AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this ___ th day of __________, 1997, between and among Warburg, Xxxxxx
Managed EAFE[R] Countries Fund, Inc., a Maryland corporation (the "New Warburg
Fund"), and Warburg, Xxxxxx Institutional Fund, Inc., a Maryland corporation
(the "Institutional Fund"), on behalf of the Managed EAFE[R] Countries
Portfolio, a series of shares of the Institutional Fund (the "Existing Warburg
Fund").
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Xxxxxxx 000 (x) xx xxx
Xxxxxx Xxxxxx Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization of the Existing Warburg Fund (collectively, the "Reorganization")
will consist of the transfer of substantially all of the assets of the Existing
Warburg Fund in exchange solely for Common Shares (collectively, the "Shares")
of the New Warburg Fund and the assumption by the New Warburg Fund of
liabilities of the Existing Warburg Fund and the distribution, after the Closing
Date hereinafter referred to, of New Warburg Fund Shares to the shareholders of
the Existing Warburg Fund in liquidation of the Existing Warburg Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Board of Directors of the Institutional Fund on behalf of
the Existing Warburg Fund, has determined that the exchange of all of the assets
and the liabilities of the Existing Warburg Fund for New Warburg Fund Shares and
the assumption of such liabilities by the New Warburg Fund is in the best
interests of the Institutional Fund and the Existing Warburg Fund and that the
interests of the existing shareholders of the Institutional Fund and the
Existing Warburg Fund would not be diluted as a result of this transaction; and
WHEREAS, the Board of Directors of the New Warburg Fund has determined
that the exchange of all of the assets of the Existing Warburg Fund for New
Warburg Fund Shares is in the best interests of the New Warburg Fund's
shareholders and that the interests of the existing shareholders of the New
Warburg Fund would not be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE EXISTING WARBURG FUND IN EXCHANGE FOR NEW
WARBURG FUND SHARES AND ASSUMPTION OF THE EXISTING WARBURG FUND'S
LIABILITIES AND LIQUIDATION OF THE EXISTING WARBURG FUND
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Institutional
Fund agrees to transfer the Existing Warburg Fund's assets as set forth in
paragraph 1.2 to the New Warburg Fund, and the New Warburg Fund agrees in
exchange therefor: (i) to deliver to the Institutional Fund the number of New
Warburg Fund Shares, including fractional New Warburg Fund Shares, determined by
dividing the value of the Existing Warburg Fund's net assets, computed in the
manner and as of the time and date set forth in paragraph 2.1, by the net asset
value of one New Warburg Fund Share of the same class, computed in the manner
and as of the time and date set forth in paragraph 2.2; and (ii) to assume the
liabilities of the Existing Warburg Fund, as set forth in paragraph 1.3. Such
transactions shall take place at the closing provided for in paragraph 3.1 (the
"Closing").
1.2. (a) The assets of the Existing Warburg Fund to be acquired by the
New Warburg Fund shall consist of all property including, without limitation,
all cash, securities and dividend or interest receivables which are owned by the
Existing Warburg Fund and any deferred or prepaid expenses shown as an asset on
the books of the Existing Warburg Fund on the closing date provided in paragraph
3.1 (the "Closing Date").
(b) In the event that the Existing Warburg Fund holds any
investments which do not conform to the New Warburg Fund's investment
objectives, policies and restrictions, the Existing Warburg Fund will dispose of
such securities prior to the Closing Date. In addition, if it is determined that
the portfolios of the Existing Warburg Fund and the New Warburg Fund, when
aggregated, would contain investments exceeding certain percentage limitations
imposed upon the New Warburg Fund with respect to such investments, the Existing
Warburg Fund, if requested by the New Warburg Fund, will dispose of and/or
reinvest a sufficient amount of such investments as may be necessary to avoid
violating such limitations as of the Closing Date.
1.3. The Institutional Fund, on behalf of the Existing Warburg Fund,
will endeavor to discharge all the Existing Warburg Funds' known liabilities and
obligations prior to the Closing Date, other than those liabilities and
obligations which would otherwise be discharged at a later date in the ordinary
course of business. The New Warburg Fund shall assume all liabilities, expenses,
costs, charges and reserves, including those liabilities reflected on an
unaudited statement of assets and liabilities of the Existing Warburg Fund
prepared by PFPC Inc., as of the Valuation Date (as defined in paragraph 2.1),
in
-2-
accordance with generally accepted accounting principles consistently applied
from the prior audited period. The New Warburg Fund shall also assume any
liabilities, expenses, costs or charges incurred by or on behalf of the Existing
Warburg Fund specifically arising from or relating to the operations and/or
transactions of the Existing Warburg Fund prior to and including the Closing
Date but which are not reflected on the above-mentioned statement of assets and
liabilities, including any liabilities, expenses, costs or charges arising under
paragraph 5.10 hereof.
1.4. As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable (the "Liquidation Date"), the Existing Warburg Fund
will liquidate and distribute pro rata to the Existing Warburg Fund's
shareholders of record determined as of the close of business on the Closing
Date (the "Existing Warburg Fund Shareholders") the New Warburg Fund Shares it
receives pursuant to paragraph 1.1. Such liquidation and distribution will be
accomplished by the transfer of the New Warburg Fund Shares then credited to the
account of the Existing Warburg Fund on the books of the New Warburg Fund to
open accounts on the share records of the New Warburg Fund in the name of the
Existing Warburg Fund's shareholders representing the respective pro rata number
of the New Warburg Fund Shares of the particular class due such shareholders.
All issued and outstanding shares of the Existing Warburg Fund will
simultaneously be canceled on the books of the Institutional Fund, although
share certificates representing interests in the Existing Warburg Fund will
represent a number of New Warburg Fund Shares after the Closing Date as
determined in accordance with Section 2.3. The New Warburg Fund shall not issue
certificates representing the New Warburg Fund Shares in connection with such
exchange.
1.5. Ownership of New Warburg Fund Shares will be shown on the books of
the New Warburg Fund's transfer agent. Shares of the New Warburg Fund will be
issued in the manner described in the New Warburg Fund's current prospectus and
statement of additional information.
1.6. Any transfer taxes payable upon issuance of the New Warburg Fund
Shares in a name other than the registered holder of the Existing Warburg Fund
Shares on the books of the Existing Warburg Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such New
Warburg Fund shares are to be issued and transferred.
1.7. Any reporting responsibility of the Existing Warburg Fund is and
shall remain the responsibility of the Institutional Fund up to and including
the applicable Closing Date and such later dates on which the Existing Warburg
Fund is terminated.
-3-
2. VALUATION
2.1. The value of the Existing Warburg Fund's assets to be acquired
hereunder shall be the value of such assets computed as of the close of regular
trading on the New York Stock Exchange, Inc. (the "NYSE") on the applicable
Closing Date (such time and date being hereinafter called the "Valuation Date"),
using the valuation procedures set forth in the Existing Warburg Fund's then
current prospectus or statement of additional information.
2.2. The net asset value of New Warburg Fund Shares shall be the net
asset value per share computed as of the Valuation Date, using the valuation
procedures set forth in the New Warburg Fund's then current prospectus or
statement of additional information.
2.3. The number of Shares of the New Warburg Fund to be issued
(including fractional shares, if any) in exchange for the Existing Warburg
Fund's net assets shall be determined by dividing the value of the net assets of
the Existing Warburg Fund Shares determined using the same valuation procedures
referred to in paragraph 2.1 by the net asset value per Share of the New Warburg
Fund determined in accordance with paragraph 2.2.
2.4. All computations of value shall be made by PFPC Inc. in accordance
with its regular practice as pricing agent for the Existing Warburg Fund and New
Warburg Fund, respectively.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date for the Reorganization shall be __________ ___,
1997, or such other date as the parties to such Reorganization may agree to in
writing. All acts taking place at the Closing shall be deemed to take place
simultaneously as of the close of business on the Closing Date unless otherwise
provided. The Closing shall be held as of ____:00 p.m., at the offices of
Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000-0000,
or at such other time and/or place as the parties may agree.
3.2. At the Closing, a certificate of an authorized officer of the New
Warburg Fund shall be delivered stating that: (a) the Existing Warburg Fund's
portfolio securities, cash and any other assets shall have been delivered in
proper form to the New Warburg Fund prior to or on the Closing Date and (b) all
necessary taxes, including all applicable federal and state stock transfer
stamps, if any, shall have been paid, or provision for payment shall have been
made, in conjunction with the delivery of portfolio securities.
3.3. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the New Warburg Fund or the
Existing Warburg Fund shall be closed to
-4-
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on the NYSE or elsewhere shall be disrupted so that accurate
appraisal of the value of the net assets of the New Warburg Fund or the Existing
Warburg Fund is impracticable, the applicable 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.
3.4. The Institutional Fund, on behalf of the Existing Warburg Fund,
shall provide to the New Warburg Fund's transfer agent a list of the names and
addresses of the Existing Warburg Fund's shareholders and the number and class
of outstanding Shares owned by each such shareholder immediately prior to the
Closing. The New Warburg Fund shall issue and deliver a confirmation evidencing
the New Warburg Fund Shares to be credited to the Existing Warburg Fund's
account on the Closing Date to the Secretary of the Institutional Fund or
provide evidence satisfactory to the Institutional Fund that such New Warburg
Fund Shares have been credited to the Existing Warburg Fund's account on the
books of the New Warburg Fund. At the Closing, each party shall deliver to the
relevant other parties such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Institutional Fund, on behalf of the Existing Warburg Fund,
represents and warrants to the New Warburg Fund as follows:
(a) The Institutional Fund is a Maryland corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland and the Existing Warburg Fund is a validly existing series of shares of
the Institutional Fund representing interests in the Existing Warburg Fund under
the laws of the State of Maryland;
(b) The Institutional Fund is a registered investment company
classified as a management company of the open-end type and its registration
with the Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
is in full force and effect;
(c) The Institutional Fund is not, and the execution, delivery
and performance of this Agreement will not result, in a violation of its Charter
or By-Laws or any material agreement, indenture, instrument, contract, lease or
other undertaking to which the Institutional Fund or any Existing Warburg Fund
is a party or by which either of them or their property is bound;
-5-
(d) The Existing Warburg Fund has no contracts or other commitments
(other than this Agreement) which will be terminated with liability to the
Existing Warburg Fund prior to the Closing Date;
(e) Except as previously disclosed in writing to and accepted by
the New Warburg Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Existing Warburg Fund or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business. The
Institutional Fund knows of no facts which might form the basis for the
institution of such proceedings and is not party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or the business of the Existing
Warburg Fund or its ability to consummate the transactions herein contemplated;
(f) The financial statements of the Existing Warburg Fund for the
period from March 31, 1997 (commencement of the Existing Warburg Fund's
operations) and ending October 31, 1997 have been audited by Coopers & Xxxxxxx
L.L.P., certified public accountants, and are in accordance with generally
accepted accounting principles consistently applied, and such statements (copies
of which have been furnished to the New Warburg Fund) fairly reflect the
financial condition of the Existing Warburg Fund as of such dates, and there are
no known contingent liabilities of the Existing Warburg Fund as of such dates
not disclosed therein;
(g) Since October 31, 1997, there has not been any material adverse
change in the Existing Warburg Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Existing Warburg Fund of indebtedness maturing more than
one year from the date that such indebtedness was incurred, except as otherwise
disclosed to and accepted by the New Warburg Fund. For the purposes of this
subparagraph (g), a decline in net asset value per share or the total assets of
the Existing Warburg Fund in the ordinary course of business shall not
constitute a material adverse change;
(h) At the Closing Date, all federal and other tax returns and
reports of each Existing Warburg Fund required by law to have been filed by such
dates shall have been filed, and all federal and other taxes shall have been
paid so far as due, or provision shall have been made for the payment thereof
and, to the best of the Institutional Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
-6-
(i) For the most recent fiscal year of its operation, the Existing
Warburg Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company; all of the
Existing Warburg Fund's issued and outstanding shares have been offered and sold
in compliance in all material respects with applicable federal and state
securities laws;
(j) All issued and outstanding shares of the Existing Warburg Fund
are, and at the applicable Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of the issued and outstanding
shares of the Existing Warburg Fund will, at the time of Closing, be held by the
persons and the amounts set forth in the records of the transfer agent as
provided in paragraph 3.4. The Existing Warburg Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of the
Existing Warburg Fund's shares, nor is there outstanding any security
convertible into any of the Existing Warburg Fund's shares;
(k) At the Closing Date, the Institutional Fund will have good and
marketable title to the Existing Warburg Fund's assets to be transferred to the
New Warburg Fund pursuant to paragraph 1.2 and full right, power and authority
to sell, assign, transfer and deliver such assets hereunder and, upon delivery
and payment for such assets, the New Warburg Fund will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the Securities Act of
1933, as amended (the "Securities Act"), other than as disclosed to the New
Warburg Fund.
(l) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary actions on the part of the Institutional
Fund's Board of Directors, and, subject to the approval of the Existing Warburg
Fund's shareholders, this Agreement will constitute a valid and binding
obligation of the Institutional Fund, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(m) The information to be furnished by the Institutional Fund for
use in no-action letters, applications for exemptive 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 thereunder applicable thereto;
and
-7-
(n) The proxy statement of the Existing Warburg Fund (the "Proxy
Statement") to be included in the Registration Statement referred to in
paragraph 5.7 (other than information therein that relates to the New Warburg
Fund) will, on the effective date of the Registration Statement and on the
Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading.
4.2. The New Warburg Fund represents and warrants to the Existing
Warburg Fund as follows:
(a) The New Warburg Fund is a Maryland corporation, duly organized,
validly existing and in good standing under the laws of the State of Maryland;
(b) The New Warburg Fund 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 1940 Act is in full force
and effect;
(c) The current prospectus and statement of additional information
filed as part of the New Warburg Fund registration statement on Form N-1A (the
"New Warburg Fund Registration Statement") conform in all material respects to
the applicable requirements of the Securities Act and the 1940 Act and the rules
and regulations of the Commission thereunder and do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(d) At the Closing Date, the New Warburg Fund will have good and
marketable title to its assets;
(e) The New Warburg Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a violation of its Charter or
By-Laws or any material agreement, indenture, instrument, contract, lease or
other undertaking to which the New Warburg Fund is a party or by which it is
bound;
(f) Except as previously disclosed in writing to and accepted by
the Institutional Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the New Warburg Fund or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business. The New
Warburg Fund knows of no facts which might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or
-8-
judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions contemplated
herein;
(g) Since the inception of the New Warburg Fund there has not been
any material adverse change with respect to the New Warburg Fund's financial
condition, assets, liabilities or business other than changes occurring in the
ordinary course of business, or any incurrence by the New Warburg Fund of
indebtedness maturing more than one year from the date that such indebtedness
was incurred. For the purposes of this subparagraph (g), a decline in net asset
value per share or the total assets of the New Warburg Fund in the ordinary
course of business shall not constitute a material adverse change;
(h) At the Closing Date, all federal and other tax returns and
reports of the New Warburg Fund required by law then to be filed shall have been
filed, and all federal and other taxes shown as due on said returns and reports
shall have been paid or provision shall have been made for the payment thereof;
(i) The New Warburg Fund intends to meet the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company in the future;
(j) At the date hereof, all issued and outstanding New Warburg Fund
Shares are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable, with no personal liability attaching
to the ownership thereof. The New Warburg Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any New Warburg
Fund Shares, nor is there outstanding any security convertible into any New
Warburg Fund Shares;
(k) The execution, delivery and performance of this Agreement shall
have been duly authorized prior to the Closing Date by all necessary actions, if
any, on the part of the New Warburg Fund's Board of Directors and the New
Warburg Fund's shareholders, and this Agreement will constitute a valid and
binding obligation of the New Warburg Fund enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(l) The New Warburg Fund Shares to be issued and delivered to the
Existing Warburg Fund, for the account of the Existing Warburg Fund's
shareholders, pursuant to the terms of this Agreement, will at the Closing Date
have been duly authorized and, when so issued and delivered, will be duly and
validly issued New Warburg Fund Shares, and will be fully paid and
non-assessable with no personal liability attaching to the ownership thereof;
-9-
(m) The information to be furnished by the New Warburg Fund for use
in no-action letters, applications for exemptive 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;
(n) The Proxy Statement to be included in the Registration
Statement referred to in paragraph 5.7 (only insofar as it relates to the New
Warburg Fund) will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading; and
(o) The New Warburg Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the Securities Act, the 1940
Act and such of the state Blue Sky or securities laws as it may deem appropriate
in order to continue its operations after the Closing Date.
5. COVENANTS OF THE INSTITUTIONAL FUND, THE NEW WARBURG FUND AND THE
EXISTING WARBURG FUND
5.1. The New Warburg Fund and the Existing Warburg Fund each will
operate its business in the ordinary course 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 distributions.
5.2. The Institutional Fund, on behalf of the Existing Warburg Fund,
will call a meeting of its shareholders to consider and act upon this Agreement
and to take all other actions in coordination with the Existing Warburg Fund
necessary to obtain approval of the transactions contemplated herein.
5.3. The Institutional Fund, on behalf of the Existing Warburg Fund,
will call a meeting of its shareholders to consider and act upon this Agreement
and to take all other actions in co-ordination with the Existing Warburg Fund
necessary to obtain approval of the transactions contemplated herein.
5.4. The Institutional Fund, on behalf of the Existing Warburg Fund,
will assist the New Warburg Fund in obtaining such information as the New
Warburg Fund reasonably requests concerning the beneficial ownership of the
Existing Warburg Fund's Shares.
5.5. Subject to the provisions of this Agreement, the New Warburg Fund
and the Institutional Fund each will take, or cause
-10-
to be taken, all action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
5.6. As promptly as practicable, but in any case within sixty days after
the Closing Date, the Institutional Fund shall furnish the New Warburg Fund, in
such form as is reasonably satisfactory to the New Warburg Fund, a statement of
the earnings and profits of the Existing Warburg Fund for federal income tax
purposes which will be carried over to the New Warburg Fund as a result of
Section 381 of the Code.
5.7. The Institutional Fund, on behalf of the Existing Warburg Fund,
will provide the New Warburg Fund with information reasonably necessary for the
preparation of a prospectus (the "Prospectus") which will include the Proxy
Statement referred to in paragraph 4.1(n), all to be included in a registration
statement on Form N-14 of the New Warburg Fund (the "Registration Statement"),
in compliance with the Securities Act, the Securities Exchange Act of 1934 (the
"Exchange Act") and the 1940 Act in connection with the meeting of the
Institutional Fund's shareholders to consider approval of this Agreement and the
transactions contemplated herein.
5.8. The Institutional Fund, on behalf of the Existing Warburg Fund,
will provide the New Warburg Fund with information reasonably necessary for the
preparation of the New Warburg Registration Statement.
5.9. As promptly as practicable, but in any case within thirty days of
the Closing Date, the Institutional Fund shall furnish the New Warburg Fund with
a statement containing information required for purposes of complying with Rule
24f-2 under the 1940 Act. A notice pursuant to Rule 24f-2 will be filed by the
New Warburg Fund offsetting redemptions by the Existing Warburg Fund during the
fiscal year ending on or after the applicable Closing Date against sales of New
Warburg Fund Shares and the Institutional Fund agrees that it will not net
redemptions during such period by the Existing Warburg Fund against sales of
shares of any other series of the Institutional Fund.
5.10. The New Warburg Fund agrees to indemnify and advance expenses to
each person who at the time of the execution of this Agreement serves as a
Director or Officer ("Indemnified Person") of the Institutional Fund, against
money damages actually and reasonably incurred by such Indemnified Person in
connection with any claim that is asserted against such Indemnified Person
arising out of such person's service as a director or officer of the
Institutional Fund with respect to matters specifically relating to the Existing
Warburg Fund, provided that such indemnification and advancement of expenses
shall be permitted to the fullest extent that is available under the Maryland
General
-11-
Corporation law and other applicable law. This paragraph 5.10 shall not protect
any such Indemnified Person against any liability to the Existing Warburg Fund,
the New Warburg Fund or their shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or from
reckless disregard of the duties involved in the conduct of his office. An
Indemnified Person seeking indemnification shall be entitled to advances from
the New Warburg Fund for payment of the reasonable expenses incurred by him in
connection with the matter as to which he is seeking indemnification in the
manner and to the fullest extent permissible under the Maryland General
Corporation law and other applicable law. Such Indemnified Person shall provide
to the New Warburg Fund a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the New Warburg Fund has
been met and a written undertaking to repay any advance if it should ultimately
be determined that the standard of conduct has not been met. In addition, at
least one of the following additional conditions shall be met: (a) the
Indemnified Person shall provide security in form and amount acceptable to the
New Warburg Fund for its undertaking; (b) the New Warburg Fund is insured
against losses arising by reason of the advance; or (c) either a majority of a
quorum of disinterested non-party directors of the New Warburg Fund
(collectively, the "Disinterested Directors"), or independent legal counsel
selected by the New Warburg Fund, in a written opinion, shall have determined,
based on a review of facts readily available to the New Warburg Fund at the time
the advance is proposed to be made, that there is reason to believe that the
Director will ultimately be found to be entitled to indemnification.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE EXISTING WARBURG FUND
The obligations of the Institutional Fund to consummate the transactions
provided for herein with respect to the Existing Warburg Fund shall be subject,
at its election, to the performance by the New Warburg Fund of all of the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
6.1. All representations and warranties of the New Warburg Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the actions
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 New Warburg Fund shall have delivered to the Institutional Fund
a certificate executed in its name by its President or Vice President and its
Secretary, Treasurer or Assistant Treasurer, in a form reasonably satisfactory
to the
-12-
Institutional Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the New Warburg Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Existing Warburg Fund shall reasonably request;
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NEW WARBURG FUND.
The obligations of the New Warburg Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Existing Warburg Fund of all the obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Institutional Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2. The Institutional Fund shall have delivered to the New Warburg Fund
a statement of the Existing Warburg Fund's assets and liabilities, together with
a list of the Existing Warburg Fund's portfolio securities showing the tax costs
of such securities by lot and the holding periods of such securities, as of the
Closing Date;
7.3. The Institutional Fund shall have delivered to the New Warburg
Fund, pursuant to paragraph 4.1(f), copies of financial statements of the
Existing Warburg Fund as of and for its most recently completed fiscal year.
7.4. The New Warburg Fund shall have received from Coopers & Xxxxxxx
L.L.P. a letter addressed to the New Warburg Fund and dated as of the applicable
Closing Date stating that as of a date no more than three (3) business days
prior to the applicable Closing Date, Coopers & Xxxxxxx L.L.P. performed limited
procedures in connection with the Institutional Fund's most recent unaudited
financial statements and that (a) nothing came to their attention in performing
such limited procedures or otherwise that led them to believe that there had
been any changes in the assets, liabilities, net assets, net investment income,
net increase (decrease) in net assets from operations or net increase (decrease)
in net assets as compared with amounts as of the Existing Warburg Fund's most
recent audited fiscal year end or the corresponding period in the Existing
Warburg Fund's most recent audited fiscal year, other than changes occurring in
the ordinary course of business, and (b) based on such limited procedures, there
is no change in their report on the most recent audited financial statements of
such Existing Warburg Fund.
-13-
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NEW WARBURG FUND AND
THE EXISTING WARBURG FUND.
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the New Warburg Fund, the Institutional Fund on
behalf of the Existing Warburg Fund shall, and if any of such conditions do not
exist on or before the Closing Date with respect to the Existing Warburg Fund,
the New Warburg Fund shall, at their respective option, not be required to
consummate the transactions contemplated by this Agreement:
8.1. The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding Shares of
the Existing Warburg Fund in accordance with the provisions of the Institutional
Fund's Charter and applicable law and certified copies of the votes evidencing
such approval shall have been delivered to the New Warburg Fund.
8.2. On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain 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, including
"no-action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by the New Warburg Fund or the Institutional Fund
to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the New Warburg Fund or the Existing
Warburg Fund, provided that either party hereto may for itself waive any of such
conditions.
8.4. The Registration Statement and the New Warburg Fund Registration
Statement shall each have become effective under the Securities Act and no stop
orders suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened or contemplated
under the Securities Act.
8.5. The parties shall have received a favorable opinion of Xxxxxxx Xxxx
& Xxxxxxxxx, addressed to, and in form and substance satisfactory to, the
Institutional Fund, on behalf of the Existing Warburg Fund, and the New Warburg
Fund, substantially to the effect that for federal income tax purposes:
-14-
(a) The transfer of all or substantially all of the Existing
Warburg Fund's assets in exchange for the New Warburg Fund Shares and the
assumption by the New Warburg Fund of liabilities of the Existing Warburg Fund
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code and the New Warburg Fund and the Existing Warburg Fund are each a "party to
a reorganization" within the meaning of Section 368(b) of the Code; (b) no gain
or loss will be recognized by the New Warburg Fund upon the receipt of the
assets of the Existing Warburg Fund solely in exchange for the New Warburg Fund
Shares and the assumption by the New Warburg Fund of liabilities of the Existing
Warburg Fund; (c) no gain or loss will be recognized by the Existing Warburg
Fund upon the transfer of the Existing Warburg Fund's assets to the New Warburg
Fund in exchange for the New Warburg Fund Shares and the assumption by the New
Warburg Fund of liabilities of the Existing Warburg Fund or upon the
distribution (whether actual or constructive) of the New Warburg Fund Shares to
the Existing Warburg Fund's shareholders in exchange for their shares of the
Existing Warburg Fund; (d) no gain or loss will be recognized by shareholders of
the Existing Warburg Fund upon the exchange of their Existing Warburg Fund
shares for the New Warburg Fund Shares and the assumption by the New Warburg
Fund of liabilities of the Existing Warburg Fund; (e) the aggregate tax basis
for the New Warburg Fund Shares received by each of the Existing Warburg Fund's
shareholders pursuant to the Reorganization will be the same as the aggregate
tax basis of the Existing Warburg Fund Shares held by such shareholder
immediately prior to the Reorganization, and the holding period of the New
Warburg Fund Shares to be received by each Existing Warburg Fund shareholder
will include the period during which the Existing Warburg Fund Shares exchanged
therefor were held by such shareholder (provided that the Existing Warburg Fund
Shares were held as capital assets on the date of the Reorganization); and (f)
the tax basis of the Existing Warburg Fund's assets acquired by the New Warburg
Fund will be the same as the tax basis of such assets to the Existing Warburg
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Existing Warburg Fund in the hands of the New Warburg Fund will
include the period during which those assets were held by the Existing Warburg
Fund.
Notwithstanding anything herein to the contrary, neither the New Warburg
Fund nor the Institutional Fund may waive the conditions set forth in this
paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES; OTHER AGREEMENTS
9.1. The New Warburg Fund represents and warrants to the Existing
Warburg Fund, and the Institutional Fund on behalf of the Existing Warburg Fund
represents and warrants to the New Warburg Fund, that there are no brokers or
finders or other entities to receive any payments in connection with the
transactions provided for herein.
-15-
9.2. Warburg Pincus Asset Management, Inc. ("Warburg") or its affiliates
agrees to bear the expenses incurred in connection with the transactions
contemplated by this Agreement, whether or not consummated (excluding
extraordinary expenses such as litigation expenses, damages and other expenses
not normally associated with transactions of the type contemplated by this
Agreement). These expenses consist of: (i) expenses associated with preparing
this Agreement; (ii) preparing and filing the New Warburg Registration Statement
covering the Shares to be issued in the Reorganization; (iii) registration or
qualification fees and expenses of preparing and filing such forms, if any,
necessary under applicable state securities laws to qualify the New Warburg Fund
Shares to be issued in connection with the Reorganization; (iv) postage;
printing; accounting fees; and legal fees incurred in connection with the
transactions contemplated by this Agreement; (v) solicitation costs incurred in
connection with the shareholders meeting referred to in clause (i) above and
paragraph 5.2 hereof; and (vi) any other Reorganization expenses.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The New Warburg Fund and the Institutional Fund, itself and on
behalf of the Existing Warburg Fund, agree that neither party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement among the parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1. This Agreement may be terminated at any time at or prior to the
Closing Date by: (1) mutual agreement of the Institutional Fund, on behalf of
the Existing Warburg Fund, and the New Warburg Fund; (2) the Institutional Fund,
on behalf of the Existing Warburg Fund, in the event the New Warburg Fund shall,
or the New Warburg Fund in the event the Institutional Fund or the Existing
Warburg Fund shall, materially breach any representation, warranty or agreement
contained herein to be performed at or prior to the Closing Date; or (3) the
Institutional Fund, on behalf of the Existing Warburg Fund, or the New Warburg
Fund, or the New Warburg Fund in the event a condition herein expressed to be
precedent to the obligations of the terminating party or parties has not been
met and it reasonably appears that it will not or cannot be met.
11.2. In the event of any such termination, there shall be no liability
for damages on the part of either the New Warburg
-16-
Fund or the Institutional Fund, or their respective directors or officers, to
the other party or parties.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in writing in
such manner as may be mutually agreed upon by the authorized officers of the New
Warburg Fund and the Institutional Fund; provided, however, that following the
meeting of the Existing Warburg Fund's shareholders called by the Institutional
Fund pursuant to paragraph 5.2 of this Agreement no such amendment may have the
effect of changing the provisions for determining the number of the New Warburg
Fund Shares to be issued to the Existing Warburg Fund's Shareholders under this
Agreement to the detriment of such shareholders without their further approval.
13. NOTICES
13.1. 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 Institutional
Fund and/or the Existing Warburg Fund at:
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY; USE OF TRADEMARK
14.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5. The parties to this Agreement agree that the legend attached
hereto as Appendix A shall constitute part of the original agreement and shall
have the full force and effect and be binding upon the parties as if it were
originally included therein.
-17-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its Chairman of the Board, President or Vice President and
attested to by its Secretary or Assistant Secretary.
WARBURG, XXXXXX MANAGED EAFE[R] COUNTRIES FUND, INC.
By: ___________________________
Name: _____________________
Title: ____________________
Attest: _______________________
WARBURG PINCUS INSTITUTIONAL FUND, INC., for itself and
on behalf of the Managed EAFE[R] Countries Portfolio
By: ___________________________
Name: _____________________
Title: ____________________
Attest: _______________________
-18-
APPENDIX A
Warburg, Xxxxxx Managed EAFE(R) Countries Fund, Inc. (the
"Fund") is not sponsored, endorsed, sold or promoted by Xxxxxx Xxxxxxx. Xxxxxx
Xxxxxxx makes no representation or warranty, express or implied, to the owners
of the Fund or any member of the public regarding the advisability of investing
in securities generally or in the Fund particularly or the ability of the Xxxxxx
Xxxxxxx EAFE Index to track general stock market performance. Xxxxxx Xxxxxxx is
the licensor of certain trademarks, service marks and trade names of Xxxxxx
Xxxxxxx and of the Xxxxxx Xxxxxxx EAFE Index. Xxxxxx Xxxxxxx has no obligation
to take the needs of the issuer of the Fund or the owners of the Fund into
consideration in determining, composing or calculating the Xxxxxx Xxxxxxx EAFE
Index. Xxxxxx Xxxxxxx is not responsible for and has not participated in the
determination of the timing of, prices at, or quantities of the Fund to be
issued or in the determination or calculation of the equation by which the Fund
is redeemable for cash. Xxxxxx Xxxxxxx has no obligation or liability to owners
of the Fund in connection with the administration, marketing or trading of the
Fund.
XXXXXX XXXXXXX MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
HEREBY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO THE EAFE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL XXXXXX XXXXXXX HAVE ANY
LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.
