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EXHIBIT (4) (a)
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AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
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Agreement and Plan of Reorganization and Liquidation ("Agreement")
dated as of December 1, 1995, by and between The Cardinal Group, an Ohio
business trust ("TCG"), and The Cardinal Fund Inc., an Ohio corporation
("TCFI").
WHEREAS, TCG is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end investment company of the management
type and has, or before the Exchange Date (as defined below) is expected to
have, issued and outstanding one class of shares of beneficial interest,
without par value ("Shares"), for each of six series, one such series being The
Cardinal Fund (hereinafter sometimes referred to as the "Cardinal Fund" or the
"Acquiring Series"); and
WHEREAS, TCFI is registered under the 1940 Act as an open-end
investment company of the management type and currently has issued and
outstanding one class of common shares, without par value; and
WHEREAS, TCFI plans to transfer all of its assets, and to assign all
of its liabilities, to the Acquiring Series, in exchange for Shares of the
Acquiring Series (the "Acquiring Series Shares"), followed by the distribution
of the Acquiring Series Shares by TCFI to its shareholders, and followed by the
dissolution of TCFI, all upon the terms and provisions of this Agreement (the
"Reorganization"); and
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the trustees of TCG have determined that the Reorganization
is in the best interests of TCG, and that the interests of its shareholders
will not be diluted as a result thereof; and
WHEREAS, the Board of Directors of TCFI has determined that the
Reorganization is in the best interests of TCFI and that the
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interests of its shareholders will not be diluted as a result thereof;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto covenant and agree as follows:
1. PLAN OF REORGANIZATION AND LIQUIDATION.
(a) SALE OF ASSETS, ASSUMPTION OF LIABILITIES. Subject to
the prior approval of shareholders of TCFI and to the other terms and
conditions contained herein (including the obligation of TCFI to
distribute to its shareholders all of its investment company taxable
income and net capital gain as described in Section 8(i) herein), TCFI
agrees to sell, assign, convey, transfer and deliver to the Acquiring
Series, and the Acquiring Series agrees to acquire from TCFI on the
Exchange Date (as defined below), all of the Investments (as defined
below), cash and other assets of TCFI in exchange for that number of
full and fractional Acquiring Series Shares of the Acquiring Series
having an aggregate net asset value equal to the value of all assets
of TCFI transferred to the Acquiring Series, as provided in Section 4,
less the liabilities of TCFI assumed by the Acquiring Series.
(b) ASSETS ACQUIRED. The assets to be acquired by the
Acquiring Series from TCFI shall consist of all of TCFI's property,
including, without limitation, all Investments, cash and dividends or
interest receivables which are owned by TCFI and any deferred or
prepaid expenses shown as an asset on the books of TCFI as of the
Valuation Time described in Section 4.
(c) LIABILITIES ASSUMED. Prior to the Exchange Date TCFI
will endeavor to discharge or cause to be discharged, or make
provision for the payment of, all of its known liabilities and
obligations. The Acquiring Series shall assume all liabilities,
expenses, costs, charges and reserves of TCFI, contingent or
otherwise, including liabilities reflected in the unaudited statement
of assets and liabilities of TCFI as of the Valuation Time, prepared
by or on behalf of TCFI in accordance with generally accepted
accounting principles consistently applied from and after September
30, 1995.
(d) LIQUIDATION AND DISSOLUTION. Upon consummation of the
transactions described in Section 1(a), 1(b) and 1(c) above, TCFI
shall distribute in complete liquidation to its shareholders of record
as of the Exchange Date the Acquiring Series Shares received by it,
each TCFI shareholder of record being entitled to receive that number
of Acquiring Series Shares equal to the proportion which the number of
common
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shares, without par value, of TCFI held by such shareholder bears to
the total number of such shares of TCFI outstanding on such date, and
shall take such further action as may be required, necessary or
appropriate under TCFI's Articles of Incorporation, Ohio law and the
Code to effect the complete liquidation and dissolution of TCFI. TCFI
will fulfill all reporting requirements under the 1940 Act, both
before and after the Reorganization.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF TCFI. TCFI represents
and warrants to and agrees with TCG and the Acquiring Series that:
(a) TCFI is a corporation validly existing under the laws of
the State of Ohio and has power to own all of its properties and
assets and to carry out its obligations under this Agreement. TCFI
has qualified as a foreign corporation in each jurisdiction where the
ownership of its property and the conduct of its business require
qualification. TCFI has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to
fulfill the terms of this Agreement, except as set forth in Section
2(1).
(b) TCFI is registered under the 1940 Act as an open-end
investment company of the management type, and such registration has
not been revoked or rescinded and is in full force and effect. TCFI
has elected to qualify and has qualified as a regulated investment
company under Part I of Subchapter M of the Code as of and since its
first taxable year, and qualifies and intends to continue to qualify
as a regulated investment company for its taxable year ending upon its
liquidation. TCFI has been a regulated investment company under such
sections of the Code at all times since its inception.
(c) The statement of assets and liabilities, including the
statement of investments as of September 30, 1995, and the related
statement of operations for the year then ended, and statements of
changes in net assets for each of the two years in the period then
ended, for TCFI, such statements having been audited by KPMG Peat
Marwick LLP, independent auditors of TCFI, have been furnished to TCG.
Such statement of assets and liabilities fairly present the financial
position of TCFI as of such date and such statements of operations and
changes in net assets fairly reflect the results of operations and
changes in net assets for the periods covered thereby in conformity
with generally accepted accounting principles, and there are no known
material liabilities of TCFI as of such dates which are not disclosed
therein.
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(d) The Prospectus of TCFI dated February 1, 1995 (the "TCFI
Prospectus") and the related Statement of Additional Information for
TCFI dated February 1, 1995, in the forms filed with the Securities
and Exchange Commission and previously furnished to TCG, did not as of
their date and do not as of the date hereof 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.
(e) Except as may have been previously disclosed to TCG,
there are no material legal, administrative or other proceedings
pending or, to the knowledge of TCFI threatened against TCFI.
(f) There are no material contracts outstanding to which TCFI
is a party, other than as disclosed in the TCFI Prospectus and its
corresponding Statement of Additional Information, and there are no
such contracts or commitments (other than this Agreement) which will
be terminated with liability to TCFI on or prior to the Exchange Date.
(g) TCFI has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of September 30, 1995 and
those incurred in the ordinary course of TCFI's business as an
investment company since that date. Prior to the Exchange Date, TCFI
will advise TCG of all known material liabilities, contingent or
otherwise, incurred by it subsequent to September 30, 1995, whether or
not incurred in the ordinary course of business.
(h) As used in this Agreement, the term "Investments" shall
mean TCFI's investments shown on the statement of assets and
liabilities as of September 30, 1995 referred to in Section 2(c)
hereof, as supplemented with such changes as TCFI shall make after
September 30, 1995 and prior to the date of this Agreement, which
changes have been disclosed to TCG, and changes made on and after the
date of this Agreement after advising TCFI of such changes, and
changes resulting from stock dividends stock split-ups, mergers and
similar corporate actions.
(i) TCFI has filed or will file all federal and state tax
returns which, to the knowledge of TCFI's officers, are required to be
filed by TCFI and has paid or will pay all federal and state taxes
shown to be due on said returns or on any assessments received by
TCFI. All tax liabilities of TCFI have been adequately provided for
on its books, and no tax deficiency or liability of TCFI has been
asserted, and no
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question with respect thereto has been raised, by the Internal Revenue
Service or by any state or local tax authority for taxes in excess of
those already paid.
(j) As of both the Valuation Time and the Exchange Date and
except for shareholder approval and otherwise as described in Section
2(1), TCFI will have full right, power and authority to sell, assign,
transfer and deliver the Investments and any other of its assets and
liabilities to be transferred to TCG and the Acquiring Series pursuant
to this Agreement. At the Exchange Date, subject only to the delivery
of the Investments and any such other assets and liabilities as
contemplated by this Agreement, TCG and the Acquiring Series will
acquire the Investments and any such other assets subject to no
encumbrances, liens or security interests in favor of any third party
creditor of TCFI and, except as described in Section 2(k), without any
restrictions upon the transfer thereof.
(k) No registration under the Securities Act of 1933, as
amended (the "1933 Act"), of any of the Investments would be required
if they were, as of the time of such transfer, the subject of a public
distribution by either of TCFI or TCG, except as previously disclosed
to TCG by TCFI in writing prior to the date hereof.
(l) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by TCFI of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, Securities Exchange Act of 1934, as
amended (the "1934 Act"), 1940 Act, state securities or blue sky laws
(which term as used herein shall include the laws of the District of
Columbia and of Puerto Rico) or the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 (the "H-S-R Act").
(m) The registration statement (the "Registration Statement")
to be filed with the Securities and Exchange Commission (the
"Commission") by TCG on Form N-14 relating to the Acquiring Series
Shares issuable hereunder, and the proxy statement of TCFI included
therein (the "Proxy Statement"), on the effective date of the
Registration Statement and insofar as they relate to TCFI, (i) will
comply in all material respects with the provisions of the 1933 Act,
1934 Act and 1940 Act and the rules and regulations thereunder and
(ii) 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; and at the time of the
shareholders' meeting referred to in Section 7 below and on the
Exchange Date, the prospectus
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contained in the Registration Statement of which the Proxy Statement
is a part (the "Prospectus"), as amended or supplemented by any
amendments or supplements filed with the Commission by TCG, insofar as
it relates to TCFI, 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;
provided, however, that the representations and warranties in this
Section 2(m) shall apply only to statements of fact relating to TCFI
contained in the Registration Statement, the Prospectus or the Proxy
Statement, or omissions to state in any thereof a material fact
relating to TCFI, as such Registration Statement, Prospectus and Proxy
Statement shall be furnished to TCFI in definitive form as soon as
practicable following effectiveness of the Registration Statement and
before any public distribution of the Prospectus or Proxy Statement.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF TCG. TCG represents and
warrants to and agrees with TCFI that:
(a) TCG is a business trust validly existing under the laws
of the State of Ohio and has power to carry on its business as it is
now being conducted and to carry out its obligations under this
Agreement. TCG has qualified as a foreign business trust in each
jurisdiction where the ownership of its property and the conduct of
its business require qualification. TCG and the Acquiring Series each
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 and to fulfill the terms of this Agreement, except as set
forth in Section 3(i).
(b) TCG is registered under the 1940 Act as an open-end
investment company of the management type, and such registration has
not been revoked or rescinded and is in full force and effect. The
Acquiring Series expects to qualify as a regulated investment company
under Part I of Subchapter M of the Code.
(c) The Acquiring Series will have no financial statements as
of the Valuation Time.
(d) The prospectus of TCG and the Acquiring Series, expected
to be dated in January, 1996 (the "Acquiring Series Prospectus"), and
the related Statement of Additional Information for the Acquiring
Series to be dated such date, in the forms to be filed with the
Securities and Exchange Commission, will be furnished to TCFI promptly
upon the completion thereof and will not as of their date contain any
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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.
(e) Except as may have been previously disclosed to TCFI,
there are no material legal, administrative or other proceedings
pending or, to the knowledge of TCG or its Acquiring Series,
threatened against TCG or the Acquiring Series, which assert liability
on the part of TCG or the Acquiring Series.
(f) There are no material contracts outstanding to which TCG
or the Acquiring Series is a party, other than material contracts
disclosed in the Acquiring Series Prospectus and the corresponding
Statement of Additional Information.
(g) The Acquiring Series will have no assets or liabilities
as of the Valuation Time.
(h) TCG and the Acquiring Series will file all federal and
state tax returns which, to the knowledge of TCG's officers, are
required to be filed by TCG and the Acquiring Series and will pay all
federal and state taxes shown to be due on such returns or on any
assessments received by TCG or the Acquiring Series. All tax
liabilities of TCG and the Acquiring Series have been adequately
provided for on its books, and no tax deficiency or liability of TCG
or the Acquiring Series has been asserted, and no question with
respect thereto has been raised, by the Internal Revenue Service or by
any state or local tax authority for taxes in excess of those already
paid.
(i) No consent, approval, authorization or order of any
governmental authority is required for the consummation by TCG or the
Acquiring Series of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, 1934 Act, 1940 Act,
state securities or Blue Sky Laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and
otherwise as described in Section 3(i), TCG and the Acquiring Series
will have full right, power and authority to purchase the Investments
and any other assets and assume the liabilities of TCFI to be
transferred to the Acquiring Series pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy
Statement, on the effective date of the Registration Statement and
insofar as they relate to TCG and the Acquiring Series: (i) will
comply in all material respects with the
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provisions of the 1933 Act, 1934 Act and 1940 Act and the rules and
regulations thereunder and (ii) 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; and at the time of the shareholders' meeting referred to
in Section 7 and at the Exchange Date, the Prospectus, as amended or
supplemented by any amendments or supplements filed with the
Commission by TCG, 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; provided,
however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the
Registration Statement, the Prospectus or the Proxy Statement made in
reliance upon and in conformity with information furnished by TCFI for
use in the Registration Statement, the Prospectus or the Proxy
Statement.
(l) The Acquiring Series Shares to be issued by TCG have been
duly authorized and when issued and delivered by TCG to TCFI pursuant
to this Agreement and the Prospectus will be legally and validly
issued by TCG and will be fully paid and nonassessable, and no
shareholder of TCG will have any preemptive right of subscription or
purchase in respect thereof.
(m) The issuance of Acquiring Series Shares pursuant to this
Agreement will be in compliance with all applicable federal and state
securities laws.
(n) Cardinal Fund, upon filing of its first income tax return
at the completion of its first taxable year will elect to be a
regulated investment company and until such time will take all steps
necessary to ensure qualification as a regulated investment company.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, TCG will deliver
to TCFI a number of Acquiring Series Shares having an aggregate net asset value
equal to the value of the assets of TCFI acquired by the Acquiring Series, less
the value of the liabilities of TCFI assumed, determined as hereafter provided
in this Section 4.
(a) The net asset value of TCFI will be computed as of the
Valuation Time, using the valuation procedures set forth in the
current prospectus of TCFI.
(b) The net asset value of each of the Acquiring Series
Shares will be determined to the nearest full cent as of the
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Valuation Time, and shall be set at the net asset value per share of
TCFI as of the Valuation Time.
(c) The Valuation Time shall be 4:00 P.M., Eastern Standard
Time, on March 30, 1996, or such earlier or later day as may be
mutually agreed upon in writing by the parties hereto (the
"Valuation Time").
(d) The Acquiring Series shall issue its Acquiring Series
Shares to TCFI on one share deposit receipt registered in the name of
TCFI. TCFI shall distribute in liquidation the Acquiring Series
Shares received by it hereunder PRO RATA to its shareholders by
redelivering such share deposit receipt to TCG's transfer agent,
which will as soon as practicable set up open accounts for each TCFI
shareholder in accordance with written instructions furnished by TCFI.
(e) The Acquiring Series shall assume all liabilities of
TCFI, whether accrued or contingent, described in subsection 1(c)
hereof in connection with the acquisition of assets and subsequent
dissolution of TCFI or otherwise, except that recourse for assumed
liabilities relating to TCFI will be limited to the Acquiring Series.
5. EXPENSES, FEES, ETC.
(a) Subject to the further provisions of this Section 5, TOC
shall be responsible for the fees and expenses of the Reorganization.
The Acquiring Series will be responsible for its organization costs.
TCFI will be responsible for proxy solicitation and other costs
associated with its annual meeting (or special meeting in lieu
thereof) to the extent such costs are comparable to those incurred for
annual meetings in recent prior years. TOC has undertaken to absorb
all other costs of the Reorganization.
(b) In the event the transactions contemplated by this
Agreement are not consummated by reason of TCFI's being either
unwilling or unable to go forward (other than by reason of the
nonfulfillment or failure of any condition to TCFI's obligations
referred to in Section 7(a) or Section 9), TCFI shall pay directly all
reasonable fees and expenses incurred by TCG in connection with such
transactions, including, without limitation, legal, accounting and
filing fees.
(c) In the event the transactions contemplated by this
Agreement are not consummated by reason of TCG's being either
unwilling or unable to go forward (other than by reason of the
nonfulfillment or failure of any condition to TCG's obligations
referred to in Section 7(a) or Section 8), TCG
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shall pay directly all of the reasonable fees and expenses incurred by
TCFI in connection with such transactions, including, without
limitation, legal, accounting and filing fees.
(d) Notwithstanding any other provisions of this Agreement,
if for any reason the transactions contemplated by this Agreement are
not consummated, no party shall be liable to the other party for any
damages resulting therefrom, including, without limitation,
consequential damages, except as specifically set forth above.
6. EXCHANGE DATE. Delivery of the assets of TCFI to be transferred,
assumption of the liabilities of TCFI to be assumed, and the delivery of
Acquiring Series Shares to be issued shall be made at the offices of The Ohio
Company, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx at 9:00 A.M. on March 31, 1996,
or at such other time and date agreed to by TCG and TCFI, the date and time
upon which such delivery is to take place being referred to herein as the
"Exchange Date."
7. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION.
(a) TCFI agrees to call a special meeting of its
shareholders as soon as is practicable after the effective date of the
Registration Statement for the purpose of considering the sale of all
of the assets of TCFI to and the assumption of all of the liabilities
of TCFI by the Acquiring Series as herein provided, authorizing and
approving this Agreement, and authorizing and approving the
liquidation and dissolution of TCFI, and it shall be a condition to
the obligations of each of the parties hereto that the holders of
common shares, without par value, of TCFI shall have approved this
Agreement, and the transactions contemplated herein, including the
liquidation and dissolution of TCFI, in the manner required by law and
TCFI's Articles of Incorporation at such a meeting on or before the
Valuation Time.
(b) TCFI agrees that the liquidation and dissolution of TCFI
will be effected in the manner provided in TCFI's Articles of
Incorporation and in accordance with applicable law, and that it will
not make any distributions of any Acquiring Series Shares to the
shareholders of TCFI without first paying or adequately providing for
the payment of all of TCFI's known debts, obligations and liabilities.
(c) Each of TCG and TCFI will cooperate with the other, and
each will furnish to the other the information relating to itself
required by the 1933 Act, 1934 Act and 1940 Act and the
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rules and regulations thereunder to be set forth in the Registration
Statement, including the Prospectus and the Proxy Statement.
8. CONDITIONS TO TCG'S OBLIGATIONS. The obligations of TCG and the
Acquiring Series hereunder shall be subject to the following conditions:
(a) That this Agreement shall have been authorized and the
transactions contemplated hereby, including the liquidation and
dissolution of TCFI, shall have been approved by the directors and
shareholders of TCFI in the manner required by law.
(b) TCFI shall have furnished to TCG a statement of TCFI's
assets and liabilities, with values determined as provided in Section
4 of this Agreement, together with a list of Investments with their
respective tax costs, all as of the Valuation Time, certified on
TCFI's behalf by its President (or any Vice President) and Treasurer
(or other financial officer), and a certificate of both such officers,
dated the Exchange Date, to the effect that as of the Valuation Time
and as of the Exchange Date there has been no material adverse change
in the financial position of TCFI since September 30, 1995, other than
changes in the Investments since that date or changes in the market
value of the Investments, or changes due to net redemptions of shares
of TCFI, dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of TCFI made in this Agreement are true
and correct in all material respects as if made at and as of such
dates, TCFI has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
each of such dates, and TCFI shall have furnished to TCG a statement,
dated the Exchange Date, signed by TCFI's President (or any Vice
President) and Treasurer (or other financial officer) certifying those
facts as of such dates.
(d) There shall not be any material litigation pending or
overtly threatened with respect to the matters contemplated by this
Agreement.
(e) TCG shall have received an opinion of Xxxxx & Xxxxxxxxx,
in form reasonably satisfactory to TCG and dated the Exchange Date, to
the effect that (i) TCFI is a corporation validly existing under the
laws of the State of Ohio, and is, to the knowledge of such counsel,
qualified to do business as a foreign corporation in each jurisdiction
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where the ownership of its property and the conduct of its business
require qualification, (ii) this Agreement has been duly authorized,
executed and delivered by TCFI and, assuming that the Registration
Statement, the Prospectus and the Proxy Statement comply with the 1933
Act, 1934 Act and 1940 Act and assuming due authorization, execution
and delivery of this Agreement by TCG, is a valid and binding
obligation of TCFI, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and other equitable principles, (iii) TCFI has power to
sell, assign, convey, transfer and deliver the Investments and other
assets contemplated hereby and, upon consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement,
TCFI will have duly sold, assigned, conveyed, transferred and
delivered such Investments and other assets to TCG, (iv) the execution
and delivery of this Agreement did not and the consummation of the
transactions contemplated hereby will not, violate TCFI's Articles of
Incorporation or its Code of Regulations, as amended, or any provision
of any agreement known to such counsel to which TCFI is a party or by
which it is bound, it being understood that with respect to any
investment restrictions as contained in TCFI's Articles of
Incorporation or Code of Regulations, or then current prospectus or
statement of additional information, such counsel may rely upon a
certificate of an officer of TCFI, whose responsibility it is to
advise TCFI with respect to such matters and (v) to the knowledge of
such counsel no consent, approval, authorization or order of any court
or governmental authority is required for the consummation by TCFI of
the transactions contemplated hereby, except such as have been
obtained under the 1933 Act, 1934 Act and 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act.
In rendering such opinion, Xxxxx & Xxxxxxxxx may rely upon certain
reasonable and customary assumptions and certifications of fact
received from TCG, TCFI, and certain of its shareholders.
(f) TCG shall have received an opinion of Xxxxx & Xxxxxxxxx,
addressed to TCG, the Acquiring Series and TCFI, in form reasonably
satisfactory to TCG and dated the Exchange Date, to the effect that
for Federal income tax purposes (i) the transfer of all or
substantially all of TCFI's assets in exchange for the Acquiring
Series Shares and the assumption by the Acquiring Series of
liabilities of TCFI will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and each of the Acquiring
Series and TCFI is a "party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) no gain or loss will be recognized by
TCFI upon the
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transfer of the assets of the Acquiring Series in exchange for
Acquiring Series Shares and the assumption by the Acquiring Series of
the liabilities of TCFI or upon the distribution of Acquiring Series
Shares by TCFI to its shareholders in liquidation; (iii) no gain or
loss will be recognized by the shareholders of TCFI upon the exchange
of their shares for Acquiring Series Shares, (iv) the basis of the
Acquiring Series Shares a TCFI shareholder receives in connection with
the Reorganization will be the same as the basis of his or her shares
exchanged therefor; (v) a TCFI shareholder's holding period for his or
her Acquiring Series Shares will be determined by including the period
for which he or she held TCFI shares exchanged therefor, provided that
he or she held such shares as capital assets; (vi) no gain or loss
will be recognized by the Acquiring Series upon the receipt of the
assets of TCFI in exchange for Acquiring Series Shares and the
assumption by the Acquiring Series of the liabilities of TCFI; (vii)
the basis in the hands of the Acquiring Series the assets of TCFI
transferred to the Acquiring Series will be the same as the basis of
the assets in the hands of TCFI immediately prior to the transfer; and
(viii) the Acquiring Series' holding periods of the assets of TCFI
will include the period for which such assets were held by TCFI. In
rendering such opinion, Xxxxx & Xxxxxxxxx may rely upon certain
reasonable and customary assumptions and certifications of fact
received from TCG, TCFI, and certain of its shareholders.
(g) The Registration Statement shall have become effective
under the 1933 Act and applicable Blue Sky provisions, and no stop
order suspending such effectiveness shall have been instituted or, to
the knowledge of TCG, contemplated by the Commission or any state
regulatory authority.
(h) All necessary proceedings taken by TCFI in connection
with the transactions contemplated by this Agreement and all documents
incidental thereto reasonably shall be satisfactory in form and
substance to TCG and Xxxxx & Xxxxxxxxx.
(i) Prior to the Exchange Date, TCFI shall have declared a
dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders
all of its investment company taxable income for its taxable year
ended September 30, 1995 and the short taxable year beginning on
October 1, 1995 and ending on the Valuation Date (computed without
regard to any deduction for dividends paid), and all of its net
capital gain realized in its taxable year ended September 30, 1995 and
the short taxable year beginning on October 1, 1995 and ending on the
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Valuation Date (after reduction for any capital loss carryover).
(j) TCFI shall have furnished to TCG a certificate, signed by
the President (or any Vice President) and the Treasurer (or other
financial officer) of TCFI, as to the tax cost to TCG of the
securities delivered to TCG pursuant to this Agreement, together with
any such evidence as to such tax cost as TCG reasonably may request.
(k) TCFI's custodian shall have delivered to TCG a
certificate identifying all of the assets of TCFI held by such
custodian as of the Valuation Time.
(l) TCFI's transfer agent shall have provided to TCG (i) the
originals or true copies of all of the records of TCFI in the
possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of TCFI outstanding as
of the Valuation Time and (iii) the name and address of each holder of
record of any such shares of TCFI and the number of shares held of
record by each such shareholder.
(m) TCFI shall have duly executed and delivered to TCG a xxxx
of sale, assignment, certificate and other instruments of transfer
("Transfer Documents") as TCG may deem necessary or desirable to
transfer all of TCFI's entire right, title and interest in and to the
Investments and all other assets of TCFI to the Acquiring Series.
(n) TCG and TCFI shall have received from the Commission, if
necessary, a written order of exemption, satisfactory in form and
substance to TCG and TCFI, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
9. CONDITIONS OF TCFI'S OBLIGATIONS. The obligations of TCFI hereunder
shall be subject to the following conditions:
(a) This Agreement shall have been authorized and the
transactions contemplated hereby, including the liquidation and
dissolution of TCFI, shall have been approved by the directors and
shareholders of TCFI in the manner required by law.
(b) TCG shall have executed and delivered to TCFI an
Assumption of Liabilities dated as of the Exchange Date pursuant to
which the Acquiring Series will assume all of the liabilities,
expenses, costs, charges and reserves of TCFI, contingent or
otherwise, including liabilities existing at the
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Valuation Time and described in Section 1(c) hereof in connection with
the transactions contemplated by this Agreement.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of TCG made in this Agreement are true
and correct in all material respects as if made at and as of such
dates, TCG and the Acquiring Series have complied with all of the
agreements and satisfied all of the conditions on their part to be
performed or satisfied at or prior to each of such dates, and TCG
shall have furnished to TCFI a statement, dated the Exchange Date,
signed by TCG's President (or any Vice President) and Treasurer (or
other financial officer) certifying those facts as of such dates.
(d) There shall not be any material litigation pending or
overtly threatened with respect to the matters contemplated by this
Agreement.
(e) TCFI shall have received an opinion of Xxxxx & Xxxxxxxxx,
in form reasonably satisfactory to TCFI and dated the Exchange Date,
to the effect that (i) TCG is a business trust validly existing under
the laws of the State of Ohio and is, to the knowledge of such
counsel, qualified to do business in each jurisdiction where the
ownership of its property and the conduct of its business requires
qualification, (ii) the Acquiring Series Shares to be delivered to
TCFI as provided for by this Agreement are duly authorized and upon
such delivery will be validly issued and will be fully paid and
nonassessable by TCG and no shareholder of TCG has any preemptive
right to subscription or purchase in respect thereof, (iii) this
Agreement has been duly authorized, executed and delivered by TCG and
assuming that the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1933 Act, 1934 Act and 1940 Act, and
assuming due authorization, execution and delivery of this Agreement
by TCFI, is a valid and binding obligation of TCG, enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and other equitable
principles, (iv) the execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not,
violate TCG's Declaration of Trust or its By-Laws or any provision of
any agreement known to such counsel to which TCG or the Acquiring
Series is a party or by which it is bound, it being understood that
with respect to investment restrictions as contained in TCG's
Declaration of Trust, By-Laws or then current prospectus or statement
of additional information, such counsel may rely upon a certificate of
an officer of TCG whose responsibility
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it is to advise TCG with respect to such matters, (v) to the knowledge
of such counsel no consent, approval, authorization or order of any
court or governmental authority is required for the consummation by
TCG or the Acquiring Series of the transactions contemplated herein,
except such as have been obtained under the 1933 Act, 1934 Act and
1940 Act and such as may be required under state securities or blue
sky laws and the H-S-R Act. In rendering such opinion Xxxxx &
Xxxxxxxxx may rely on certain reasonable assumptions and
certifications of fact received from TCFI, TCG and certain of its
shareholders.
(f) TCFI shall have received an opinion of Xxxxx & Xxxxxxxxx
addressed to TCFI, TCG and the Acquiring Series and in a form
reasonably satisfactory to TCFI dated the Exchange Date, with respect
to the matters specified in Section 8(f) of this Agreement. In
rendering such opinion Xxxxx & Xxxxxxxxx may rely on certain
reasonable assumptions and certifications of fact received from TCFI,
TCG and certain of its shareholders.
(g) All necessary proceedings taken by TCG in connection with
the transactions contemplated by this Agreement and all documents,
incidental thereto reasonably shall be satisfactory in form and
substance to TCFI and Xxxxx & Xxxxxxxxx.
(h) The Registration Statement shall have become effective
under the 1933 Act and applicable Blue Sky provisions, and no stop
order suspending such effectiveness shall have been instituted or, to
the knowledge of TCFI, contemplated by the Commission or any state
regulatory authority.
(i) TCG and TCFI shall have received from the Commission, if
necessary, a written order of exemption, satisfactory in form and
substance to TCG and TCFI, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
10. TERMINATION. TCG and TCFI may, by mutual consent of their respective
trustees or directors, terminate this Agreement, and TCG or TCFI, after
consultation with counsel and by consent of their respective trustees or
directors or an officer authorized by such trustees or directors, may, subject
to Section 11 of this Agreement, waive any condition to their respective
obligations hereunder.
11. SOLE AGREEMENT; GOVERNING LAW; AMENDMENTS. This Agreement supersedes
all previous correspondence and oral communications
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between the parties regarding the subject matter hereof, constitutes the only
understanding with respect to such subject matter and shall be construed in
accordance with and governed by the laws of the State of Ohio.
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officer of TCG and
TCFI; provided, however, that following the meeting of TCFI's shareholders
called by TCFI pursuant to Section 7 of this Agreement, no such amendment may
have the effect of altering or changing the amount or kind of shares received
by TCFI, or altering or changing to any material extent the amount or kind of
liabilities assumed by TCG and the Acquiring Series, or altering or changing
any other terms and conditions of the Reorganization if any of the alterations
or changes, alone or in the aggregate, would materially adversely affect TCFI's
shareholders without their further approval.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
THE CARDINAL GROUP
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
THE CARDINAL FUND INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx, President
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