AGREEMENT AND PLAN OF REORGANIZATION
Mutual Selection Fund, Inc.
and
Pearl Mutual Funds
Dated June 25, 2001
MUTUAL SELECTION FUND, INC., an Iowa corporation (the "Corporation"), and PEARL
MUTUAL FUNDS, a Massachusetts business trust ("the Trust"), on behalf of its
series Pearl Total Return Fund ("New Fund"), agree upon the following plan of
reorganization:
1. Succession of the Corporation by the Trust; Distribution of Shares of the
New Fund. The Corporation shall transfer to the New Fund, as a series of
the Trust, all of its assets, in exchange for which the New Fund shall
simultaneously assume all of the liabilities of the Corporation, and the
New Fund shall issue to the Corporation shares of the New Fund equal in
number and net asset value to the number and net asset value of shares
(including fractional shares) of the Corporation then outstanding. The
Corporation shall promptly distribute to its shareholders the number of
shares of the New Fund (including fractional shares) equal in number and
net asset value to the number and net asset value of shares (including any
fractional shares) of the Corporation then owned by the shareholders, in
exchange for and cancellation of the shareholder's shares of the
Corporation (which series of actions is referred to hereafter as the
"Reorganization"). The Corporation will then terminate its operations and
will subsequently be dissolved.
2. Shareholder Accounts. The distribution to the shareholders of the
Corporation shall be accomplished by establishing an account on the share
records of the New Fund in the name of each registered shareholder of the
Corporation, and crediting that account with a number of shares of the New
Fund equal to the number of shares (including any fractional shares) of the
Corporation of record by the shareholder at the time of the distribution.
Outstanding shares of the Corporation shall thereafter represent an equal
number of shares of the New Fund.
3. Dissolution of the Corporation. Within a reasonable time after the closing
of the Reorganization, the Corporation shall terminate its operations.
Subsequently, the Corporation shall be dissolved and shall execute and file
articles of dissolution with the Iowa Secretary of State.
4. Closing. The Reorganization shall take place on July 2, 2001 at 1:00 PM CDT
at the offices of Pearl Management Company, 0000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxx or at such other date, time or place as may be agreed upon by the
parties.
5. Conditions to Closing. The obligations of the parties to consummate the
Reorganization shall be subject to the following conditions:
a. A notification of registration on Form N-8A shall have been filed by
the Trust with the Securities and Exchange Commission (the "SEC").
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b. A registration statement on Form N-1A shall have been filed by the
Trust with the SEC, and the registration statement shall have become
effective under the Securities Act of 1933, and no stop-order
suspending the effectiveness of the registration statement shall have
been issued and no proceeding for that purpose shall have been
initiated or threatened by the SEC (other than such stop-order,
proceeding or threatened proceeding which shall have been withdrawn or
terminated).
c. The SEC shall not have issued an unfavorable advisory report under
Section 25(b) of the Investment Company Act of 1940 nor instituted any
proceeding seeking to enjoin consummation of the Reorganization under
Section 25(c) of the Investment Company Act of 1940.
d. The Corporation and the Trust shall have received an opinion of Xxxx,
Xxxx & Xxxxx LLC, Chicago, Illinois, to the effect that the
Reorganization qualifies as a "reorganization" under Section 368 of
the Internal Revenue Code of 1986, as amended, and the Reorganization
of the Corporation into the New Fund will not give rise to the
recognition of income, deductions, gain or loss for federal income tax
purposes to the Corporation, the Trust, the New Fund, or the
shareholders of the Corporation.
e. The Reorganization shall have been approved by shareholders of the
Corporation.
6. Representations. The Corporation and/or the Trust represent as follows:
a. The Corporation and the Trust are duly organized and existing in good
standing under the laws of the State of Iowa and the Commonwealth of
Massachusetts, respectively.
b. The Corporation and the Trust are each empowered under applicable laws
to enter into and perform this agreement.
c. The New Fund intends (i) to continue the investment business of the
Corporation, (ii) to maintain the investment objective to seek long-
term total return, and (iii) to market the New Fund to a group of
investors that includes the universe of investors who previously
acquired shares of the Corporation. The New Fund has no plan or
intention to sell the investment assets of the Corporation except in
the ordinary course of business to provide funds to satisfy
redemptions or as a result of portfolio management decisions. The
investment adviser and manager of the New Fund will be the current
investment adviser of the Corporation.
7. Amendments or Termination. This agreement may be amended at any time, and
may be terminated at any time before the closing of the Reorganization,
either before or after this agreement and plan of reorganization has been
approved by shareholders of the Corporation, by agreement of the
Corporation and the Trust, provided that no amendment shall have a material
adverse effect upon the interests
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of shareholders of the Corporation. In any case, this agreement and plan of
reorganization may be terminated by either the Corporation or the Trust if
the Reorganization has not occurred by the close of business on
December 31, 2001.
8. Declaration of Trust. A copy of the Trust's Amended and Restated
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this agreement is executed
on behalf of the Trustees of the Trust as the Trustees of the Trust and not
individually and that the obligations under this instrument are not binding
upon any of the Trustees, Officers or shareholders of the Trust,
individually, but binding only upon the assets and property of the New
Fund.
9. Further Actions and Assurances. At any time after the closing of the
Reorganization, the Corporation acting through its Officers, or if then
dissolved through its last Officers, shall execute and deliver to the Trust
any additional instruments of transfer or other written assurances which
the Trust may reasonably request in order to vest in the Trust, acting on
behalf of the New Fund, title to the assets transferred by the Corporation
under this agreement.
10. Governing Law. This agreement shall be construed in accordance with
applicable federal law and the laws of the State of Iowa, except as to the
provisions of Section 8 hereof which shall be construed in accordance with
the laws of the Commonwealth of Massachusetts.
Executed in Muscatine, Iowa, as of the date first stated above. This agreement
is executed in multiple counterparts, each of which shall be deemed to be an
original; but all counterparts together shall constitute only one instrument.
MUTUAL SELECTION FUND, INC.
By /s/ Xxxxxx X. Xxxx
--------------------
Xxxxxx X. Xxxx
Vice President
ATTEST:
/s/ Xxxxx X. Xxx Xxxxxxx
--------------------------------
Xxxxx X. Xxx Xxxxxxx
Secretary
PEARL MUTUAL FUNDS, on behalf of
its series Pearl Total Return Fund
BY /s/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx
Chairman and President
ATTEST:
/s/ Xxxxx X. Xxx Xxxxxxx
--------------------------------
Xxxxx X. Xxx Xxxxxxx
Secretary
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