AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT AND PLAN OF ACQUISITION (the "Plan") is made as of this
19th day of March, 2002, by and between Xxxxxxxxx Emerging Markets Appreciation
Fund, Inc. ("Emerging Markets Appreciation Fund"), a corporation incorporated
under the laws of the State of Maryland and a non-diversified, closed-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), with its principal place of business at 000 Xxxx
Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, and Xxxxxxxxx Developing
Markets Trust ("Developing Markets Trust"), a business trust formed under the
laws of the Commonwealth of Massachusetts and a diversified, open-end management
investment company registered under the 1940 Act, with its principal place of
business at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000.
REORGANIZATION
The reorganization (hereinafter referred to as the "Reorganization")
will consist of (i) the acquisition by Developing Markets Trust of substantially
all of the property, assets and goodwill of Emerging Markets Appreciation Fund
in exchange solely for full and fractional shares of beneficial interest, par
value $0.01 per share, of Developing Markets Trust - Advisor Class ("Developing
Markets Trust Shares"); (ii) the distribution of Developing Markets Trust Shares
to the shareholders of Emerging Markets Appreciation Fund according to their
respective interests in liquidation of Emerging Markets Appreciation Fund; and
(iii) the dissolution of Emerging Markets Appreciation Fund as soon as is
practicable after the closing (as defined in Section 3, hereinafter called the
"Closing"), all upon and subject to the terms and conditions of this Plan
hereinafter set forth.
AGREEMENT
In order to consummate the Plan and the Reorganization and in
consideration of the premises and of the covenants and agreements hereinafter
set forth, and intending to be legally bound, the parties hereto covenant and
agree as follows:
1. SALE AND TRANSFER OF ASSETS, LIQUIDATION AND DISSOLUTION OF EMERGING MARKETS
APPRECIATION FUND.
(a) Subject to the terms and conditions of this Plan, and in reliance on
the representations and warranties of Developing Markets Trust herein
contained, and in consideration of the delivery by Developing Markets
Trust of the number of Developing Markets Trust Shares hereinafter
provided, Emerging Markets Appreciation Fund agrees that it will
convey, transfer and deliver to Developing Markets Trust at the
Closing all of Emerging Markets Appreciation Fund's then existing
assets, free and clear of all liens, encumbrances and claims
whatsoever (other than shareholders' rights of redemption, if any),
except for cash, bank deposits or cash equivalent securities in an
estimated amount necessary to: (i) pay the costs and expenses of
carrying out this Plan (including, but not limited to, fees of counsel
and accountants, and expenses of its liquidation and dissolution
contemplated hereunder), which costs and expenses shall be established
on Emerging Markets Appreciation Fund's books as liability reserves;
(ii) discharge its unpaid liabilities on its books at the closing date
(as defined in Section 3, hereinafter called the "Closing Date"),
including, but not limited to, its income dividends and capital gains
distributions, if any, payable for the period prior to, and through,
the Closing Date and excluding those liabilities that would otherwise
be discharged at a later date in the ordinary course of business; and
(iii) pay such contingent liabilities as the Board of Directors of
Emerging Markets Appreciation Fund (the "Emerging Markets Appreciation
Fund Board") shall reasonably deem to exist against Emerging Markets
Appreciation Fund, if any, at the Closing Date, for which contingent
and other appropriate liability reserves shall be established on
Emerging Markets Appreciation Fund's books (hereinafter "Net Assets").
Emerging Markets Appreciation Fund shall also retain any and all
rights that it may have over and against any person that may have
arisen up to and including the close of business on the Closing Date.
(b) Subject to the terms and conditions of this Plan, and in reliance on
the representations and warranties of Emerging Markets Appreciation
Fund herein contained, and in consideration of such sale, conveyance,
transfer and delivery, Developing Markets Trust agrees at the Closing
to deliver to Emerging Markets Appreciation Fund the number of
Developing Markets Trust Shares, determined by: (a) dividing the value
of Emerging Markets Appreciation Fund's Net Assets by the number of
outstanding shares of common stock, par value $0.01 per share, of
Emerging Markets Appreciation Fund ("Emerging Markets Appreciation
Fund Shares"); (b) dividing the value of Developing Markets Trust's
net assets attributable to Developing Markets Trust Shares by the
number of outstanding Developing Markets Trust Shares; (c) dividing
the quotient calculated in step (a) by the quotient calculated in step
(b); and (d) multiplying the quotient calculated in step (c) by the
number of outstanding Emerging Markets Appreciation Fund Shares as of
4:00 p.m. Eastern time on the Closing Date. All such values shall be
determined in the manner and as of the time set forth in Section 2
hereof.
(c) Immediately following the Closing, Emerging Markets Appreciation Fund
shall effect a liquidating distribution of the Developing Markets
Trust Shares received by Emerging Markets Appreciation Fund pursuant
to this Section 1, together with any other assets, pro rata to
Emerging Markets Appreciation Fund's shareholders of record as of the
close of business on the Closing Date. Such liquidating distribution
shall be accomplished by the establishment of accounts on the share
records of Developing Markets Trust of the type and in the amounts due
such shareholders based on their respective holdings as of the close
of business on the Closing Date. Fractional Developing Markets Trust
Shares shall be carried to the third decimal place. As promptly as is
practicable after the Closing, each holder of any outstanding
certificate or certificates representing Emerging Markets Appreciation
Fund Shares shall be entitled to surrender the same to the transfer
agent for Developing Markets Trust in exchange for the number of
Developing Markets Trust Shares into which the Emerging Markets
Appreciation Fund Shares theretofore represented by the certificate or
certificates so surrendered shall have been converted. Certificates
for Developing Markets Trust Shares shall not be issued, unless
specifically requested by the shareholders. Until so surrendered, each
outstanding certificate which, prior to the Closing, represented
Emerging Markets Appreciation Fund Shares shall be deemed for all
Developing Markets Trust's purposes to evidence ownership of the
number of Developing Markets Trust Shares into which the Emerging
Markets Appreciation Fund Shares (which prior to the Closing were
represented thereby) have been converted. Promptly following the
Closing and the liquidating distribution of the Developing Markets
Trust Shares (and any resolution of litigation or other contingent
liabilities), Emerging Markets Appreciation Fund shall be dissolved.
2. VALUATION.
(a) The value of Emerging Markets Appreciation Fund's Net Assets to be
acquired by Developing Markets Trust hereunder shall be computed as of
4:00 p.m. Eastern time on the Closing Date in a manner consistent with
the valuation procedures described in Emerging Markets Appreciation
Fund's registration statement on Form N-2 dated April 29, 1994, as
such disclosures have been amended to date by any: (i) amendments to
Emerging Markets Appreciation Fund's Form N-2 filed with the U.S.
Securities and Exchange Commission (the "SEC"); (ii) press releases
issued on behalf of Emerging Markets Appreciation Fund; and (iii)
Emerging Markets Appreciation Fund annual or semi-annual reports sent
to shareholders pursuant to Section 30 of the 1940 Act (together, the
"Emerging Markets Appreciation Fund Disclosure Documents").
(b) The net asset value per Emerging Markets Appreciation Fund Share shall
be determined to the second decimal place as of 4:00 p.m. Eastern time
on the Closing Date in a manner consistent with the valuation
procedures described in Emerging Markets Appreciation Fund's
Disclosure Documents.
(c) The net asset value of a share of beneficial interest of Developing
Markets Trust Shares shall be determined to the second decimal place
as of 4:00 p.m. Eastern time on the Closing Date in a manner
consistent with the valuation procedures described in Developing
Markets Trust's currently effective prospectus.
3. CLOSING DATE
The Closing Date shall be September 26, 2002, or such later date as the
parties may mutually agree. The Closing shall take place at the principal office
of Developing Markets Trust at 5:00 p.m. Eastern time, on the Closing Date.
Emerging Markets Appreciation Fund shall have provided for delivery as of the
Closing of those Net Assets of Emerging Markets Appreciation Fund to be
transferred to the account of Developing Markets Trust's custodian, JPMorgan
Xxxxx Xxxx, XxxxxXxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000. Also, Emerging Markets
Appreciation Fund shall deliver at the Closing a list of names and addresses of
the shareholders of record of its Emerging Markets Appreciation Fund Shares and
the number of full and fractional shares of common stock of Emerging Markets
Appreciation Fund Shares owned by each such shareholder, indicating thereon
which such shares are represented by outstanding certificates and which by
book-entry accounts, all as of 4:00 p.m. Eastern time on the Closing Date,
certified by its transfer agent or by its President or a Vice President to the
best of its or his or her knowledge and belief. Developing Markets Trust shall
issue and deliver a certificate or certificates evidencing the Developing
Markets Trust Shares to be delivered to the account of Emerging Markets
Appreciation Fund at said transfer agent registered in such manner as the
officers of Emerging Markets Appreciation Fund may request, or provide evidence
satisfactory to Emerging Markets Appreciation Fund that such Developing Markets
Trust Shares have been registered in an account on the books of Developing
Markets Trust in such manner as the officers of Emerging Markets Appreciation
Fund may request.
4. REPRESENTATIONS AND WARRANTIES BY DEVELOPING MARKETS TRUST.
Developing Markets Trust represents and warrants to Emerging Markets
Appreciation Fund that:
(a) Developing Markets Trust is a business trust formed under the laws of
the Commonwealth of Massachusetts on August 9, 1991, and is validly
existing under the laws of that Commonwealth. Developing Markets Trust
is duly registered under the 1940 Act as an open-end, management
investment company and all of the Developing Markets Trust Shares sold
were sold pursuant to an effective registration statement filed under
the Securities Act of 1933, as amended (the "1933 Act"), except for
those shares sold pursuant to the private offering exemption for the
purpose of raising the required initial capital.
(b) Developing Markets Trust is authorized to issue an unlimited number of
shares of beneficial interest of Developing Markets Trust Shares, par
value $0.01 per share, each outstanding share of which is fully paid,
non-assessable, freely transferable and has full voting rights.
Developing Markets Trust is further divided into five classes of
shares of which Developing Markets Trust Shares is one, and an
unlimited number of shares of beneficial interest, par value $0.01 per
share, have been allocated and designated to Developing Markets Trust
Shares.
(c) The audited financial statements appearing in Developing Markets
Trust's Annual Report to Shareholders for the fiscal year ended
December 31, 2001, audited by PricewaterhouseCoopers LLP, a copy of
which has been delivered to Emerging Markets Appreciation Fund, fairly
present the financial position of Developing Markets Trust as of the
respective dates indicated and the results of its operations for the
periods indicated in conformity with generally accepted accounting
principles applied on a consistent basis.
(d) The books and records of Developing Markets Trust accurately summarize
the accounting data represented and contain no material omissions with
respect to the business and operations of Developing Markets Trust.
(e) Developing Markets Trust has the necessary power and authority to
conduct its business as such business is now being conducted.
(f) Developing Markets Trust is not a party to or obligated under any
provision of its Declaration of Trust or its By-laws (together, as
each has been amended to date, the "Developing Markets Trust Trust
Documents"), or any contract or any other commitment or obligation,
and is not subject to any order or decree, that would be violated by
its execution of or performance under this Plan.
(g) Developing Markets Trust has elected to be treated as a regulated
investment company ("RIC") for federal income tax purposes under Part
I of Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and it has qualified as a RIC for each taxable year
since its inception and will qualify as a RIC as of the Closing Date,
and consummation of the transactions contemplated by the Plan will not
cause it to fail to be qualified as a RIC as of the Closing Date.
(h) Developing Markets Trust is not under jurisdiction of a Court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of
the Code.
5. REPRESENTATIONS AND WARRANTIES BY EMERGING MARKETS APPRECIATION FUND.
Emerging Markets Appreciation Fund represents and warrants to Developing
Markets Trust that:
(a) Emerging Markets Appreciation Fund is a corporation incorporated under
the laws of the State of Maryland on February 16, 1994, and is validly
existing under the laws of that State. Emerging Markets Appreciation
Fund is duly registered under the 1940 Act as a non-diversified,
closed-end management investment company and all of the Emerging
Markets Appreciation Fund Shares sold were sold in compliance in all
material respects with applicable registration requirements of the
1933 Act.
(b) Emerging Markets Appreciation Fund is authorized to issue one hundred
million (100,000,000) shares of common stock of Emerging Markets
Appreciation Fund, par value $0.01 per share, each outstanding share
of which is fully paid, non-assessable, freely transferable and has
full voting rights. Emerging Markets Appreciation Fund currently
issues shares of one (1) class, and it has not designated any series
of shares.
(c) The unaudited financial statements appearing in Emerging Markets
Appreciation Fund's Semi-Annual Report to Shareholders for the
six-month period ended September 30, 2001, a copy of which has been
delivered to Developing Markets Trust, fairly present the financial
position of Emerging Markets Appreciation Fund as of the respective
dates indicated and the results of its operations for the periods
indicated in conformity with generally accepted accounting principles
applied on a consistent basis. If available, a copy of the financial
statements appearing in Emerging Markets Appreciation Fund's Annual
Report to Shareholders for the fiscal year ended March 31, 2002,
audited by PricewaterhouseCoopers LLP, will be delivered to Developing
Markets Trust which will fairly present the financial position of
Emerging Markets Appreciation Fund as of the respective dates
indicated and the results of its operations for the periods indicated
in conformity with generally accepted accounting principles applied on
a consistent basis.
(d) The books and records of Emerging Markets Appreciation Fund accurately
summarize the accounting data represented and contain no material
omissions with respect to the business and operations of Emerging
Markets Appreciation Fund.
(e) Emerging Markets Appreciation Fund has the necessary power and
authority to conduct its business as such business is now being
conducted.
(f) Emerging Markets Appreciation Fund is not a party to or obligated under
any provision of its Articles of Incorporation or its Bylaws
(together, as each has been amended to date, the "Emerging Markets
Appreciation Fund Corporate Documents"), or any contract or any other
commitment or obligation, and is not subject to any order or decree,
that would be violated by its execution of or performance under this
Plan.
(g) Emerging Markets Appreciation Fund has elected to be treated as a RIC
for federal income tax purposes under Part I of Subchapter M of the
Code, and it has qualified as a RIC for each taxable year since its
inception and will qualify as a RIC as of the Closing Date, and
consummation of the transactions contemplated by the Plan will not
cause it to fail to be qualified as a RIC as of the Closing Date.
(h) Emerging Markets Appreciation Fund is not under jurisdiction of a Court
in a Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
6. REPRESENTATIONS AND WARRANTIES BY EMERGING MARKETS APPRECIATION FUND AND
DEVELOPING MARKETS TRUST.
Emerging Markets Appreciation Fund and Developing Markets Trust each
represents and warrants to the other that:
(a) The statement of assets and liabilities to be furnished by it as of
4:00 p.m. Eastern time on the Closing Date, for the purpose of
determining the number of Developing Markets Trust Shares to be issued
pursuant to Section 1 of this Plan, will accurately reflect its Net
Assets in the case of Emerging Markets Appreciation Fund and its net
assets in the case of Developing Markets Trust and the outstanding
Emerging Markets Appreciation Fund Shares and Developing Markets Trust
Shares, respectively, as of such date, in conformity with generally
accepted accounting principles applied on a consistent basis.
(b) At the Closing, it will have good and marketable title to all of the
securities and other assets shown on the statement of assets and
liabilities referred to in (a) above, free and clear of all liens or
encumbrances of any nature whatsoever, except such imperfections of
title or encumbrances as do not materially detract from the value or
use of the assets subject thereto, or materially affect title thereto.
(c) Except as has been previously disclosed in the Emerging Markets
Appreciation Fund Disclosure Documents or in Developing Markets
Trust's currently effective prospectus, there is no material suit,
judicial action, or legal or administrative proceeding pending or
threatened against Emerging Markets Appreciation Fund or Developing
Markets Trust, respectively.
(d) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by it.
(e) The execution, delivery and performance of this Plan have been duly
authorized by all necessary action of the Board of Trustees of
Developing Markets Trust (the "Developing Markets Trust Board") or the
Emerging Markets Appreciation Fund Board, respectively, and this Plan
constitutes a valid and binding obligation enforceable in accordance
with its terms.
(f) It anticipates that the consummation of this Plan will not cause either
Emerging Markets Appreciation Fund or Developing Markets Trust to fail
to conform to the requirements of Subchapter M of the Code for federal
income taxation as a RIC at the end of its fiscal year.
(g) It has the necessary power and authority to conduct its business as
such business is now being conducted.
7. COVENANTS OF EMERGING MARKETS APPRECIATION FUND AND DEVELOPING MARKETS TRUST.
(a) Emerging Markets Appreciation Fund and Developing Markets Trust each
covenants to operate its respective business as presently conducted
between the date hereof and the Closing.
(b) Emerging Markets Appreciation Fund undertakes that it will not acquire
Developing Markets Trust Shares for the purpose of making
distributions thereof to anyone other than Emerging Markets
Appreciation Fund's shareholders.
(c) Emerging Markets Appreciation Fund undertakes that, if this Plan is
consummated, it will dissolve its corporate existence, file an
application pursuant to Section 8(f) of the 1940 Act for an order
declaring that it has ceased to be an investment company and take the
necessary actions, including making the necessary filings, to withdraw
its shares from listing on those stock exchanges on which Emerging
Markets Appreciation Fund Shares are listed as of the Closing Date.
(d) Emerging Markets Appreciation Fund and Developing Markets Trust each
agrees that, by the Closing, all of its federal and other tax returns
and reports required by law to be filed on or before such date shall
have been filed, and all federal and other taxes shown as due on said
returns shall have either been paid or had adequate liability reserves
created for the payment of such taxes.
(e) At the Closing, Emerging Markets Appreciation Fund will provide
Developing Markets Trust a copy of the shareholder ledger accounts,
certified by Emerging Markets Appreciation Fund's transfer agent or
its President or a Vice President to the best of its or his or her
knowledge and belief, for all of the shareholders of record of
Emerging Markets Appreciation Fund Shares as of 4:00 p.m. Eastern time
on the Closing Date who are to become shareholders of Developing
Markets Trust as a result of the transfer of assets that is the
subject of this Plan.
(f) each of its shareholders of record entitled to vote at the meeting of
its shareholders at which action on this Plan is to be considered, in
sufficient time to comply with requirements as to notice thereof, a
combined Prospectus and Proxy Statement that complies in all material
respects with the applicable provisions of Section 14(a) of the
Securities Exchange Act of 1934, as amended, and Section 20(a) of the
1940 Act, and the rules and regulations, respectively, thereunder.
(g) Developing Markets Trust will file with the SEC a registration
statement on Form N-14 under the 1933 Act relating to Developing
Markets Trust Shares issuable hereunder (the "Developing Markets Trust
N-14 Registration Statement"), and will use its best efforts to
provide that the Developing Markets Trust N-14 Registration Statement
becomes effective as promptly as is practicable. At the time it
becomes effective, the Developing Markets Trust N-14 Registration
Statement will (i) comply in all material respects with the applicable
provisions of the 1933 Act, and the rules and regulations promulgated
thereunder; and (ii) not contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. At the time
the Developing Markets Trust N-14 Registration Statement becomes
effective, at the time of Emerging Markets Appreciation Fund's
shareholders' meeting to consider this Plan, and at the Closing Date,
the Prospectus and Statement of Additional Information included in the
Developing Markets Trust N-14 Registration Statement will not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) Emerging Markets Appreciation Fund and Developing Markets Trust each
agrees that, before the Closing, it will deliver to the other party a
copy of the resolutions, adopted and approved by the appropriate
action of its Board, certified by its President, a Vice President or
an equivalent officer of Emerging Markets Appreciation Fund or
Developing Markets Trust, respectively, approving the imposition by
Developing Markets Trust of a 2% redemption fee on those Developing
Markets Trust Shares issued as part of the Reorganization pursuant to
this Plan to Emerging Markets Appreciation Fund shareholders in
exchange for their Emerging Markets Appreciation Fund Shares that are
redeemed or exchanged out of Developing Markets Trust within six (6)
months after the Closing Date.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY EMERGING MARKETS APPRECIATION FUND
AND DEVELOPING MARKETS TRUST.
The consummation of this Plan hereunder shall be subject to the following
respective conditions:
(a) That: (i) all the representations and warranties of the other party
contained herein shall be true and correct as of the Closing with the
same effect as though made as of and at such date; (ii) the other
party shall have performed all obligations required by this Plan to be
performed by it prior to the Closing; and (iii) the other party shall
have delivered to such party a certificate signed by its President, a
Vice President or an equivalent officer to the foregoing effect.
(b) That each party shall have delivered to the other party a copy of the
resolutions approving the Plan adopted and approved by the appropriate
action of the Emerging Markets Appreciation Fund Board or Developing
Markets Trust Board, as appropriate, certified by its President, a
Vice President or an equivalent officer of Emerging Markets
Appreciation Fund or Developing Markets Trust, respectively.
(c) That the SEC shall not have issued an unfavorable management report
under Section 25(b) of the 1940 Act or instituted or threatened to
institute any proceeding seeking to enjoin consummation of the Plan
under Section 25(c) of the 1940 Act. And, further, no other legal,
administrative or other proceeding shall have been instituted or
threatened that would materially affect the financial condition of
either party or would prohibit the transactions contemplated hereby.
(d) That this Plan and the Reorganization contemplated hereby shall have
been adopted and approved by the appropriate action of the
shareholders of Emerging Markets Appreciation Fund at an annual or
special meeting or any adjournment thereof.
(e) That a distribution or distributions shall have been declared for
Emerging Markets Appreciation Fund prior to the Closing Date that,
together with all previous distributions, shall have the effect of
distributing to its shareholders (i) all of its ordinary income and
all of its capital gain net income, if any, for the period from the
close of its last fiscal year to 4:00 p.m. Eastern time on the Closing
Date; and (ii) any undistributed ordinary income and capital gain net
income from any period to the extent not otherwise declared for
distribution. Capital gain net income has the meaning given such term
by Section 1222(a) of the Code.
(f) That there shall be delivered to Emerging Markets Appreciation Fund and
Developing Markets Trust an opinion from Xxxxxxxx Ronon Xxxxxxx &
Young, LLP, counsel to Emerging Markets Appreciation Fund and
Developing Markets Trust, to the effect that, provided the acquisition
contemplated hereby is carried out in accordance with this Plan and
the laws of the State of Maryland and the Commonwealth of
Massachusetts, and based upon certificates of the officers of Emerging
Markets Appreciation Fund and Developing Markets Trust with regard to
matters of fact:
(1) The acquisition by Developing Markets Trust of substantially all
the assets of Emerging Markets Appreciation Fund as provided for
herein in exchange for Developing Markets Trust Shares followed
by the distribution by Emerging Markets Appreciation Fund to its
shareholders of Developing Markets Trust Shares in complete
liquidation of Emerging Markets Appreciation Fund will qualify as
a reorganization within the meaning of Section 368(a)(1) of the
Code, and Emerging Markets Appreciation Fund and Developing
Markets Trust will each be a "party to the reorganization" within
the meaning of Section 368(b) of the Code;
(2) No gain or loss will be recognized by Emerging Markets
Appreciation Fund upon the transfer of substantially all of its
assets to Developing Markets Trust in exchange solely for voting
shares of Developing Markets Trust (Sections 361(a) and 357(a) of
the Code);
(3) No gain or loss will be recognized by Developing Markets Trust
upon the receipt of substantially all of the assets of Emerging
Markets Appreciation Fund in exchange solely for voting shares of
Developing Markets Trust (Section 1032(a) of the Code);
(4) No gain or loss will be recognized by Emerging Markets
Appreciation Fund upon the distribution of Developing Markets
Trust Shares to its shareholders in liquidation of Emerging
Markets Appreciation Fund (in pursuance of the Plan) (Section
361(c)(1) of the Code);
(5) The basis of the assets of Emerging Markets Appreciation Fund
received by Developing Markets Trust will be the same as the
basis of such assets to Emerging Markets Appreciation Fund
immediately prior to the reorganization (Section 362(b) of the
Code);
(6) The holding period of the assets of Emerging Markets Appreciation
Fund received by Developing Markets Trust will include the period
during which such assets were held by Emerging Markets
Appreciation Fund (Section 1223(2) of the Code);
(7) No gain or loss will be recognized to the shareholders of Emerging
Markets Appreciation Fund upon the exchange of their shares in
Emerging Markets Appreciation Fund for voting shares of
Developing Markets Trust, including fractional shares to which
they may be entitled (Section 354(a) of the Code);
(8) The basis of Developing Markets Trust Shares received by the
shareholders of Emerging Markets Appreciation Fund shall be the
same as the basis of the Emerging Markets Appreciation Fund
Shares exchanged therefor (Section 358(a)(1) of the Code);
(9) The holding period of Developing Markets Trust Shares received by
shareholders of Emerging Markets Appreciation Fund (including
fractional shares to which they may be entitled) will include the
holding period of the Emerging Markets Appreciation Fund Shares
surrendered in exchange therefor, provided that the Emerging
Markets Appreciation Fund Shares were held as a capital asset on
the effective date of the exchange (Section 1223(1) of the Code);
and
(10) Developing Markets Trust will succeed to and take into account as
of the date of the transfer (as defined in Section 1.381(b)-1(b)
of the regulations issued by the United States Treasury
("Treasury Regulations")) the items of Emerging Markets
Appreciation Fund described in Section 381(c) of the Code,
subject to the conditions and limitations specified in Sections
381, 382, 383 and 384 of the Code and the Treasury Regulations.
(g) That there shall be delivered to Developing Markets Trust an opinion in
form and substance satisfactory to it from Xxxxxxxx Ronon Xxxxxxx &
Young, LLP, counsel to Emerging Markets Appreciation Fund, to the
effect that, subject in all respects to the effects of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other laws now or hereafter affecting generally the enforcement of
creditors' rights:
(1) Emerging Markets Appreciation Fund is a corporation incorporated
under the laws of the State of Maryland on February 16, 1994, and
is a validly existing corporation and in good standing under the
laws of that state;
(2) Emerging Markets Appreciation Fund is authorized to issue one
hundred million (100,000,000) shares of common stock, par value
$0.01 per share. Emerging Markets Appreciation Fund currently
issues shares of one (1) class and it has not designated any
series of shares. Assuming that the initial shares of common
stock of Emerging Markets Appreciation Fund were issued in
accordance with the 1940 Act and the Emerging Markets
Appreciation Fund Corporate Documents, and that all other
outstanding shares of Emerging Markets Appreciation Fund were
sold, issued and paid for in compliance in all material respects
with applicable registration requirements of the 1933 Act, each
such outstanding share is fully paid, non-assessable, freely
transferable and has full voting rights in accordance with the
terms of the Emerging Markets Appreciation Fund Corporate
Documents;
(3) Emerging Markets Appreciation Fund is a closed-end, non-
diversified investment company of the management type registered
as such under the 1940 Act;
(4) Except as disclosed in the Emerging Markets Appreciation Fund
Disclosure Documents, such counsel does not know of any material
suit, action or legal or administrative proceeding pending or
threatened against Emerging Markets Appreciation Fund, the
unfavorable outcome of which would materially and adversely
affect Emerging Markets Appreciation Fund;
(5) All corporate actions required to be taken by Emerging Markets
Appreciation Fund to authorize this Plan and to effect the
Reorganization contemplated hereby have been duly authorized by
all necessary action on the part of Emerging Markets Appreciation
Fund; and
(6) The execution, delivery or performance of this Plan by Emerging
Markets Appreciation Fund will not violate any provision of the
Emerging Markets Appreciation Fund Corporate Documents, or the
provisions of any agreement or other instrument known to such
counsel to which Emerging Markets Appreciation Fund is a party or
by which Emerging Markets Appreciation Fund is otherwise bound;
this Plan is the legal, valid and binding obligation of Emerging
Markets Appreciation Fund and is enforceable against Emerging
Markets Appreciation Fund in accordance with its terms.
In giving the opinions set forth above, this counsel may state that it is
relying on certificates of the officers of Emerging Markets Appreciation Fund
with regard to matters of fact, and certain certifications and written
statements of governmental officials with respect to the good standing of
Emerging Markets Appreciation Fund.
(h) That there shall be delivered to Emerging Markets Appreciation Fund an
opinion in form and substance satisfactory to it from Xxxxxxxx Ronon
Xxxxxxx & Young, LLP, counsel to Developing Markets Trust, to the
effect that, subject in all respects to the effects of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other laws now or hereafter affecting generally the enforcement of
creditors' rights:
(1) Developing Markets Trust is a business trust formed under the laws
of the Commonwealth of Massachusetts on August 9, 1991 and is a
validly existing business trust and in good standing under the
laws of that Commonwealth;
(2) Developing Markets Trust is authorized to issue an unlimited
number of shares of beneficial interest, par value $0.01 per
share. Developing Markets Trust is further divided into five
classes of shares of which Developing Markets Trust - Advisor
Class Shares is one, and an unlimited number of shares of
beneficial interest, par value $0.01 per share, has been
allocated and designated to Developing Markets Trust Shares.
Assuming that the initial Developing Markets Trust Shares of
beneficial interest were issued in accordance in all material
respects with the 1940 Act and the Developing Markets Trust Trust
Documents, and that all other outstanding shares of Developing
Markets Trust were sold, issued and paid for in accordance in all
material respects with the terms of Developing Markets Trust's
prospectus in effect at the time of such sales, each such
outstanding share is fully paid, non-assessable, freely
transferable and has full voting rights in accordance with the
terms of the Developing Markets Trust Trust Documents;
(3) Developing Markets Trust is an open-end diversified investment
company of the management type registered as such under the 1940
Act;
(4) Except as disclosed in Developing Markets Trust's currently
effective prospectus, such counsel does not know of any material
suit, action or legal or administrative proceeding pending or
threatened against Developing Markets Trust, the unfavorable
outcome of which would materially and adversely affect Developing
Markets Trust;
(5) Developing Markets Trust Shares to be issued pursuant to the terms
of this Plan have been duly authorized and, when issued and
delivered as provided in this Plan, will have been validly issued
and fully paid and will be non-assessable by Developing Markets
Trust;
(6) All trust actions required to be taken by Developing Markets Trust
to authorize this Plan and to effect the Reorganization
contemplated hereby have been duly authorized by all necessary
action on the part of Developing Markets Trust;
(7) The execution, delivery or performance of this Plan by Developing
Markets Trust will not violate any provision of the Developing
Markets Trust Trust Documents, or the provisions of any agreement
or other instrument known to such counsel to which Developing
Markets Trust is a party or by which Developing Markets Trust is
otherwise bound; this Plan is the legal, valid and binding
obligation of Developing Markets Trust and is enforceable against
Developing Markets Trust in accordance with its terms; and
(8) The Developing Markets Trust N-14 Registration Statement has been
declared or, by operation of rule, has become effective under the
1933 Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of such Registration Statement
has been issued, and no proceedings for such purpose have been
instituted or are pending before or threatened by the SEC under
the 1933 Act, and nothing has come to counsel's attention that
causes it to believe that, at the time the Developing Markets
Trust N-14 Registration Statement became effective, or at the
Closing, such Registration Statement (except for the financial
statements and other financial and statistical data included
therein, as to which counsel need not express an opinion),
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and such counsel
knows of no legal or government proceedings required to be
described in the Developing Markets Trust N-14 Registration
Statement, or of any contract or document of a character required
to be described in the Developing Markets Trust N-14 Registration
Statement that is not described as required.
In giving the opinions set forth above, this counsel may state that it is
relying on certificates of the officers of Developing Markets Trust with regard
to matters of fact, and certain certifications and written statements of
governmental officials with respect to the good standing of Developing Markets
Trust.
(i) That Emerging Markets Appreciation Fund shall have received a
certificate from the President or a Vice President of Developing
Markets Trust to the effect that, to the best knowledge and belief of
such officer, the statements contained in the Developing Markets Trust
N-14 Registration Statement, at the time the Developing Markets Trust
N-14 Registration Statement became effective, at the date of the
signing of this Plan, and at the Closing, did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(j) That the Developing Markets Trust N-14 Registration Statement with
respect to Developing Markets Trust Shares to be delivered to Emerging
Markets Appreciation Fund's shareholders in accordance with this Plan
shall have become effective, and no stop order suspending the
effectiveness of the Developing Markets Trust N-14 Registration
Statement or any amendment or supplement thereto, shall have been
issued prior to the Closing Date or shall be in effect at Closing, and
no proceedings for the issuance of such an order shall be pending or
threatened on that date.
(k) That Developing Markets Trust Shares to be delivered hereunder shall be
eligible for sale with each state commission or agency with which such
eligibility is required in order to permit Developing Markets Trust
Shares lawfully to be delivered to each holder of Emerging Markets
Appreciation Fund Shares.
(l) That, at the Closing, there shall be transferred to Developing Markets
Trust, aggregate Net Assets of Emerging Markets Appreciation Fund
comprising at least 90% in fair market value of the total net assets
and 70% of the fair market value of the total gross assets recorded on
the books of Emerging Markets Appreciation Fund on the Closing Date.
(m) That there be delivered to Developing Markets Trust information
concerning the tax basis of Emerging Markets Appreciation Fund in all
securities transferred to Developing Markets Trust, together with
shareholder information including the names, addresses and taxpayer
identification numbers of the shareholders of Emerging Markets
Appreciation Fund as of the Closing Date, the number of shares held by
each shareholder, the dividend reinvestment elections applicable to
each shareholder, and the backup withholding and nonresident alien
withholding certifications, notices or records on file with Emerging
Markets Appreciation Fund with respect to each shareholder.
(n) That all consents of other parties, and all other consents, orders and
permits of federal, state and local regulatory authorities (including
those of the SEC and of state Blue Sky securities authorities,
including any necessary "no-action" positions or exemptive orders from
such federal and state authorities), required to permit consummation
of the Reorganization 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 Emerging Markets Appreciation Fund or Developing Markets
Trust.
9. BROKERAGE FEES AND EXPENSES.
(a) Emerging Markets Appreciation Fund and Developing Markets Trust each
represents and warrants to the other that there are no broker or
finders' fees payable by it in connection with the transactions
provided for herein.
(b) The expenses of entering into and carrying out the provisions of this
Plan shall be borne one-fourth by Developing Markets Trust, one-fourth
by Emerging Markets Appreciation Fund and one-half by Xxxxxxxxx Asset
Management Ltd.
10. TERMINATION; POSTPONEMENT; WAIVER; ORDER.
(a) Anything contained in this Plan to the contrary notwithstanding, this
Plan may be terminated and the Reorganization abandoned at any time
(whether before or after approval thereof by the shareholders of
Emerging Markets Appreciation Fund) prior to the Closing, or the
Closing may be postponed as follows:
(1) by mutual consent of Emerging Markets Appreciation Fund and
Developing Markets Trust;
(2) by Developing Markets Trust if any condition of its obligations
set forth in Section 8 has not been fulfilled or waived; or
(3) by Emerging Markets Appreciation Fund if any condition of its
obligations set forth in Section 8 has not been fulfilled or
waived.
An election by Emerging Markets Appreciation Fund or Developing Markets
Trust to terminate this Plan and to abandon the Reorganization shall be
exercised by the Emerging Markets Appreciation Fund Board or the Developing
Markets Trust Board, respectively.
(b) If the transactions contemplated by this Plan have not been consummated
by December 31, 2002, the Plan shall automatically terminate on that
date, unless a later date is agreed to by both the Emerging Markets
Appreciation Fund Board and the Developing Markets Trust Board.
(c) In the event of termination of this Plan pursuant to the provisions
hereof, the Plan shall become void and have no further effect, and
neither Emerging Markets Appreciation Fund nor Developing Markets
Trust, nor their trustees, directors, officers or agents or the
shareholders of Emerging Markets Appreciation Fund or Developing
Markets Trust shall have any liability in respect of this Plan.
(d) At any time prior to the Closing, any of the terms or conditions of
this Plan may be waived by the party who is entitled to the benefit
thereof by action taken by the Developing Markets Trust Board or
Emerging Markets Appreciation Fund Board, as the case may be, if, in
the judgment of such Board, such action or waiver will not have a
material adverse effect on the benefits intended under this Plan to
its shareholders, on behalf of whom such action is taken.
(e) The respective representations and warranties contained in Sections 4
through 6 hereof shall expire with and be terminated by the
Reorganization, and neither Emerging Markets Appreciation Fund nor
Developing Markets Trust, nor any of their officers, trustees,
directors, agents or shareholders shall have any liability with
respect to such representations or warranties after the Closing. This
provision shall not protect any officer, trustee, director, agent or
shareholder of Emerging Markets Appreciation Fund or Developing
Markets Trust against any liability to the entity for which that
officer, trustee, director, agent or shareholder so acts or to its
shareholders to which that officer, trustee, director, agent or
shareholder would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties in the conduct of such office.
(f) If any order or orders of the SEC with respect to this Plan shall be
issued prior to the Closing and shall impose any terms or conditions
that are determined by action of the Emerging Markets Appreciation
Fund Board and the Developing Markets Trust Board to be acceptable,
such terms and conditions shall be binding as if a part of this Plan
without further vote or approval of the shareholders of Emerging
Markets Appreciation Fund, unless such terms and conditions shall
result in a change in the method of computing the number of Developing
Markets Trust Shares to be issued to Emerging Markets Appreciation
Fund in which event, unless such terms and conditions shall have been
included in the proxy solicitation material furnished to the
shareholders of Emerging Markets Appreciation Fund prior to the
meeting at which the transactions contemplated by this Plan shall have
been approved, this Plan shall not be consummated and shall terminate
unless Emerging Markets Appreciation Fund shall promptly call a
special meeting of its shareholders at which such conditions so
imposed shall be submitted for approval.
11. ENTIRE AGREEMENT AND AMENDMENTS.
This Plan embodies the entire agreement between the parties and there are
no agreements, understandings, restrictions or warranties relating to the
transactions contemplated by this Plan other than those set forth herein or
herein provided for. This Plan may be amended only by mutual consent of the
parties in writing. Neither this Plan nor any interest herein may be assigned
without the prior written consent of the other party.
12. COUNTERPARTS.
This Plan may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts together shall
constitute but one instrument.
13. NOTICES.
(a) Any notice, report or demand required or permitted by any provision of
this Plan shall be in writing and shall be deemed to have been given
to Emerging Markets Appreciation Fund if delivered or mailed, first
class postage prepaid, addressed to Xxxxxxxxx Emerging Markets
Appreciation Fund, Inc., at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000, Attention: Secretary.
(b) Any notice, report or demand required or permitted by any provision of
this Plan shall be in writing and shall be deemed to have been given
to Developing Markets Trust if delivered or mailed, first class
postage prepaid, addressed to Xxxxxxxxx Developing Markets Trust, at
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, Attention:
Secretary.
14. GOVERNING LAW.
This Plan shall be governed by and carried out in accordance with the laws
of the State of Maryland.
[The remainder of this page was intentionally left blank.]
IN WITNESS WHEREOF, Emerging Markets Appreciation Fund and Developing
Markets Trust have each caused this Plan to be executed on its behalf by its
duly authorized officers, all as of the date and year first-above written.
XXXXXXXXX EMERGING MARKETS
APPRECIATION FUND, INC.
Attest:/s/XXXX X. XXXXX By:/s/XXXXX X. XXXX
-------------------------------- ---------------------------
Name: Xxxx X. Xxxxx Name: Xxxxx X. Xxxx
Title: Assistant Secretary Title: Vice President and
Assistant Secretary
XXXXXXXXX DEVELOPING MARKETS
TRUST
Attest:/s/XXXX X. XXXXX By:/s/XXXXXX X. XXXXXXX
-------------------------------- ---------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxx
Title: Assistant Secretary Title: Vice President and
Assistant Secretary
