1
EXHIBIT (4) (b)
2
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
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 Cardinal Government Obligations Fund, an Ohio
business trust ("CGOF").
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
Cardinal Government Obligations Fund (hereinafter sometimes referred to as the
"Cardinal Government Obligations Fund" or the "Acquiring Series"); and
WHEREAS, CGOF 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 shares of beneficial interest, without par value; and
WHEREAS, CGOF 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 CGOF to its shareholders, and followed by the
dissolution of CGOF, 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
3
WHEREAS, the trustees of CGOF have determined that the Reorganization
is in the best interests of CGOF and that the 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 CGOF and to the other terms and
conditions contained herein (including the obligation of CGOF to
distribute to its shareholders all of its investment company taxable
income and net capital gain as described in Section 8(i) herein), CGOF
agrees to sell, assign, convey, transfer and deliver to TCG and the
Acquiring Series, and TCG and the Acquiring Series agree to acquire
from CGOF on the Exchange Date (as defined below), all of the
Investments (as defined below), cash and other assets of CGOF 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 CGOF transferred to the Acquiring
Series, as provided in Section 4, less the liabilities of CGOF assumed
by the Acquiring Series.
(b) ASSETS ACQUIRED. The assets to be acquired by the
Acquiring Series from CGOF shall consist of all of CGOF's property,
including, without limitation, all Investments, cash and dividends or
interest receivables which are owned by CGOF and any deferred or
prepaid expenses shown as an asset on the books of CGOF as of the
Valuation Time described in Section 4.
(c) LIABILITIES ASSUMED. Prior to the Exchange Date CGOF
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 CGOF, contingent or
otherwise, including liabilities reflected in the unaudited statement
of assets and liabilities of CGOF as of the Valuation Time, prepared
by or on behalf of CGOF 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, CGOF
shall distribute in complete liquidation to its shareholders of record
as of the Exchange Date the Acquiring Series Shares received by it,
each CGOF shareholder of record
-2-
4
being entitled to receive that number of Acquiring Series Shares equal
to the proportion which the number of shares of beneficial interest,
without par value, of CGOF held by such shareholder bears to the total
number of such shares of CGOF outstanding on such date, and shall take
such further action as may be required, necessary or appropriate under
CGOF's Declaration of Trust, Ohio law and the Code to effect the
complete liquidation and dissolution of CGOF. CGOF will fulfill all
reporting requirements under the 1940 Act, both before and after the
Reorganization.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF CGOF. CGOF represents
and warrants to and agrees with TCG and the Acquiring Series that:
(a) CGOF is a business trust 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. CGOF
has qualified as a foreign business trust in each jurisdiction where
the ownership of its property and the conduct of its business require
qualification. CGOF 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) CGOF 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. CGOF
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. CGOF 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 CGOF, such statements having been audited by KPMG Peat
Marwick LLP, independent auditors of CGOF, have been furnished to TCG.
Such statement of assets and liabilities fairly present the financial
position of CGOF 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
-3-
5
there are no known material liabilities of CGOF as of such dates which
are not disclosed therein.
(d) The Prospectus of CGOF dated February 1, 1995 (the "CGOF
Prospectus") and the related Statement of Additional Information for
CGOF 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 CGOF threatened against CGOF.
(f) There are no material contracts outstanding to which CGOF
is a party, other than as disclosed in the CGOF 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 CGOF on or prior to the Exchange Date.
(g) CGOF 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 CGOF's business as an
investment company since that date. Prior to the Exchange Date, CGOF
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 CGOF'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 CGOF 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 CGPF of such changes, and
changes resulting from stock dividends stock split-ups, mergers and
similar corporate actions.
(i) CGOF has filed or will file all federal and state tax
returns which, to the knowledge of CGOF's officers, are required to be
filed by CGOF and has paid or will pay all federal and state taxes
shown to be due on said returns or on
-4-
6
any assessments received by CGOF. All tax liabilities of CGOF have
been adequately provided for on its books, and no tax deficiency or
liability of CGOF 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.
(j) As of both the Valuation Time and the Exchange Date and
except for shareholder approval and otherwise as described in Section
2(1), CGOF 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 CGOF 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 CGOF or TCG, except as previously disclosed
to TCG by CGOF 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 CGOF of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the 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 CGOF included
therein (the "Proxy Statement"), on the effective date of the
Registration Statement and insofar as they relate to CGOF, (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
-5-
7
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 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 CGOF, 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 CGOF contained in the Registration Statement, the
Prospectus or the Proxy Statement, or omissions to state in any
thereof a material fact relating to CGOF, as such Registration
Statement, Prospectus and Proxy Statement shall be furnished to CGOF
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 CGOF 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
-6-
8
the forms to be filed with the Securities and Exchange Commission,
will be furnished to CGOF promptly upon the completion thereof and
will not as of their date 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 CGOF,
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 CGOF to be
transferred to the Acquiring Series pursuant to this Agreement.
-7-
9
(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 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 CGOF 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 CGOF 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 Government Obligations 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 CGOF a number of Acquiring Series Shares having an aggregate net asset value
equal to the value of the assets of CGOF acquired by the Acquiring Series, less
the value of the liabilities of CGOF assumed, determined as hereafter provided
in this Section 4.
(a) The net value of CGOF will be computed as of the
Valuation Time, using the valuation procedures set forth in the
current prospectus of CGOF.
-8-
10
(b) The net asset value of each of the Acquiring Series
Shares will be determined to the nearest full cent as of the Valuation
Time, and shall be set at the net asset value per share of CGOF 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 CGOF on one share deposit receipt registered in the name of
CGOF. CGOF shall distribute in liquidation the Acquiring Series
Shares received by it hereunderPRO 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 CGOF
shareholder in accordance with written instructions furnished by CGOF.
(e) The Acquiring Series shall assume all liabilities of
CGOF, whether accrued or contingent, described in subsection 1(c)
hereof in connection with the acquisition of assets and subsequent
dissolution of CGOF or otherwise, except that recourse for assumed
liabilities relating to CGOF 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.
CGOF will be responsibe 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 CGOF's being either
unwilling or unable to go forward (other than by reason of the
nonfulfillment or failure of any condition to CGOF's obligations
referred to in Section 7(a) or Section 9), CGOF 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 CGOF's being either
unwilling or unable to go forward (other than by reason of the
nonfulfillment or failure of any condition to TCG's
-9-
11
obligations referred to in Section 7(a) or Section 8), TCG shall pay
directly all of the reasonable fees and expenses incurred by CGOF 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 CGOF to be transferred,
assumption of the liabilities of CGOF 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 CGOF, 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) CGOF 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 CGOF to and the assumption of all of the liabilities of CGOF by the
Acquiring Series as herein provided, authorizing and approving this
Agreement, and authorizing and approving the liquidation and
dissolution of CGOF, and it shall be a condition to the obligations of
each of the parties hereto that the holders of shares of beneficial
interest, without par value, of CGOF shall have approved this
Agreement, and the transactions contemplated herein, including the
liquidation and dissolution of CGOF, in the manner required by law and
CGOF's Declaration of Trust, at such a meeting on or before the
Valuation Time.
(b) CGOF agrees that the liquidation and dissolution of CGOF
will be effected in the manner provided in CGOF's Declaration of Trust
and in accordance with applicable law, and that it will not make any
distributions of any Acquiring Series Shares to the shareholders of
CGOF without first paying or adequately providing for the payment of
all of CGOF's known debts, obligations and liabilities.
(c) Each of TCG and CGOF 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 rules and
regulations thereunder to be set forth in the
-10-
12
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 CGOF, shall have been approved by the trustees and
shareholders of CGOF in the manner required by law.
(b) CGOF shall have furnished to TCG a statement of CGOF'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
CGOF'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 CGOF 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 CGOF, dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of CGOF made in this Agreement are true
and correct in all material respects as if made at and as of such
dates, CGOF 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 CGOF shall have furnished to TCG a statement,
dated the Exchange Date, signed by CGOF'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) CGOF 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 as a foreign business trust in each
jurisdiction 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 CGOF and, assuming
-11-
13
that the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1934 Act and the 1940 Act and assuming due
authorization, execution and delivery of this Agreement by TCG, is a
valid and binding obligation of CGOF, 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) CGOF 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, CGOF 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 CGOF's Declaration of Trust or its By-Laws, as amended, or any
provision of any agreement known to such counsel to which CGOF is a
party or by which it is bound, it being understood that with respect
to any investment restrictions as contained in CGOF's Declaration of
Trust or By-Laws, or then current prospectus or statement of
additional information, such counsel may rely upon a certificate of an
officer of CGOF, whose responsibility it is to advise CGOF 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 CGOF 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,
CGOF, and certain of its shareholders.
(f) TCG shall have received an opinion of Xxxxx & Xxxxxxxxx,
addressed to TCG, the Acquiring Series and CGOF, 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 CGOF's assets in exchange for the Acquiring
Series Shares and the assumption by the Acquiring Series of
liabilities of CGOF will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and each of the Acquiring
Series and CGOF are a "party to a reorganization" within the meaning
of Section 368(b) of the Code; (ii) no gain or loss will be recognized
by CGOF upon the 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 CGOF or upon the distribution
of Acquiring Series Shares by CGOF to its shareholders in liquidation;
(iii) no gain or loss will be recognized by the shareholders of CGOF
upon the exchange of
-12-
14
their shares for Acquiring Series Shares, (iv) the basis of the
Acquiring Series Shares a CGOF shareholder receives in connection with
the Reorganization will be the same as the basis of his or her shares
exchanged therefor; (v) a CGOF shareholder's holding period for his or
her Acquiring Series Shares will be determined by including the period
for which he or she held CGOF 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 CGOF in exchange for Acquiring Series Shares and the
assumption by the Acquiring Series of the liabilities of CGOF; (vii)
the basis in the hands of the Acquiring Series the assets of CGOF
transferred to the Acquiring Series will be the same as the basis of
the assets in the hands of CGOF immediately prior to the transfer; and
(viii) the Acquiring Series' holding periods of the assets of CGOF
will include the period for which such assets were held by CGOF. In
rendering such opinion, Xxxxx & Xxxxxxxxx may rely upon certain
reasonable and customary assumptions and certifications of fact
received from TCG, CGOF, 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 CGOF 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, CGOF 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
Valuation Date (after reduction for any capital loss carryover).
(j) CGOF shall have furnished to TCG a certificate, signed by
the President (or any Vice President) and the Treasurer (or other
financial officer) of CGOF, as to the tax cost to TCG of the
securities delivered to TCG pursuant to
-13-
15
this Agreement, together with any such evidence as to such tax cost as
TCG reasonably may request.
(k) CGOF's custodian shall have delivered to TCG a
certificate identifying all of the assets of CGOF held by such
custodian as of the Valuation Time.
(l) CGOF's transfer agent shall have provided to TCG (i) the
originals or true copies of all of the records of CGOF in the
possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of CGOF outstanding as
of the Valuation Time and (iii) the name and address of each holder of
record of any such shares of CGOF and the number of shares held of
record by each such shareholder.
(m) CGOF 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 CGOF's entire right, title and interest in and to
the Investments and all other assets of CGOF the Acquiring Series.
(n) TCG and CGOF shall have received from the Commission,
if necessary, a written order of exemption, satisfactory in form and
substance to TCG and CGOF, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
9. CONDITIONS OF CGOF'S OBLIGATIONS. The obligations of CGOF 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 CGOF, shall have been approved by the trustees and
shareholders of CGOF in the manner required by law.
(b) TCG shall have executed and delivered to CGOF 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 CGOF, contingent or
otherwise, including liabilities existing at the 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
-14-
16
the conditions on their part to be performed or satisfied at or prior
to each of such dates, and TCG shall have furnished to CGOF 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) CGOF shall have received an opinion of Xxxxx & Xxxxxxxxx,
in form reasonably satisfactory to CGOF 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 as a foreign business trust in each
jurisdiction where the ownership of its property and the conduct of
its business require qualification, (ii) the Acquiring Series Shares
to be delivered to CGOF 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 CGOF, 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 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 CGOF,
TCG and certain of its shareholders.
-15-
17
(f) CGOF shall have received an opinion of Xxxxx & Xxxxxxxxx
addressed to CGOF, TCG and the Acquiring Series and in a form
reasonably satisfactory to CGOF 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 CGOF,
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 CGOF 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 CGOF, contemplated by the Commission or any
state regulatory authority.
(i) TCG and CGOF shall have received from the Commission, if
necessary, a written order of exemption, satisfactory in form and
substance to TCG and CGOF, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
10. TERMINATION. TCG and CGOF may, by mutual consent of their respective
trustees, terminate this Agreement, and TCG or CGOF, after consultation with
counsel and by consent of their respective trustees or an officer authorized by
such trustees, 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 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
CGOF; provided, however, that following the meeting of CGOF's shareholders
called by CGOF 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 CGOF, 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 CGOF's
shareholders without their further approval.
-16-
18
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
--------------------------------------
Xxxxx X. Xxxxxx, President
CARDINAL GOVERNMENT OBLIGATIONS FUND
By /s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx, President
-17-
