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1.
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Definitions.
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The following terms shall have the following meanings:
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1933 Act
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The Securities Act of 1933, as amended.
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1934 Act
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The Securities Exchange Act of 1934, as amended.
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Assets
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All property and assets of any kind and all interests,
rights, privileges and powers of or attributable to the Target Fund whether
or not determinable at the Effective Time and wherever located. Assets
include all cash, cash equivalents, securities, claims (whether absolute or
contingent, Known or unknown, accrued or unaccrued or conditional or
unmatured), contract rights and receivables (including dividend and interest
receivables) owned by or attributed to the Target Fund and any deferred or
prepaid expense shown as an asset on the Target Fund's books.
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Assets List
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A list of securities and other Assets and Liabilities of
or attributable to the Target Fund as of the date provided to Viking.
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Business Day
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Each weekday that the New York Stock Exchange is open.
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Closing Date
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June 30, 2009, or such other date as the parties may agree
to in writing.
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Effective Time
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9:00 a.m. Eastern time on the Business Day following the
Closing Date, or such other time as the parties may agree to in writing.
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Fund
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The Acquiring Fund or the Target Fund as the context may
require.
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Know, Known, or
Knowledge
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Known after reasonable inquiry.
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Liabilities
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All liabilities of, allocated or attributable to the
Target Fund as set forth on the Assets List and as included in the
calculation of net asset value (as defined below) on the Closing Date of the
Reorganization, excluding liabilities for expenses incurred by the Funds in connection
with the Reorganization.
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N-14 Registration
Statement
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Viking's registration statement on Form N-14 under the
1940 Act that will register the shares of the Acquiring Fund to be issued in
the Reorganization and will include the proxy materials necessary for
shareholders of the Target Fund to approve the Reorganization.
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Material Agreements
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The agreements set forth in Schedule A.
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Net Value of Assets
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Value of Assets, determined in accordance with Section
3(d) hereof, net of Liabilities.
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Reorganization
Documents
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Such bills of sale, assignments, assumptions, and other
instruments as desirable for the Target Fund to transfer to the Corresponding
Acquiring Fund all right and title to and interest in the Assets and for the
Corresponding Acquiring Fund to assume the Liabilities.
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Schedule A
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Schedule A to this Plan.
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Schedule B
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Schedule B to this Plan.
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Target Financial
Statements
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The audited financial statements of the Target Fund for
its most recently completed fiscal year and, if applicable, the unaudited
financial statements of the Target Fund for its most recently completed
semi-annual period.
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Valuation Time
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The time on the Closing Date, the Business Day immediately
preceding the Closing Date if the Closing Date is not a Business Day, or such
other date as the parties may agree to in writing, that Viking determines the
Net Value of Assets per share of the Acquiring Fund and the Target Fund
determines the Net Value of Assets of or attributable to the Class A shares
and Class B shares, if applicable, of the Target Fund. Unless otherwise
agreed to in writing, the Valuation Time shall be at the time of day then set
forth in the Acquiring Fund's registration statement on Form N-1A as the time
of day at which net asset value is calculated.
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2.
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Regulatory Filings and Shareholder Action.
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(a)
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Viking shall promptly file the N-14 Registration Statement with the SEC. The
Target Funds and Viking shall promptly prepare and file any other appropriate
regulatory filings, including, without limitation, filings with federal,
state or foreign securities regulatory authorities.
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(b)
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The parties shall comply with the provisions of rule 17a-8 under the 1940
Act, or if required, shall seek an order of the SEC, providing them with any
necessary relief from section 17 of the 1940 Act to permit them to consummate
the transactions contemplated by this Plan.
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(c)
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As soon as practicable after the effective date of the N-14 Registration
Statement, the Target Funds shall hold a meeting of Target Fund shareholders
to consider and approve this Plan and such other matters as the Target Funds'
boards of directors may determine.
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3.
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Transfer of Assets and Related Transactions. The Target Funds and
Viking shall take the following steps with respect to the Reorganizations:
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(a)
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On or prior to the Closing Date, the Target Fund shall (1) endeavor to pay or
make reasonable provision to pay all of the liabilities, expenses, costs and
charges of or attributable to the Target Fund that are Known to the Target
Fund and that are due and payable as of the Closing Date, and (2) the Target
Fund shall declare and pay to its shareholders a dividend and/or other
distribution in an amount large enough so that it will have distributed
substantially all (and in any event not less than 98%) of its "investment
company taxable income" (as defined in section 852(b)(2) of the Code,
computed without regard to any deduction for dividends paid) and
substantially all of its "net capital gain," if any (as defined in section 1222(11))
for the current taxable year through the Effective Time.
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(b)
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At the Effective Time, the Target Fund shall assign, transfer, deliver and
convey all of the Assets to the Corresponding Acquiring Fund, subject to the
Liabilities. Viking shall then accept the Assets and assume the Liabilities
such that at and after the Effective Time (i) all of the Assets shall become
and be the assets of the Corresponding Acquiring Fund and (ii) all of the
Liabilities shall attach to the Corresponding Acquiring Fund, enforceable
against the Corresponding Acquiring Fund to the same extent as if initially
incurred by the Corresponding Acquiring Fund.
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(c)
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Within a reasonable time prior to the Closing Date, the Target Fund shall provide
the Assets List to Viking. The parties agree that the Target Fund may sell
any asset on the Assets List prior to the Effective Time. After the Target
Fund provides the Assets List, the Target Fund will not acquire any
additional securities or permit to exist any encumbrances, rights,
restrictions or claims not reflected on the Assets List, without the prior
consent of Viking. Within a reasonable time after receipt of the Assets List
and prior to the Closing Date, Viking will advise the Target Fund of any
investments shown on the Assets List that Viking has determined to be
inconsistent with the investment objective, policies and restrictions of the
Acquiring Fund. The Target Fund will dispose of any such securities prior to
the Closing Date to the extent practicable and consistent with applicable
legal requirements, including the Target Fund's investment objective,
policies and restrictions. In addition, if Viking determines that, as a
result of the Reorganization, the Acquiring Fund would own an aggregate
amount of an investment that would exceed a percentage limitation applicable
to the Acquiring Fund, Viking will advise the Target Fund in writing of any
such limitation and the Target Fund shall dispose of a sufficient amount of
such investment as may be necessary to avoid violating the limitation as of
the Effective Time, to the extent practicable and consistent with applicable
legal requirements, including the Target Fund's investment objective,
policies and restrictions.
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(d)
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The Target Fund shall assign, transfer, deliver and convey the Assets to the
Corresponding Acquiring Fund, free and clear of all liens and encumbrances
and subject to no restrictions on the full transfer thereof, at the Effective
Time on the following bases:
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(1)
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In exchange for the transfer of the Assets, Viking shall simultaneously issue
and deliver to the Target Fund full and fractional shares of beneficial
interest of the Corresponding Acquiring Fund. Viking shall determine the
number of shares of the Acquiring Fund to be issued by dividing the Net Value
of Assets attributable to each respective class of the Target Fund by the net
asset value of one Corresponding Acquiring Fund share determined in
accordance with Section 3(d)(2) hereof. Based on this calculation, Viking
shall issue shares of beneficial interest of the Acquiring Fund with an
aggregate net asset value equal to the Net Value of Assets attributable to
Class A and Class B of the Corresponding Target Fund.
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(2)
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The parties shall determine, as of the Valuation Time, the Net Value of
Assets of the Acquiring Fund shares to be delivered and the Net Value of
Assets attributable to Class A and Class B, if applicable, of the
Corresponding Target Fund to be conveyed, substantially in accordance with
the Acquiring Funds' current valuation procedures. The parties shall make all
computations to the fourth decimal place or such other decimal place as the
parties may agree to in writing.
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(3)
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The Target Fund shall transfer the Assets with good and marketable title to
Viking's custodian for the account of the Corresponding Acquiring Fund. The
Target Fund shall transfer all of the Target Fund's cash in the form of
immediately available funds payable to the order of Viking's custodian for
the account of the Corresponding Acquiring Fund. The Target Fund shall
transfer any of the Assets that were not transferred to Viking's custodian at
the Effective Time to Viking's custodian at the earliest practicable date
thereafter.
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(e)
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The steps set forth in Section 3(d) hereof, together with all other related
acts necessary to consummate the Reorganization, shall occur at the Target
Fund's principal office on the Closing Date, or at such other place as the
parties may agree on. All steps and acts shall be deemed to take place
simultaneously at the Effective Time.
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(f)
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Promptly after the Closing Date (usually within one week), the Target Fund
will deliver to Viking the Statement of Assets and Liabilities of the Target
Fund as of the Valuation Time.
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4.
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Liquidation and Dissolution of the Target Fund, Registration of Shares and
Access to Records. The Target Funds and Viking also shall take the
following steps in connection with the Reorganizations:
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(a)
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At or as soon as reasonably practical after the Effective Time, the Target
Fund shall liquidate and dissolve by transferring to shareholders of record
full and fractional shares of beneficial interest of the Acquiring Fund
received equal in value to the shares of the respective class of the Target
Fund held by the shareholder. The Target Fund shareholder also shall have the
right to receive any unpaid dividends or other distributions that the Target
Fund declared with respect to the shareholder's Target Fund class shares at
or before the Effective Time. Viking shall record on its books the ownership
by the shareholders of the Acquiring Fund shares; the Target Fund shall
simultaneously redeem and cancel on its books all of its issued and
outstanding shares. The Target Fund shall then wind up its affairs and take
all steps as are necessary and proper to dissolve as soon as is reasonably
possible (but in no event more than six months) after the Effective Time and
in accordance with all applicable laws and regulations.
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(b)
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If a Target Fund shareholder requests a change in the registration of the
shareholder's Acquiring Fund shares to a person other than the shareholder,
the Acquiring Fund shall require the shareholder to (i) furnish the Acquiring
Fund with an instrument of transfer properly endorsed, accompanied by any
required signature guarantees and otherwise in proper form for transfer; (ii)
if any of the shares are outstanding in certificate form, deliver to the
Acquiring Fund the certificate representing such shares; and (iii) pay to the
Acquiring Fund any transfer or other taxes required by reason of such
registration or establish to the reasonable satisfaction of the Acquiring
Fund that such tax has been paid or does not apply.
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(c)
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At and after the Closing Date, the Target Fund shall provide Viking and its
transfer agent with immediate access to: (i) all records containing the
names, addresses and taxpayer identification numbers of all of the Target
Fund's shareholders and the number and percentage ownership of the
outstanding shares of the respective class of the Target Fund owned by each
shareholder as of the Effective Time and (ii) all original documentation
(including all applicable Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Target Fund shareholders'
taxpayer identification numbers and their liability for or exemption from
back-up withholding. The Target Fund shall preserve and maintain, or shall
direct its service providers to preserve and maintain, its records as
required by section 31 of and rules 31a-1 and 31a-2 under the 1940 Act.
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5.
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Certain Representations, Warranties and Agreements of the Target Funds.
Each Target Fund represents and warrants to, and agrees with, Viking as
follows:
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(a)
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The Target Fund is a corporation, duly incorporated, validly existing and in
good standing under the laws of the State of North Dakota. The Target Fund is
registered with the SEC as an open-end management investment company under
the 1940 Act, and such registration is in full force and effect.
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(b)
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The Target Fund has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and Assets, to
carry on its business as now being conducted and described in its currently
effective registration statement on Form N-1A, to enter into this Plan and to
consummate the transactions contemplated herein.
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(c)
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The board of directors of the Target Fund has duly authorized the execution
and delivery of this Plan and the transactions contemplated herein. Duly
authorized officers of the Target Fund have executed and delivered this Plan.
Assuming due authorization, execution and delivery of this Plan by Viking,
this Plan represents a valid and binding contract, enforceable in accordance
with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The execution and delivery of this Plan does not, and,
subject to the approval of shareholders referenced in Section 2(c) hereof,
the consummation of the transactions contemplated by this Plan will not,
violate the Target Fund's articles of incorporation, bylaws or any Material
Agreement or any provision of North Dakota law. Except for the approval of
Target Fund shareholders and subject to conditions precedent herein, the
Target Fund does not need to take any other action to authorize its officers
to effectuate this Plan and the transactions contemplated herein.
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(d)
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The Target Fund has qualified for treatment as a regulated investment company
("RIC") under Part I of Subchapter M of Chapter 1 of Subtitle A of the
Code, for each taxable year since the commencement of its operations and
qualifies and shall continue to qualify for treatment as a RIC during its
current taxable year, which includes the Effective Time; it will invest its
assets at all times and through the Effective Time in a manner that ensures
compliance with the foregoing; and it has no earnings and profits accumulated
in any taxable year in which the provisions of such Subchapter M did not
apply to it.
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(e)
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The materials included within the N-14 Registration Statement when filed with
the SEC, when Part A of the N-14 Registration Statement is distributed to
Target Fund shareholders, at the time of the Target Fund shareholder meeting
and at the Effective Time, insofar as they relate to the Target Fund (i)
shall comply in all material respects with the applicable provisions of the
1933 Act, the 1934 Act and the 1940 Act, the rules and regulations thereunder
and state securities laws, and (ii) shall 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 made therein not misleading.
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(f)
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The Target Fund has duly authorized and validly issued all of its issued and
outstanding shares and all of the shares are validly outstanding, fully paid
and non-assessable, and are offered for sale and sold in conformity with the
registration requirements of all applicable federal and state securities
laws. There are no outstanding options, warrants or other rights to subscribe
for or purchase Target Fund shares, nor are there any securities convertible
into Target Fund shares.
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(g)
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The Target Fund shall operate its business in the ordinary course between the
date hereof and the Effective Time, it being agreed that such ordinary course
of business will include the declaration and payment of customary dividends
and other distributions and any other distributions deemed advisable in
anticipation of the Reorganization (including distributions pursuant to
Section 3(a)(2) hereof). From the date it commenced operations through the
Effective Time, the Target Fund shall conduct its "historic business" (within
the meaning of section 1.368-1(d)(2) of the Regulations) in a substantially
unchanged manner; and before the Effective Time, the Target Fund will not (a)
dispose of and/or acquire any Assets (i) for the purpose of satisfying the
Acquiring Fund's investment objective or policies or (ii) for any other
reason except in the ordinary course of its business as a RIC, or (b)
otherwise change its historic investment policies.
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(h)
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As of the Effective Time, at least 33-1/3 percent of the Target Fund's
portfolio assets will meet the investment objectives, strategies, policies,
risks and restrictions of the Acquiring Fund. As of the Effective Time, the
Target Fund will not have altered its portfolio in connection with the
Reorganization to meet the 33-1/3 percent threshold. As of the Effective
Time, the Target Fund will not have modified any of its investment
objectives, strategies, policies, risks or restrictions as part of the plan
of Reorganization for purposes of section 1.368-1(d)(2) of the Regulations.
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(i)
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The Target Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of section 368(a)(3)(A)
of the Code.
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(j)
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At the Effective Time, the Target Fund will have good and marketable title to
the Assets and full right, power and authority to assign, transfer, deliver
and convey the Assets.
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(k)
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The Target Financial Statements, copies of which have been previously
delivered to Viking, fairly present the financial position of the Target Fund
as of its most recent fiscal year-end and the results of its operations and
changes in its net assets for the periods indicated. The Target Financial
Statements are in accordance with generally accepted accounting principles
consistently applied.
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(l)
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To the Knowledge of the Target Fund, the Target Fund has no liabilities,
whether or not determined or determinable, other than the liabilities
disclosed or provided for in the Target Financial Statements or liabilities
incurred in the ordinary course of business subsequent to the date of the
Target Fund Financial Statements and set forth in the Assets List. All such
liabilities were incurred by the Target Fund in the ordinary course of its
business and are associated with the Assets transferred to the Acquiring
Fund.
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(m)
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Other than the claims, actions, suits, investigations or proceedings set
forth on Schedule B, the Target Fund does not Know of any claims, actions,
suits, investigations or proceedings of any type pending or threatened
against it or the Assets or its businesses. The Target Fund does not Know of
any facts that it currently has reason to believe are likely to form the
basis for the institution of any such claim, action, suit, investigation or
proceeding against it. For purposes of this provision, investment
underperformance or negative investment performance shall not be deemed to
constitute such facts, provided all required performance disclosures have
been made. Other than the orders, decrees or judgments set forth on Schedule
B, the Target Fund is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that adversely
affects, or is reasonably likely to adversely affect, its financial
condition, results of operations, business, properties or the Assets or its
ability to consummate the transactions contemplated by the Plan.
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(n)
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Except for contracts, agreements, franchises, licenses or permits listed in
Schedule A, in each case under which no material default exists, the Target
Fund is not a party to or subject to any material contract, debt instrument,
employee benefit plan, lease, franchise, license or permit of any kind or
nature whatsoever.
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(o)
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The Target Fund has filed its federal income tax returns, copies of which
have been previously delivered to Viking, for all taxable years to and
including the Target Fund's most recently completed taxable year, and has
paid all taxes payable pursuant to such returns. No such return is currently
under audit and no assessment has been asserted with respect to such returns.
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(p)
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Since the date of the Target Financial Statements, there has been no material
adverse change in the financial condition, results of operations, business,
properties or assets of the Target Fund. For all purposes under this Plan,
investment underperformance, negative investment performance and/or investor
redemptions shall not be considered material adverse changes, provided all
required performance disclosures have been made. The Target Fund incurred the
Liabilities in the ordinary course of its business.
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(q)
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During the five-year period ending at the Effective Time, (a) neither the
Target Fund nor any person "related" (within the meaning of section
1.368-1(e)(4) of the Regulations, without regard to section 1.368-1(e)(4)(i)(A)
thereof) to it will have acquired Target Fund shares, either directly or
through any transaction, agreement, or arrangement with any other person,
with consideration other than Acquiring Fund shares or Target Fund shares,
except for shares redeemed in the ordinary course of the Target Fund's
business as an open-end investment company as required by section 22(e) of
the 1940 Act, and (b) no distributions will have been made with respect
to Target Fund shares, other than normal, regular dividend distributions made
pursuant to the Target Fund's historic dividend-paying practice and other
distributions that qualify for the deduction for dividends paid (within the
meaning of section 561 of the Code) referred to in sections 852(a)(1) and
4982(c)(1)(A) of the Code.
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(r)
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Not more than 25% of the value of the Target Fund's total assets (excluding
cash, cash items and U.S. government securities) is invested in the stock and
securities of any one issuer, and not more than 50% of the value of such
assets is invested in the stock and securities of five or fewer issuers.
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(s)
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Until the Closing Date, the Target Fund will invest its assets in accordance
with the disclosures contained in its current prospectus and statement of
additional information.
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6.
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Certain Representations, Warranties and Agreements of Viking. Viking,
on behalf of itself and, as appropriate, the Corresponding Acquiring Fund,
represents and warrants to, and agrees with the Target Funds as follows:
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(a)
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Viking is a statutory trust, duly created, validly existing and in good
standing under the laws of the State of Delaware. The board of trustees of
Viking has duly established and designated the Acquiring Fund as a series of
Viking. Viking is registered with the SEC as an open-end management
investment company under the 1940 Act, and such registration is in full force
and effect.
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(b)
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Viking has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties and assets, to
carry on its business as now being conducted and described in its currently
effective registration statement on Form N-1A, to enter into this Plan and to
consummate the transactions contemplated herein.
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(c)
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The board of trustees of Viking has duly authorized the execution and
delivery of this Plan and the transactions contemplated herein. Duly
authorized officers of Viking have executed and delivered this Plan. Assuming
due authorization, execution and delivery of this Plan by the Target Fund,
this Plan represents a valid and binding contract, enforceable in accordance
with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated by this Plan will not, violate
Viking's certificate of trust, trust instrument, bylaws or any Material
Agreement or any provision of Delaware law. Viking does not need to take any
other action to authorize its officers to effectuate the Plan and the
transactions contemplated herein.
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(d)
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The Acquiring Fund is a "fund" (as defined in section 851(g)(2) of the Code);
it shall qualify for treatment as a RIC under Part I of Subchapter M of
Chapter 1 of Subtitle A of the Code, for its current taxable year, which
includes the Effective Time; it will invest its assets at all times and
through the Effective Time in a manner that ensures compliance with the
foregoing; and it has no earnings and profits accumulated in any taxable year
in which the provisions of such Subchapter M did not apply to it.
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(e)
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The materials included within the N-14 Registration Statement when filed with
the SEC, when Part A of the N-14 Registration Statement is distributed to
Target Fund shareholders, at the time of the Target Fund shareholder meeting
and at the Effective Time of the Reorganization, insofar as they relate to
Viking and the Acquiring Fund (i) shall comply in all material respects with
the applicable provisions of the 1933 Act, 1934 Act and the 1940 Act, the
rules and regulations thereunder and state securities laws, and (ii) shall
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 made therein not misleading.
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(f)
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Viking does not Know of any claims, actions, suits, investigations or proceedings
of any type pending or threatened against the Acquiring Fund or its assets or
businesses. There are no facts that Viking currently has reason to believe
are likely to form the basis for the institution of any such claim, action,
suit, investigation or proceeding against the Acquiring Fund. For purposes of
this provision, investment underperformance or negative investment
performance shall not be deemed to constitute such facts, provided all
required performance disclosures have been made. The Acquiring Fund is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body that adversely affects, or is reasonably likely to
adversely affect, its financial condition, results of operations, business,
properties or assets or its ability to consummate the transactions
contemplated herein.
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(g)
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Except for contracts, agreements, franchises, licenses or permits entered
into or granted in the ordinary course of its business, in each case under
which no material default exists, Viking is not a party to or subject to any
material contract, debt instrument, employee benefit plan, lease, franchise,
license or permit of any kind or nature whatsoever on behalf of the Acquiring
Fund.
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(h)
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No consideration other than Acquiring Fund shares (and the Acquiring Fund's
assumption of the Liabilities) will be issued in exchange for the Assets in
the Reorganization.
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(i)
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The Acquiring Fund has no plan or intention to issue additional Acquiring
Fund shares following the Reorganization except for shares issued in the
ordinary course of its business as a series of an open-end investment
company; nor does the Acquiring Fund, or any person "related" (within the
meaning of section 1.368-1(e)(4) of the Regulations) to it, have any plan or
intention to acquire, during the five-year period beginning at the Effective
Time, either directly or through any transaction, agreement, or arrangement
with any other person, any Acquiring Fund shares issued to the Target Fund's
shareholders pursuant to the Reorganization, except for redemptions in the
ordinary course of such business as required by section 22(e) of the 1940
Act.
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(j)
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As of the Effective Time, the Acquiring Fund will not have modified any of
its investment objectives, strategies, policies, risks or restrictions as
part of the plan of Reorganization for purposes of section 1.368-1(d)(2) of
the Regulations. As of the Effective Time, the Acquiring Fund will have no
plan or intention to change any of its investment objectives, strategies,
policies, risks and restrictions after the Reorganization. Following the
Reorganization, the Acquiring Fund (a) will continue the Target Fund's
"historic business" (within the meaning of section 1.368-1(d)(2) of the
Regulations) or (b) will use at least one third of the Target Fund's
"historic business assets" (within the meaning of section 1.368-1(d)(3) of
the Regulations) in its business; in addition, the Acquiring Fund (c) has no
plan or intention to sell or otherwise dispose of any of the Assets, except
for dispositions made in the ordinary course of that business and
dispositions necessary to maintain its status as a RIC and (d) expects to
retain substantially all the Assets in the same form as it receives them in
the Reorganization, unless and until subsequent investment circumstances
suggest the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status. The Acquiring Fund is, and at
the Effective Time will continue to be, in the same line of business as the
Target Fund will be in prior to the Reorganization.
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(k)
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There is no plan or intention for the Acquiring Fund to be terminated or
merged into another statutory or business trust or a corporation or any
"fund" thereof (as defined in section 851(g)(2) of the Code) following the
Reorganization.
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(l)
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As of the Closing Date, (a) not more than 25% of the value of the Acquiring
Fund's total assets (excluding cash, cash items and U.S. government
securities) will be invested in the stock and securities of any one issuer
and (b) not more than 50% of the value of such assets will be invested in the
stock and securities of five or fewer issuers.
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(m)
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The Acquiring Fund does not directly or indirectly own, nor at the Effective
Time will it directly or indirectly own, nor has it directly or indirectly
owned at any time during the past five years, any shares of the Target Fund.
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(n)
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During the five-year period ending at the Effective Time, neither the
Acquiring Fund nor any person "related" (within the meaning of section
1.368-1(e)(4) of the Regulations) to it will have acquired Target Fund shares
with consideration other than Acquiring Fund shares.
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(o)
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Viking has made all state filings to register the Acquiring Fund in each
jurisdiction that the Target Fund is currently registered and all necessary
steps have been taken under all relevant jurisdictions' securities laws to
consummate the Reorganization.
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(p)
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The Acquiring Fund will invest its assets in accordance with the disclosures
contained in its current prospectus and statement of additional information.
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(q)
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To the best of the knowledge of the Acquiring Fund's management, there is no
plan or intention by the Target Fund shareholders to sell, exchange, or
otherwise dispose of a number of Target Fund shares (or Acquiring Fund shares
received in the Reorganization), in connection with the Reorganization, that
would reduce the Target Fund shareholders' ownership of Target Fund shares
(or equivalent Acquiring Fund shares) to a number of shares that is less than
50 percent of the current number of Target Fund shares outstanding.
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6A.
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Additional Representations, Warranties and Agreements of the Target Funds
and Viking. Each Target Fund, on behalf of itself, represents and warrants
to, and agrees with, Viking, and Viking, on behalf of itself and, as
appropriate, the Corresponding Acquiring Fund, represents and warrants to,
and agrees with, the Target Funds, as follows:
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(a)
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The fair market value of the Acquiring Fund shares each Target Fund
shareholder receives will be approximately equal to the fair market value of
the Target Fund shares it surrenders in exchange therefor.
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(b)
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The respective management of the Target Fund and Viking (a) is unaware,
without making independent inquiry, of any plan or intention of the Target
Fund's shareholders to redeem, sell or otherwise dispose of (i) any portion
of their Target Fund shares before the Reorganization to any person "related"
(within the meaning of section 1.368-1(e)(4) of the Regulations) to either
the Acquiring Fund or the Target Fund or (ii) any portion of the Acquiring
Fund shares they receive in the Reorganization to any person "related"
(within such meaning) to the Acquiring Fund, (b) does not anticipate
dispositions of those Acquiring Fund shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of dispositions of
shares of the Target Fund as an open-end investment company, (c) expects that
the percentage of Target Fund shareholder interests, if any, that will be
disposed of as a result of or at the time of the Reorganization will be de
minimis, and (d) does not anticipate that there will be extraordinary
redemptions of Target Fund shares immediately following the Reorganization.
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(c)
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Each Target Fund shareholder will pay his or her own expenses (including fees
of personal investment or tax advisors for advice regarding the
Reorganization), if any, he or she incurs in connection with the
Reorganization.
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(d)
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The fair market value of the Assets on a going concern basis will equal or
exceed the Liabilities to be assumed by the Acquiring Fund and those to which
the Assets are subject.
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(e)
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There is no intercompany indebtedness between the Acquiring Fund and the
Target Fund that was issued or acquired, or will be settled, at a discount.
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(f)
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Pursuant to the Reorganization, the Target Fund will transfer to the
Corresponding Acquiring Fund, and the Corresponding Acquiring Fund will
acquire, at least 90% of the fair market value of the net Assets, and at
least 70% of the fair market value of the gross Assets, the Target Fund held
immediately before the Reorganization. For the purposes of the foregoing, any
amounts the Target Fund uses to pay its Reorganization expenses and to make
redemptions and distributions immediately before the Reorganization (except
(a) redemptions in the ordinary course of its business required by section
22(e) of the 1940 Act and (b) regular, normal dividend distributions made to
conform to its policy of distributing all or substantially all of its income
and gains to avoid the obligation to pay federal income tax and/or the excise
tax under section 4982 of the Code) will be included as Assets held thereby
immediately before the Reorganization.
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(g)
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None of the compensation received by any Target Fund shareholder who is an
employee of or service provider to the Target Fund will be separate
consideration for, or allocable to, any of the Target Fund shares that
shareholder held; none of the Acquiring Fund shares any such shareholder
receives will be separate consideration for, or allocable to, any employment
agreement, investment advisory agreement or other service agreement; and the
consideration paid to any such shareholder will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
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(h)
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The aggregate value of the acquisitions, redemptions and distributions
limited by Sections 5(q), 6(i) and 6(n) hereof will not exceed 50% of the
value (without giving effect to such acquisitions, redemptions, and
distributions) of the proprietary interest in the Target Fund at the
Effective Time.
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(i)
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The shareholders of the Target Fund will receive no consideration pursuant to
the Reorganization other than Acquiring Fund shares.
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(j)
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Other than liabilities relating to reorganization expenses described in
Revenue Ruling 73-54, the sum of (a) the expenses incurred by Integrity Money
Management, Inc. ("Integrity"), the Target Fund's investment adviser,
pursuant to the Plan and (b) the liabilities of the Target Fund to be assumed
by the Acquiring Fund in the Reorganization will not exceed 20% of the fair
market value of the assets of the Target Fund transferred to the Acquiring
Funds pursuant to the Reorganization.
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(k)
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Each of the Target Fund and Viking shall use its reasonable best efforts to
assure compliance with the conditions of section 15(f) of the 1940 Act as it
applies to the transactions contemplated by this Plan.
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7.
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Conditions to the Target Funds' Obligations. The obligations of the
Target Funds set forth herein shall be subject to the following conditions
precedent:
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(a)
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Viking shall have duly executed and delivered to the Target Funds its
applicable Reorganization Documents.
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(b)
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The Target Funds' shareholders shall have approved this Plan in the manner
required by the Target Funds' articles of incorporation, bylaws, and
applicable law. If the shareholders of either Target Fund fail to approve
this Plan, that failure shall release the Target Funds of their obligations
under this Plan.
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(c)
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Viking shall have delivered to the Target Funds a certificate dated as of the
Closing Date and executed in its name by the Secretary or Assistant Secretary
of Viking, in a form reasonably satisfactory to the Target Funds, stating
that the representations and warranties of Viking in this Plan are true and
correct in all material respects at and as of the Effective Time.
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(d)
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The Target Funds shall have received an opinion of Xxxxxxx and Xxxxxx LLP
with respect to the tax matters specified in Section 8(d) hereof addressed to
the Target Funds and Viking in form and substance reasonably satisfactory to
them, and dated as of the Closing Date (the "Tax Opinion"). In
rendering the Tax Opinion, such counsel may rely as to factual matters,
exclusively and without independent verification, on the representations and
warranties made in this Plan, which such counsel may treat as representations
and warrantees made to it, and in separate letters addressed to such counsel
and certificates delivered pursuant to this Plan. The Tax Opinion shall
comprise substantively the opinions listed under Sections 8(d)(1)-(7) hereof
based on the facts and assumptions stated therein and conditioned on
consummation of the Reorganizations in accordance with this Plan, for federal
income tax purposes.
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(e)
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The N-14 Registration Statement shall have become effective under the 1933
Act as to the Acquiring Funds' shares, and the SEC shall not have instituted
or, to the Knowledge of Viking, contemplated instituting, any stop order
suspending the effectiveness of the N-14 Registration Statement.
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(f)
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No action, suit or other proceeding shall be threatened or pending before any
court or governmental agency in which it is sought to restrain or prohibit,
or obtain damages or other relief in connection with the Reorganizations.
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(g)
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The SEC shall not have issued any unfavorable advisory report under section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganizations under section 25(c) of the 1940 Act.
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(h)
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Viking shall have performed and complied in all material respects with each
of its agreements and covenants required by this Plan to be performed or
complied with by it prior to or at the Valuation Time and Effective Time.
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(i)
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The Target Funds shall have received from Viking a duly executed
instrument(s) whereby each Acquiring Fund assumes the Liabilities of or
attributable to the Corresponding Target Fund.
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(j)
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Neither party shall have terminated this Plan pursuant to Section 11 hereof.
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(k)
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The parties shall have received any necessary order of the SEC exempting the
parties from the prohibitions of section 17 of the 1940 Act or any similar
relief necessary to permit consummation of the Reorganizations.
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(l)
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The Target Funds shall have received a certificate from Corridor Investors,
LLC ("Corridor") and Integrity stating that (i) except as provided in
clause (ii), Corridor will pay all of the expenses incurred by the Target
Funds and Acquiring Funds in connection with the Reorganizations and (ii) Integrity
will share equally the legal costs (up to a maximum outlay of $10,000) of the
initial preparation of the first distribution draft of the documentation
required for submission to the SEC and shall share equally in any proxy
solicitation costs to Target Fund shareholders with respect to the
Reorganizations.
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(m)
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The parties shall have received such assurances as they deem appropriate with
respect to the audited and pro forma financial information of the Acquiring
Funds and the Target Funds contained in the N-14 Registration Statement.
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8.
|
Conditions to Viking's Obligations. The obligations of Viking set forth
herein shall be subject to the following conditions precedent:
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(a)
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Each Target Fund shall have duly executed and delivered to Viking its
applicable Reorganization Documents.
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(b)
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The Target Funds' shareholders shall have approved this Plan in the manner
required by the Target Funds' articles of incorporation, bylaws and
applicable law. If the shareholders of either Target Fund fail to approve
this Plan, that failure shall release Viking's obligations under this Plan.
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(c)
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Each Target Fund shall have delivered to Viking a certificate dated as of the
Closing Date and executed in its name by the Target Fund's Secretary or
Assistant Secretary, in a form reasonably satisfactory to Viking, stating
that the representations and warranties of the Target Fund in this Plan are
true and correct in all material respects at and as of the Effective Time.
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(d)
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Viking shall have received the Tax Opinion of Xxxxxxx and Xxxxxx LLP
addressed to the Target Funds and Viking in form and substance reasonably satisfactory
to it, and dated as of the Closing Date, as to the federal income tax
consequences mentioned below. In rendering the Tax Opinion, such counsel may
rely as to factual matters, exclusively and without independent verification,
on the representations and warranties made in this Plan, which such counsel
may treat as representations and warranties made to it, and in separate
letters addressed to such counsel and certificates delivered pursuant to this
Plan. The Tax Opinion shall be substantially to the effect that, based on the
facts and assumptions stated therein and conditioned on consummation of each
Reorganization in accordance with this Plan, for federal income tax purposes:
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(1)
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The Reorganization will qualify as a "reorganization" (within the meaning of
section 368(a)) of the Code, and the Acquiring Fund and the Target Fund each
will be a "party to a reorganization" (within the meaning of section 368(b)
of the Code).
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(2)
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In accordance with section 354(a)(1) of the Code, the Target Fund
shareholders will recognize no gain or loss on their receipt of Acquiring
Fund shares actually or constructively in exchange for their Target Fund
shares pursuant to the Reorganization.
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(3)
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In accordance with sections 361(a), 361(c)(1) and 357(a) of the Code, the
Target Fund will recognize no gain or loss on the transfer of all of the
Assets to the Acquiring Fund solely in exchange for Acquiring Fund shares and
the assumption by the Acquiring Fund of the Liabilities pursuant to the
Reorganization or on its distribution of those shares to its shareholders
pursuant to its liquidation, actually or constructively in exchange for their
Target Fund shares.
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(4)
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In accordance with section 1032 of the Code, the Acquiring Fund will
recognize no gain or loss on its acquisition of all of the Assets solely in
exchange for the Acquiring Fund shares and its assumption of the Liabilities.
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(5)
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In accordance with section 358(a) of the Code, the aggregate tax basis in the
Acquiring Fund shares received by each Target Fund shareholder pursuant to
the Reorganization will equal the aggregate tax basis of the Target Fund
shares surrendered actually or constructively in exchange therefor, and, in
accordance with section 1223(l) of the Code, the shareholder's holding period
for those Acquiring Fund shares will include the period that the shareholder
held the Target Fund shares actually or constructively exchanged therefor,
provided that the shareholder held such Target Fund shares as a capital asset
at the Effective Time.
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(6)
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In accordance with section 362(b) of the Code, the Acquiring Fund's basis in
the Assets will equal the Target Fund's basis in the Assets immediately
before the Reorganization, and, in accordance with section 1223(2) of the
Code, the Acquiring Fund's holding period for the Assets will include the
period during which the Target Fund held the Assets.
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(7)
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The Acquiring Fund will succeed to and take into account the items of the
Target 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 applicable regulations thereunder.
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(e)
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The N-14 Registration Statement shall have become effective under the 1933
Act as to the Acquiring Funds' shares, and the SEC shall not have instituted
or, to the Knowledge of Viking, contemplated instituting, any stop order
suspending the effectiveness of the N-14 Registration Statement.
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(f)
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No action, suit or other proceeding shall be threatened or pending before any
court or governmental agency in which it is sought to restrain or prohibit or
obtain damages or other relief in connection with the Reorganizations.
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(g)
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The SEC shall not have issued any unfavorable advisory report under section
25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin
consummation of the Reorganizations under section 25(c) of the 1940 Act.
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(h)
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Each Target Fund shall have performed and complied in all material respects
with each of its agreements and covenants required by this Plan to be
performed or complied with by it prior to or at the Valuation Time and
Effective Time.
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(i)
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Neither party shall have terminated this Plan pursuant to Section 11 hereof.
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(j)
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The parties shall have received any necessary order of the SEC exempting the
parties from the prohibitions of section 17 of the 1940 Act or any similar
relief necessary to permit consummation of the Reorganizations.
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(k)
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Viking shall have received a certificate from Corridor and Integrity stating that (i) except as
provided in clause (ii), Corridor will pay all of the expenses incurred by
the Target Funds and Acquiring Funds in connection with the Reorganizations
and (ii) Integrity will share equally the legal costs (up to a maximum outlay
of $10,000) of the initial preparation of the first distribution draft of the
documentation required for submission to the SEC and shall share equally in
any proxy solicitation costs to Target Fund shareholders with respect to the
Reorganizations.
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(l)
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The parties shall have received such assurances as they deem appropriate with
respect to the audited and pro forma financial information of the Acquiring
Funds and the Target Funds contained in the N-14 Registration Statement.
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9.
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Additional Condition to Viking's and the Target Funds' Obligations. Unless
the parties hereto agree in writing otherwise, the obligations of Viking and
the Target Funds set forth herein shall be subject to the closing (either
simultaneous with or preceding the Effective Time of the Reorganizations) of
the share purchase and change of advisor agreement by and among Corridor
together with Viking Fund Management, LLC, and Integrity Mutual Funds, Inc.
of Nevada, Integrity Fund Services, Inc., Integrity Funds Distributor, Inc.,
Integrity Mutual Funds, Inc., and Integrity dated March 6, 2009.
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10.
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Survival of Representations and Warranties. The representations and
warranties of the parties hereto shall survive the completion of the
transactions contemplated herein.
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11.
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Termination of Plan. A majority of a party's board of
directors/trustees may terminate this Plan, by giving notice to the other
parties at any time before the Effective Time if: (i) the party's conditions
precedent set forth in Sections 7, 8 or 9 hereof, as appropriate, are not
satisfied or (ii) the board of directors/trustees determines that the
consummation of the Reorganizations are not in the best interests of
shareholders, including after Target Fund shareholders approved the Plan.
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12.
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Governing Law. This Plan and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the laws of the
State of North Dakota, except to the extent preempted by federal law, without
regard to conflicts of law principles.
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13.
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Brokerage Fees. Each party represents and warrants that there are no
brokers or finders entitled to receive any payments from the Target Funds,
Viking, or an Acquiring Fund in connection with the transactions provided for
in this Plan.
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14.
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Amendments. The parties may, by agreement in writing authorized by
their respective boards of directors/trustees, amend this Plan at any time
before or after the Target Funds' shareholders approve this Plan. However,
after the Target Fund shareholders approve this Plan, the parties may not
amend this Plan in a manner that materially alters the obligations of either
party with respect to the Reorganizations. The parties shall not deem this
Section to preclude them from changing the Closing Date or the Effective Time
by mutual agreement.
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15.
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Waivers. At any time prior to the Closing Date, either party may by
written instrument signed by it (i) waive the effect of any inaccuracies in
the representations and warranties made to it contained herein and (ii) waive
compliance with any of the agreements, covenants or conditions made for its
benefit contained herein. The parties agree that any waiver shall apply only
to the particular inaccuracy or requirement for compliance waived, and not
any other or future inaccuracy or lack of compliance.
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16.
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Cooperation and Further Assurances. Each party will cooperate with the
other in fulfilling its obligations under this Plan and will provide such
information and documentation as is reasonably requested by the other in
carrying out this Plan's terms. Each party will provide such further
assurances concerning the performance of obligations under this Plan and the
consummation of the Reorganizations as the other shall deem necessary,
advisable or appropriate.
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17.
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Updating of N-14 Registration Statement. If at any time prior to the
Effective Time, a party becomes aware of any material information that is not
reflected in the N-14 Registration Statement, the party discovering the
information shall promptly notify the other party and the parties shall
cooperate in promptly preparing, filing and clearing with the SEC, and, if
appropriate, distributing to Target Fund shareholders appropriate disclosure
with respect to the information.
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18.
|
Limitation on Liabilities. The obligations of the Target Funds,
Viking, and the Acquiring Funds shall not bind any of the trustees,
directors, shareholders, nominees, officers, agents, or employees of the
Target Funds or Viking personally or any series of Viking other than the
relevant Acquiring Fund, but shall bind only the assets and property of the
Target Fund and the Acquiring Fund, respectively. The execution and delivery
of this Plan by the parties' officers shall not be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the Assets and the property of the Target
Fund or Acquiring Fund, as appropriate.
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19.
|
Notices. Any notice, report, statement, certificate or demand required
or permitted by any provision of this Plan shall be in writing and shall be
given by prepaid telegraph, telecopy, certified mail or overnight express
courier to:
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For the Target Funds:
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Xxxxx Xxxxxxxx/Xxxx Xxxxx
Integrity Mutual Funds, Inc.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
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With copies to:
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Xxxxxx Xxxxx
Xxxxx & Co., P.C.
0000 Xxxxx Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, XX 00000
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For Viking:
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Xxxxxx X. Xxxxxxx
Xxxxxxx Xxxxx
Integrity Mutual Funds, Inc.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
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With copies to:
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Xxxx Xxxxxx
c/o Chapman and Xxxxxx LLP
000 X. Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
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20.
|
General. This Plan supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement of the
terms of the agreement between the parties and may not be changed or
terminated orally. The parties may execute this Plan in counterparts, which
shall be considered one and the same agreement, and shall become effective
when the counterparts have been executed by and delivered to both parties. The
headings contained in this Plan are for reference only and shall not affect
in any way the meaning or interpretation of this Plan. Nothing in this Plan,
expressed or implied, confers upon any other person any rights or remedies
under or by reason of this Plan. Neither party may assign or transfer any
right or obligation under this Plan without the written consent of the other
party.
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