Xxxxxx, X.X., Xxxxxx Xxxxx, Xxxxxxxxxx, XX
00000-0000, and to the Acquiring Portfolio, c/o Pioneer Investment Management,
Inc., 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxxx, Esq., with copies to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware, without giving effect to conflict of
laws principles (other than Delaware Code Title 6 ss. 2708); provided that, in
the case of any conflict between those laws and the federal securities laws, the
latter shall govern.
14.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by either party
without the prior written consent of the other party hereto. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, or other entity, other than the parties hereto
and their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
14.5 It is expressly agreed that the obligations of the Acquiring Trust and the
Safeco Trust shall not be binding upon any of their respective trustees,
shareholders, nominees, officers, agents or employees personally, but bind only
to the property of the Acquiring Portfolio or the Acquired Portfolio, as the
case may be, as provided in the trust instruments of the Acquiring Trust and the
Instrument of Trust of the Safeco Trust, respectively. The execution and
delivery of this Agreement have been authorized by the trustees of the Acquiring
Trust and of the Safeco Trust and this Agreement has been executed by authorized
officers of the Acquiring Trust and the Safeco Trust, acting as such, and
neither such authorization by such trustees nor such execution and delivery by
such officers shall be deemed to have been made by any of them individually or
to imposed any liability on any of them personally, but shall bind only the
property of the Acquiring Portfolio and the Acquired Portfolio, as the case may
be, as provided in the trust instruments of the Acquiring Trust and the
Instrument of Trust of the Safeco Trust, respectively.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first set forth above by its President
or Vice President and attested by its Secretary or Assistant Secretary.
Attest: SAFECO RESOURCE SERIES TRUST on behalf of SAFECO
MULTI-CAP CORE PORTFOLIO
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------- -------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxx
Title: Secretary Title: President
Attest: PIONEER VARIABLE CONTRACTS TRUST on behalf of
PIONEER MID CAP VALUE VCT PORTFOLIO
By: /s/ Xxxxxxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx
------------------------- ------------------
Name: Xxxxxxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxx
Title: Assistant Secretary Title: Executive Vice President
A-2
US1DOCS 2327601v5
Annex A
TAX REPRESENTATION CERTIFICATE OF
PIONEER VARIABLE CONTRACTS TRUST
ON BEHALF OF PIONEER MID CAP VALUE VCT PORTFOLIO
This certificate is being delivered in connection with the transactions
to be effected pursuant to the Agreement and Plan of Reorganization made as of
October 29, 2004 between Pioneer Variable Contracts Trust, a Delaware statutory
trust ("Acquiring Trust"), on behalf of its series Pioneer Mid Cap Value VCT
Portfolio ("Acquiring Portfolio"), and Safeco Resource Series Trust, a Delaware
statutory trust, on behalf of its series Safeco Multi-Cap Core Portfolio
("Acquired Portfolio") (the "Agreement"). Pursuant to the Agreement, Acquiring
Portfolio will acquire all of the assets of Acquired Portfolio in exchange
solely for (i) the assumption by Acquiring Portfolio of the Assumed Liabilities
of Acquired Portfolio and (ii) the issuance of Class I shares of beneficial
interest of Acquiring Portfolio (the "Acquiring Portfolio Shares") to Acquired
Portfolio, followed by the distribution by Acquired Portfolio, in liquidation of
Acquired Portfolio, of the Acquiring Portfolio Shares to the shareholders of
Acquired Portfolio and the termination of Acquired Portfolio (the foregoing
together constituting the "transaction").
The undersigned officer of Acquiring Trust, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations, on behalf of Acquiring Portfolio, hereby
certifies and represents that the following statements are true, complete and
correct and will be true, complete and correct on the date of the transaction
and thereafter as relevant. Unless otherwise indicated, all capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Agreement.
1. Acquiring Portfolio is a series of Acquiring Trust, a statutory trust
organized under the laws of the State of Delaware, and Acquiring Portfolio is,
and has been at all times, treated as a separate corporation for federal tax
purposes.
2. Neither Acquiring Portfolio nor any person "related" to Acquiring Portfolio
(as defined in Treasury Regulation Section 1.368-1(e)(3)), nor any partnership
of which Acquiring Portfolio or any such related person is a partner, has any
plan or intention to redeem or otherwise acquire any of the Acquiring Portfolio
Shares received by shareholders of Acquired Portfolio in the transaction except
in the ordinary course of Acquiring Portfolio's business in connection with its
legal obligation under Section 22(e) of the Investment Company Act of 1940, as
amended (the "1940 Act"), as a series of a registered open-end investment
company to redeem its own shares.
3. After the transaction, Acquiring Portfolio will continue the historic
business (as defined in Treasury Regulation Section 1.368-1(d)(2)) of Acquired
Portfolio or will use a significant portion of the historic business assets (as
defined in Treasury Regulation Section 1.368-1(d)(3)) acquired from Acquired
Portfolio in a business.
4. Acquiring Portfolio has no plan or intention to sell or otherwise dispose of
any assets of Acquired Portfolio acquired in the transaction, except for
dispositions made in the ordinary course of its business or to maintain its
qualification as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code").
5. Any expenses of Acquired Portfolio incurred in connection with the
transaction which are paid or assumed by Acquiring Portfolio will be expenses of
Acquired Portfolio solely and directly related to the transaction in accordance
with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquiring Portfolio will not pay or
assume the expenses, if any, incurred by any Acquired Portfolio Shareholders in
connection with the transaction.
6. There is no, and never has been any, indebtedness between Acquiring Portfolio
and Acquired Portfolio.
7. Acquiring Portfolio has properly elected to be a regulated investment company
under Subchapter M of the Code, has qualified for the special tax treatment
afforded regulated investment companies under the Code for each taxable year
since inception and qualifies for such treatment as of the time of the Closing.
8. Acquiring Portfolio meets the requirements of an "investment company" in
Section 368(a)(2)(F) of the Code.
9. Acquiring Portfolio is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
10. Acquiring Portfolio does not now own and has never owned, directly or
indirectly, any shares of Acquired Portfolio.
11. As of the date of the transaction, the fair market value of the Acquiring
Portfolio Shares issued to Acquired Portfolio will be approximately equal to the
fair market value of the Acquired Assets, minus the Assumed Liabilities.
Acquiring Portfolio will not furnish any consideration in connection with the
acquisition of the Acquired Assets other than the assumption of the Assumed
Liabilities and the issuance of such Acquiring Portfolio Shares.
12. Acquired Portfolio Shareholders will not be in control (within the meaning
of Sections 368(a)(2)(H)(i) and 304(c)(1) of the Code) of Acquiring Portfolio
after the transaction.
13. The transaction is being undertaken for valid and substantial business
purposes, including facilitating Acquired Portfolio's becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
14. No Acquired Portfolio shareholder is acting as agent for Acquiring Portfolio
in connection with the transaction or approval thereof. Acquiring Portfolio will
not reimburse any Acquired Portfolio shareholder for Acquired Portfolio Shares
such shareholder may have purchased or for other obligations such shareholder
may have incurred.
15. Acquiring Portfolio has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in Acquiring Portfolio.
* * * * *
The undersigned officer of Acquiring Trust is authorized to make all of
the representations set forth herein, and the undersigned is authorized to
execute this certificate on behalf of Acquiring Portfolio. The undersigned
recognizes that Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP will rely upon the
foregoing representations in evaluating the United States federal income tax
consequences of the transaction and rendering its opinion pursuant to Section
8.5 of the Agreement. If, prior to the date of the transaction, any of the
representations set forth herein ceases to be accurate, the undersigned agrees
to deliver immediately to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP a written
notice to that effect.
PIONEER VARIABLE CONTRACTS TRUST on behalf of PIONEER MID
CAP VALUE VCT PORTFOLIO
By: /s/ Xxxxxxx Nave________
Name: Xxxxxxx Xxxx
Title: Treasurer
Dated: December 10, 2004
B-3
US1DOCS 2327601v5
Annex B
TAX REPRESENTATION CERTIFICATE OF
SAFECO RESOURCE SERIES TRUST
ON BEHALF OF SAFECO MULTI-CAP CORE PORTFOLIO
This certificate is being delivered in connection with the transactions
to be effected pursuant to the Agreement and Plan of Reorganization made as of
October 29, 2004 between Pioneer Variable Contracts Trust, a Delaware statutory
trust, on behalf of its series Pioneer Mid Cap Value VCT Portfolio ("Acquiring
Portfolio"), and Safeco Resource Series Trust, a Delaware statutory trust
("Safeco Trust"), on behalf of its series Safeco Multi-Cap Core Portfolio
("Acquired Portfolio") (the "Agreement"). Pursuant to the Agreement, Acquiring
Portfolio will acquire all of the assets of Acquired Portfolio in exchange
solely for (i) the assumption by Acquiring Portfolio of the Assumed Liabilities
of Acquired Portfolio; and (ii) the issuance of Class I shares of beneficial
interest of Acquiring Portfolio (the "Acquiring Portfolio Shares") to Acquired
Portfolio, followed by the distribution by Acquired Portfolio, in liquidation of
Acquired Portfolio, of the Acquiring Portfolio Shares to the shareholders of
Acquired Portfolio and the termination of Acquired Portfolio (the foregoing
together constituting the "transaction").
The undersigned officer of Safeco Trust, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations, on behalf of Acquired Portfolio, hereby
certifies and represents that the following statements are true, complete and
correct and will be true, complete and correct on the date of the transaction
and thereafter as relevant. Unless otherwise indicated, all capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Agreement.
1. Acquired Portfolio is a series of Safeco Trust, a statutory trust organized
under the laws of the State of Delaware, and Acquired Portfolio is, and has been
at all times, treated as a separate corporation for federal tax purposes.
2. As of the date of the transaction, the fair market value of the Acquiring
Portfolio Shares received by each shareholder that holds shares of Acquired
Portfolio (the "Acquired Portfolio Shares") will be approximately equal to the
fair market value of the Acquired Portfolio Shares with respect to which such
Acquiring Portfolio Shares are received, and the aggregate consideration
received by Acquired Portfolio shareholders in exchange for their Acquired
Portfolio Shares will be approximately equal to the fair market value of all of
the outstanding Acquired Portfolio Shares immediately prior to the transaction.
No property other than Acquiring Portfolio Shares will be distributed to
shareholders of Acquired Portfolio in exchange for their Acquired Portfolio
Shares, nor will any such shareholder receive cash or other property as part of
the transaction.
3. Neither Acquired Portfolio nor any person "related" to Acquired Portfolio (as
defined in Treasury Regulation Section 1.368-1(e)(3)), nor any partnership in
which Acquired Portfolio or any such related person is a partner, has redeemed,
acquired or otherwise made any distributions with respect to any shares of
Acquired Portfolio as part of the transaction, or otherwise pursuant to a plan
of which the transaction is a part, other than redemptions and distributions
made in the ordinary course of Acquired Portfolio's business as a series of an
open-end investment company. To the best knowledge of management of Acquired
Portfolio, there is no plan or intention on the part of the shareholders of
Acquired Portfolio to engage in any transaction with Acquired Portfolio,
Acquiring Portfolio, or any person treated as related to Acquired Portfolio or
Acquiring Portfolio under Treasury Regulation Section 1.368-1(e)(3) or any
partnership in which Acquired Portfolio, Acquiring Portfolio, or any person
treated as related to Acquired Portfolio or Acquiring Portfolio under Treasury
Regulation Section 1.368-1(e)(3) is a partner involving the sale, redemption or
exchange of any of the Acquired Portfolio Shares or any of the Acquiring
Portfolio Shares to be received in the transaction, as the case may be, other
than in the ordinary course of Acquired Portfolio's business as a series of an
open-end investment company.
4. Pursuant to the transaction, Acquired Portfolio will transfer to Acquiring
Portfolio, and Acquiring Portfolio will acquire, at least 90% of the fair market
value of the net assets, and at least 70% of the fair market value of the gross
assets, Acquired Portfolio held immediately before the transaction. For the
purposes of the foregoing, any amounts Acquired Portfolio uses to pay its
transaction expenses and to make redemptions and distributions immediately
before the transaction (except (a) redemptions in the ordinary course of its
business required by section 22(e) of the Investment Company Act and (b)
regular, normal dividend distributions made to conform to its policy of
distributing all or substantially all of its income and gains to avoid the
obligation to pay federal income tax and/or the excise tax under Section 4982 of
the Code) will be included as assets it held immediately before the transaction.
5. As of the date of the transaction, the fair market value of the Acquiring
Portfolio Shares issued to Acquired Portfolio will be approximately equal to the
fair market value of the Acquired Assets, minus the Assumed Liabilities.
Acquired Portfolio will not receive any consideration from Acquiring Portfolio
in connection with the acquisition of the Acquired Assets other than the
assumption of the Assumed Liabilities and the issuance of such Acquiring
Portfolio Shares.
6. The Assumed Liabilities assumed by Acquiring Portfolio plus the Assumed
Liabilities, if any, to which the transferred assets are subject were incurred
by Acquired Portfolio in the ordinary course of its business. Acquired Portfolio
is not aware of any liabilities of any kind other than the Assumed Liabilities.
7. As of the Closing Date, the adjusted basis and fair market value of the
Acquired Assets will equal or exceed the Assumed Liabilities assumed for
purposes of Section 357(d) of the Code.
8. Acquired Portfolio currently conducts its historic business within the
meaning of Treasury Regulation Section 1.368-1(d)(2), which provides that, in
general, a corporation's historic business is the business it has conducted most
recently, but does not include a business that the corporation enters into as
part of a plan of reorganization. All of the assets held by Acquired Portfolio
as of the opening of business on August 2, 2004 (the date the Acquiring
Portfolio Adviser became investment adviser to Acquired Portfolio) were Acquired
Portfolio's historic business assets within the meaning of Treasury Regulation
Section 1.368-1(d)(3) (which provides that a corporation's historic business
assets are the assets used in its historic business).
9. Acquired Portfolio will distribute to its shareholders the Acquiring
Portfolio Shares it receives pursuant to the transaction, and its other
properties, if any, and will be liquidated promptly thereafter.
10. The expenses of Acquired Portfolio incurred by it in connection with the
transaction will be only such expenses that are solely and directly related to
the transaction in accordance with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquired
Portfolio will not pay any expenses incurred by its shareholders in connection
with the transaction.
11. There is no, and never has been any, indebtedness between Acquiring
Portfolio and Acquired Portfolio.
12. Acquired Portfolio has properly elected to be a regulated investment company
under Subchapter M of the Code, has qualified for the special tax treatment
afforded regulated investment companies under Subchapter M of the Code for each
taxable year since inception, and qualifies for such treatment as of the time of
the Closing.
13. Acquired Portfolio meets the requirements of an "investment company" in
Section 368(a)(2)(F) of the Code.
14. Acquired Portfolio is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
15. Acquired Portfolio shareholders will not have dissenters' or appraisal
rights in the transaction.
16. The transaction is being undertaken for valid and substantial business
purposes, including facilitating Acquired Portfolio's becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
17. Acquired Portfolio does not pay compensation to any shareholder-employee.
18. Acquired Portfolio has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in Acquired Portfolio.
* * * * *
The undersigned officer of Safeco Trust is authorized to make all of
the representations set forth herein, and the undersigned is authorized to
execute this certificate on behalf of Acquired Portfolio. The undersigned
recognizes that Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP will rely upon the
foregoing representations in evaluating the United States federal income tax
consequences of the transaction and rendering its opinion pursuant to Section
8.5 of the Agreement. If, prior to the date of the transaction, any of the
representations set forth herein ceases to be accurate, the undersigned agrees
to deliver immediately to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP a written
notice to that effect.
SAFECO RESOURCE SERIES TRUST
on behalf of SAFECO MULTI-CAP CORE PORTFOLIO
By: /s/ Xxxxx X. Evans__________
------------------
Name: Xxxxx X. Evans________
--------------
Title: Treasurer______________
Dated: December 10, 2004
