APPENDIX A FORM OF AGREEMENT AND PLAN OF REORGANIZATION
APPENDIX
A
THIS
AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this
___ day of __________, 2009, by and among FORUM FUNDS, a Delaware statutory
trust, with its principal place of business at Three Xxxxx Xxxxx, Xxxxx #000,
Xxxxxxxx, Xxxxx 00000 (“Forum”), with respect to
Liberty Street Horizon Fund, a segregated portfolio of assets (“series”) thereof (the “Acquired Fund”), INVESTMENT
MANAGERS SERIES TRUST, a Delaware statutory trust, with its principal
place of business at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000
(“IMST”), with respect
to its Liberty Street Horizon Fund series (the “Acquiring Fund”), and, solely
for purposes of paragraphs 5.11(c), 5.13, and 9.1, LIBERTY STREET ADVISORS,
INC., the investment manager of the Acquiring Fund and the Acquired Fund (the
“Manager”).
Each of
Forum and IMST (each, an “Investment Company”) wishes to
effect a reorganization described in Section 368(a)(1)(F) of the United States
Internal Revenue Code of 1986, as amended (the “Code”), and intends this
Agreement to be, and adopts it as, a “plan of reorganization” within the meaning
of the regulations under the Code (the “Regulations”). The
reorganization will consist of (i) the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund (which is being established solely for the
purpose of acquiring those assets and continuing the Acquired Fund’s business)
in exchange solely for voting shares of beneficial interest, no par value per
share (“shares”), in the
Acquiring Fund and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund, (ii) the distribution of those shares
pro rata to the
shareholders of the Acquired Fund in exchange for their shares therein and in
complete liquidation thereof, and (iii) the termination of the Acquired
Fund as provided herein, all upon the terms and conditions set forth herein
(collectively, the “Reorganization”).
WHEREAS,
the Acquiring Fund and the Acquired Fund (each, a “Fund”) are series of IMST and
Forum, respectively, which are open-end, registered management investment
companies, and the Acquired Fund owns securities that generally are assets of
the character in which the Acquiring Fund is permitted to invest;
WHEREAS,
each Fund is authorized to issue its shares;
WHEREAS,
the Board of Trustees of each Investment Company (each, a “Board”), in each case
including a majority of its members who are not “interested persons” (as that
term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) (the “Independent Trustees”) of
either Investment Company, (1) has duly adopted and approved this Agreement
and the transactions contemplated hereby and (2) has determined that
participation in the Reorganization is in the best interests of its Fund and
that the interests of its Fund’s existing shareholders will not be diluted as a
result of the Reorganization; and
WHEREAS,
the Acquired Fund is authorized to issue and has outstanding three
classes of shares, designated Class A, Class C, and Institutional
shares (the “Class A
Acquired Fund Shares,” “Class C Acquired Fund
Shares,” and “Institutional Acquired Fund Shares,”
respectively, and collectively, the “Acquired Fund
Shares”). The Acquiring Fund will have three classes of
shares, also designated Class A, Class C, and Institutional shares
(the “Class A Acquiring
Fund Shares,” “Class C Acquiring Fund
Shares,” and “Institutional Acquiring Fund
Shares,” respectively, and collectively, the “Acquiring Fund
Shares”). The rights, powers, privileges, and obligations of
each class of Acquiring Fund Shares will be identical to those of the
identically designated class of Acquired Fund Shares.
NOW,
THEREFORE, in consideration of the premises, covenants, and agreements
hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE
I
THE
REORGANIZATION
1.1 THE
EXCHANGE. Subject to requisite approval of the Acquired Fund’s
shareholders and the other terms and conditions contained herein and on the
basis of the representations and warranties contained herein, the Acquired Fund
agrees to sell, assign, convey, transfer, and deliver all of its assets
described in paragraph 1.2 (the “Assets”) to the Acquiring
Fund. The Acquiring Fund agrees to acquire all of the Assets and in
exchange therefor --
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(a)
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to
issue and deliver to the Acquired Fund the number of full and fractional
(1) Class A Acquiring Fund Shares equal to the number of full
and fractional Class A Acquired Fund Shares then outstanding,
(2) Class C Acquiring Fund Shares equal to the number of full
and fractional Class C Acquired Fund Shares then outstanding, and
(3) Institutional Class Acquiring Fund Shares equal to the number of
full and fractional Institutional Class Acquired Fund Shares then
outstanding (all references herein to “fractional” shares meaning
fractions rounded to the third decimal place),
and
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(b)
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assume
all the Acquired Fund’s liabilities described in paragraph 1.3 (the “Liabilities”).
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Such
transactions shall take place at the Closing, on the Closing Date (both as defined
in paragraph 2.1).
1.2 ASSETS
TO BE ACQUIRED. The Assets shall consist of all assets and property
of every kind and nature, including all cash, cash equivalents, securities,
commodities, interests in futures, claims and rights of action (whether absolute
or contingent, known or unknown, accrued or unaccrued), dividends and interest
receivable, receivables for shares sold, books and records, rights to register
stock under applicable securities laws, and other rights that are owned by the
Acquired Fund as of the Effective Time (as defined in paragraph
2.1), and any deferred or prepaid expenses (other than unamortized
organizational expenses) shown as an asset on the books of the Acquired Fund as
of that time. Forum has provided IMST with the Acquired Fund’s most
recent audited financial statements, which contain a list of all of the Acquired
Fund’s assets required to be set forth on a balance sheet as of the date of such
statements prepared in accordance with generally accepted accounting principles
consistently applied in the United States ("U.S. GAAP"). Forum
hereby represents that, as of the date of the execution of this Agreement, there
have been no changes in the Acquired Fund’s financial position as reflected in
such financial statements other than those occurring in the ordinary course of
business in connection with the purchase and sale of securities, changes in the
market value of portfolio securities, the payment of normal operating expenses,
and the payment of dividends, capital gain distributions, and redemption
proceeds to shareholders.
1.3 LIABILITIES
TO BE ASSUMED. The Liabilities shall consist of all of the Acquired
Fund’s liabilities, debts, obligations, and duties of whatever kind or nature
existing as of the Effective Time, whether absolute, accrued, contingent, or
otherwise, whether known or unknown, whether or not arising in the ordinary
course of business, whether or not determinable as of the Effective Time,
whether or not reflected in the Acquired Fund’s accounts or on its financial
statements, and whether or not specifically referred to in this Agreement,
excluding Reorganization
Expenses (as defined in paragraph 4.1(ff)) borne by the Manager or any
other person pursuant to paragraph 9.1. Notwithstanding the
foregoing, the Acquired Fund shall endeavor in good faith to discharge all of
its known liabilities and obligations to the extent possible prior to the
Effective Time.
1.4 LIQUIDATION
AND DISTRIBUTION. On or as soon after the Closing Date as is
conveniently practicable, the Acquired Fund (a) will distribute the
Acquiring Fund Shares it receives pursuant to paragraph 1.1(a) to its
shareholders of record determined as of the Effective Time (each, an “Acquired Fund Shareholder”),
in proportion to their Acquired Fund Shares then held of record and in
constructive exchange for their Acquired Fund Shares, and (b) will
thereupon proceed to terminate as set forth in paragraph 1.8. That
distribution will be accomplished by IMST’s transfer agent’s opening accounts on
its books in the Acquired Fund Shareholders’ names and transferring those
Acquiring Fund Shares thereto. Pursuant to that transfer, each
Acquired Fund Shareholder’s account will be credited with the number of full and
fractional Acquiring Fund Shares equal to the number of full and fractional
Acquired Fund Shares that Acquired Fund Shareholder holds as of the Effective
Time, by class (i.e.,
the account for each Acquired Fund Shareholder that holds Class A Acquired
Fund Shares will be credited with the number of full and fractional Class A
Acquiring Fund Shares due that Acquired Fund Shareholder, the account for each
Acquired Fund Shareholder that holds Class C Acquired Fund Shares will be
credited with the number of full and fractional Class C Acquiring Fund
Shares due that Acquired Fund Shareholder, and the account for each Acquired
Fund Shareholder that holds Institutional Class Acquired Fund Shares will be
credited with the number of full and fractional Institutional Class Acquiring
Fund Shares due that Acquired Fund Shareholder). The aggregate net
asset value of each class of Acquiring Fund Shares to be so credited to each
Acquired Fund Shareholder’s account will equal the aggregate net asset value of
the identically designated class of Acquired Fund Shares that Acquired Fund
Shareholder owns as of the Effective Time. All issued and outstanding
Acquired Fund Shares, including any represented by certificates, will
simultaneously be canceled on the Acquired Fund’s share transfer
books. IMST shall not issue certificates representing the Acquiring
Fund Shares issued in connection with the Reorganization. Each
Acquired Fund Shareholder shall have the right to receive any unpaid dividends
or other distributions that were declared by the Acquired Fund before the
Effective Time with respect to Acquired Fund Shares that such Acquired Fund
Shareholder held of record as of the Effective Time.
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1.5 OWNERSHIP
OF SHARES. Ownership of Acquiring Fund Shares will be shown on the
books of the Acquiring Fund’s transfer agent. Acquiring Fund Shares
will be issued in the manner described in the Acquiring Fund’s then-current
Prospectus and Statement of Additional Information.
1.6 TRANSFER
TAXES. Any transfer taxes payable upon the issuance of Acquiring Fund
Shares in a name other than that of the registered holder on the Acquired Fund’s
share transfer books of the Acquired Fund Shares actually or constructively
exchanged therefor shall, as a condition of such issuance, be paid by the person
to whom such Acquiring Fund Shares are to be issued.
1.7 REPORTING
RESPONSIBILITY. Any reporting responsibility of the Acquired Fund,
including the responsibility for filing of regulatory reports, tax returns, and
other documents with the U.S. Securities and Exchange Commission (the “Commission”), any state
securities commission, any federal, state, and local tax authorities, and any
other relevant regulatory authority, is and shall remain the responsibility of
the Acquired Fund up to and including the date on which it is
terminated.
1.8 TERMINATION. As
soon as reasonably practicable after the distribution of the Acquiring Fund
Shares pursuant to paragraph 1.4, the Acquired Fund shall make all filings and
take all other steps as shall be necessary and proper to effect its termination
as a series of Forum and its complete dissolution under Delaware
law. After the Effective Time, the Acquired Fund shall not conduct
any business except in connection with its dissolution.
ARTICLE
II
CLOSING
AND EFFECTIVE TIME
2.1 The
closing of the Reorganization, including related acts necessary to consummate
the same (the “Closing”), shall be held at
the offices of Atlantic Fund Administration, LLC (“Atlantic”), Three Xxxxx Xxxxx,
Xxxxxxxx Xxxxx 00000, on or about XXXXXX, 0000, or at such other place and/or on
such other date as to which the Investment Companies may agree in writing (the
“Closing
Date”). All acts taking place at the Closing shall be deemed
to take place simultaneously immediately after the close of business (i.e., 4:00 p.m., Eastern
time) on the Closing Date (“Effective Time”).
ARTICLE
III
CERTIFICATES
TO BE DELIVERED AT THE CLOSING
3.1 CUSTODIAN’S
CERTIFICATE. The portfolio securities of the Acquired Fund shall be
made available by the Acquired Fund to the Acquiring Fund’s custodian, for
examination, no later than five business days preceding the Closing Date, and
shall be transferred and delivered by the Acquired Fund as of the Effective Time
for the account of the Acquiring Fund duly endorsed in proper form for transfer
in such condition as to constitute good delivery thereof in accordance with the
custom of brokers. The Acquired Fund shall direct Citibank, N.A. (the
“Custodian”), as
custodian for the Acquired Fund, to deliver as of the Effective Time by book
entry, in accordance with the customary practices of the Custodian and any
securities depository (as defined in Rule 17f-4 under the 0000 Xxx) in which the
Acquired Fund’s assets are deposited, the Acquired Fund’s portfolio securities
and instruments deposited with such depositories. The cash to be
transferred by the Acquired Fund shall be delivered by wire transfer of federal
funds on the Closing Date. Forum shall use commercially reasonable
efforts to cause the Custodian to deliver within three business days after the
Closing, a certificate of an authorized officer stating that (a) the
Acquired Fund’s portfolio securities, cash, and any other assets shall have been
delivered in proper form to the Acquiring Fund on the Closing Date and
(b) all necessary taxes, including all applicable federal and state stock
transfer stamps, if any, shall have been paid, or provision for payment shall
have been made, in conjunction with the delivery of portfolio securities by the
Acquired Fund (the “Custodian Certificate”).
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3.2 TRANSFER
AGENTS’ CERTIFICATES. Forum shall use commercially reasonable efforts
to cause Atlantic Shareholder Services, LLC, as transfer agent for the Acquired
Fund as of the Closing Date, to deliver within three business days after the
Closing, a certificate of an authorized officer stating that its records contain
the names and addresses of the Acquired Fund Shareholders and the number and
percentage ownership of full and fractional outstanding shares owned by each
such shareholder, by class, as of the Effective Time (the “Transfer Agent
Certificate”). IMST shall issue and deliver, or cause UMB Fund
Services, Inc., its transfer agent, to issue and deliver, at the Closing
(a) a confirmation evidencing that the Acquiring Fund Shares have been
credited at the Effective Time to the Acquired Fund’s account on the books of
the Acquiring Fund and (b) a certificate as to the opening of accounts on
those books in the Acquired Fund Shareholders’ names. At the Closing,
each party shall deliver to the other such bills of sale, checks, assignments,
share certificates, if any, receipts, and other documents, if any, as such other
party or its counsel may reasonably request and a certificate executed in its
name by its President or a Vice President in form and substance reasonably
satisfactory to the recipient, and dated the Effective Time, to the effect that
the representations and warranties it made in this Agreement are true and
correct as of the Effective Time except as they may be affected by the
transactions contemplated hereby.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
4.1 REPRESENTATIONS
OF THE ACQUIRED FUND. Except as has been disclosed to IMST in a
written instrument executed by an officer of Forum, Forum and the Acquired Fund
represent and warrant to IMST and the Acquiring Fund as follows:
(a) The
Acquired Fund is duly organized as a series of Forum, which is a statutory trust
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with power under Forum’s Trust Instrument (the “Trust Instrument”) to own all
of its properties and assets and to carry on its business as it is now being
conducted.
(b) Forum
is a registered open-end management investment company, and its registration
with the Commission as an investment company under the 1940 Act, and the
registration of shares of the Acquired Fund under the Securities Act of 1933, as
amended (the “1933
Act”), is in full force and effect.
(c) No
consent, approval, authorization, or order of any court or governmental
authority is required for the consummation by the Acquired Fund of the
transactions contemplated herein, except such as have been obtained under the
1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act
and such as may be required by state securities laws.
(d) The
current Prospectus and Statement of Additional Information of the Acquired Fund
and each Prospectus and Statement of Additional Information of the Acquired Fund
used during the three years prior to the date of this Agreement conforms or
conformed at the time of its use in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations
thereunder, and do not, or did not at the time of their use, include any untrue
statement of a material fact or omit any material fact required to be stated or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(e) At
the Effective Time, the Acquired Fund will have good and valid title to the
Assets and full right, power, and authority to sell, assign, transfer and
deliver the Assets hereunder free of any liens or other encumbrances, except
those liens and encumbrances as to which the Acquiring Fund has received notice,
and upon delivery and payment for the Assets, the Acquiring Fund will acquire
good and valid title thereto, subject to no restrictions on the full transfer
thereof, excluding such restrictions as might arise under the 1933 Act, other
than as disclosed to and accepted by IMST.
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(f) The
Acquired Fund is not engaged currently, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in a material violation of the Trust Instrument or Forum’s By-Laws or of any
agreement, indenture, instrument, contract, lease, or other undertaking to which
Forum on behalf of the Acquired Fund is a party or by which it is bound, other
than as disclosed to IMST.
(g) The
execution, delivery and performance of this Agreement will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
Forum, on behalf of the Acquired Fund, is a party or by which it is bound that
would materially and adversely affect its business or its ability to consummate
the transactions contemplated by this Agreement, other than as disclosed to
IMST.
(h) The
Acquired Fund has no material contracts or other commitments (other than this
Agreement) that if terminated will result in material liability to the Acquired
Fund or under which (whether or not terminated) any material payments for
periods subsequent to the Closing Date will be due from the Acquired Fund, other
than as disclosed to IMST.
(i) Except
as otherwise disclosed in writing to and accepted by IMST, no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is presently pending or, to the best of its knowledge,
threatened against Forum, the Acquired Fund or any of Forum’s properties or
assets held for the benefit of the Acquired Fund that, if adversely determined,
would materially and adversely affect the Acquired Fund’s financial condition,
the conduct of its business, or its ability to consummate the transactions
contemplated by this Agreement. Forum, on behalf of the Acquired
Fund, knows of no facts that are reasonably likely to form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree, or judgment of any court or governmental body
that materially and adversely affects the Acquired Fund’s business or its
ability to consummate the transactions contemplated herein.
(j) The
Statement of Assets and Liabilities, Statements of Operations and Changes in Net
Assets, and Schedule of Investments of the Acquired Fund at October 31, 2008
have been audited by ___________________, an independent registered public
accounting firm, and are in accordance with U.S. GAAP, and such statements
(copies of which have been furnished to IMST) present fairly, in all material
respects, the financial condition of the Acquired Fund as of such date in
accordance with U.S. GAAP, and there are no known contingent liabilities of the
Acquired Fund of a material amount required to be reflected on a balance sheet
(including the notes thereto) in accordance with U.S. GAAP as of such date not
disclosed therein.
(k) IMST
has been furnished with an unaudited statement of assets, liabilities and
capital and a schedule of investments of the Acquired Fund, each as of April 30,
2009. These statements are in accordance with U.S. GAAP and present
fairly, in all material respects, the financial position of the Acquired Fund as
of such date in accordance with U.S. GAAP, and there are no known contingent
liabilities of the Acquired Fund of a material amount required to be on a
balance sheet in accordance with U.S. GAAP as of such date not disclosed
therein.
(l) Since
April 30, 2009, there have been no material adverse changes in the Acquired
Fund’s financial condition, assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any incurrence by
the Acquired Fund of material indebtedness, except as otherwise disclosed to and
accepted by IMST (for the purposes of this subparagraph (l), a distribution of
net investment income and/or net realized capital gains, a change in portfolio
securities, a change in market value of portfolio securities, a decline in the
net asset value per Acquired Fund Shares, the discharge of Acquired Fund
liabilities, or a net redemption of Acquired Fund Shares shall not constitute a
material adverse change).
(m) On
the Closing Date, all federal and other tax returns, dividend reporting forms,
and other tax-related reports of the Acquired Fund required by law to be filed
by such date (including any extensions), shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on such returns and reports shall have been
paid, or provision shall have been made for the payment thereof; all of the
Acquired Fund’s tax liabilities, if any, will have been adequately provided for
on its books; and to the best of Forum’s knowledge, no such return is currently
under audit, and no assessment has been asserted with respect to such
returns.
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(n) There
are no material legal, administrative, or other proceedings or investigations
pending or, to the knowledge of Forum, threatened against the Acquired
Fund.
(o) There
are no material contracts outstanding to which the Acquired Fund is a party
other than those entered into in the ordinary conduct of its
business.
(p) The
Acquired Fund is a “fund” (as defined in Section 851(g)(2) of the Code); has
elected to be, and has qualified for treatment under Subchapter M of the Code
as, a “regulated investment company” under the Code (a “RIC”) as of and since its
first taxable period; has been a RIC at all times since the end of its first
taxable year when it so qualified; and qualifies and shall continue to qualify
for treatment as a RIC for its taxable year ending upon the Closing
Date. The Acquired Fund is an investment company within the meaning
of Section 368(a)(2)(F)(i) and (iii) of the Code and satisfies the
diversification requirements of Section 368(a)(2)(F)(ii). The
Acquired Fund has not at any time since its inception been liable for, and is
not now liable for, any material income or excise tax pursuant to Section 852 or
4982 of the Code. The Acquired Fund has duly filed all federal,
state, local and foreign tax returns that are required to have been filed, and
all taxes of the Acquired Fund that are due and payable have been paid except
for amounts that alone or in the aggregate would not reasonably be expected to
have a material adverse effect. The Acquired Fund is in compliance in
all material respects with applicable regulations of the Internal Revenue
Service pertaining to the reporting of dividends and other distributions on and
redemptions of its shares of beneficial interest and to withholding in respect
of dividends and other distributions to shareholders, and is not liable for any
material penalties that could be imposed thereunder.
(q) Forum
will provide the Acquired Fund’s books and records to IMST for purposes of
preparing any tax returns required by law to be filed after the Closing
Date.
(r) All
issued and outstanding shares of the Acquired Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid and non-assessable,
have been offered and sold in compliance in all material respects with all
applicable registration or qualification requirements of the 1933 Act and state
securities laws. All of the issued and outstanding shares of the
Acquired Fund will, at the time of the Closing, be held by the persons and in
the amounts set forth in the records of the Acquired Fund’s transfer agent as
provided in paragraph 3.2. The Acquired Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any Acquired
Fund Shares, and has no outstanding securities convertible into Acquired Fund
Shares.
(s) The
execution, delivery, and performance of this Agreement will have been duly
authorized prior to the Closing Date by all necessary action on the part of the
Board of Forum, on behalf of the Acquired Fund, and subject to approval by the
Acquired Fund’s shareholders and assuming the due authorization, execution and
delivery of this Agreement by IMST, this Agreement constitutes a valid and
binding obligation of Forum with respect to the Acquired Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors’
rights generally and to general equity principles.
(t) The
information to be furnished by Forum for use in no-action letters, applications
for orders, registration statements, proxy materials, and other documents filed
or to be filed with any federal, state or local regulatory authority (including
the Financial Industry Regulatory Authority (“FINRA”)) that may be necessary
in connection with the transactions contemplated herein shall be accurate and
complete in all material respects and shall comply in all material respects with
federal securities laws and other laws and regulations.
(u) From
the effective date of the Registration Statement (as
defined in paragraph 5.6), through the time of the meeting of the Acquired
Fund’s shareholders and on the Closing Date, any written information furnished
by Forum with respect to the Acquired Fund for use in the Proxy Statement/Prospectus (as
defined in paragraph 5.6), the Registration Statement or any other materials
provided in connection with the Reorganization, does not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not materially
misleading.
(v) The
Acquired Fund will distribute the Acquiring Fund Shares it receives in the
Reorganization in pursuance of this Agreement.
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(w) The
Liabilities to be assumed by the Acquiring Fund (and the Liabilities, if any,
that are secured by the Assets) were incurred in the ordinary course of its
business and are associated with the Assets.
(x) The
fair market value of the Acquiring Fund Shares received by each Acquired Fund
Shareholder will be approximately equal to the fair market value of the Acquired
Fund Shares it actually or constructively surrenders in the
Reorganization. No Acquired Fund Shareholder will receive
consideration other than Acquiring Fund Shares.
(y) The
Acquired 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.
(z) As
soon as practicable, but in no event later than 12 months following the date
that all Assets are transferred to the Acquiring Fund, the Acquired Fund will be
liquidated and terminated as a series of Forum under state law.
(aa) The
fair market value of the transferred assets will equal or exceed the sum of the
Liabilities assumed by the Acquiring Fund plus the amount of Liabilities, if
any, that are secured by the Assets.
(bb) The
Acquired Fund has no unamortized or unpaid organizational fees or expenses that
have not previously been disclosed to IMST.
(cc) The
Acquired Fund has valued, and will continue to value, its portfolio securities
and other assets in accordance with applicable legal requirements.
(dd) The
Acquired Fund’s investment operations from inception to the date hereof have
been in compliance in all material respects with the investment policies and
investment restrictions set forth in the Acquired Fund’s Prospectus, except as
previously disclosed in writing to IMST.
(ee) The
Acquiring Fund Shares to be issued to the Acquired Fund pursuant to paragraph 1
will not be acquired for the purpose of making any distribution thereof other
than to the Acquired Fund Shareholders as provided in paragraph
1.4.
(ff) No
expenses incurred by the Acquired Fund or on its behalf in connection with the
Reorganization will be paid or assumed by the Manager, the Acquiring Fund, or
any third party unless those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set forth in Rev.
Rul. 73-54, 1973-1 C.B. 187) (“Reorganization Expenses”), and
no cash or property other than Acquiring Fund Shares will be transferred to the
Acquired Fund or any of its shareholders with the intention that it be used to
pay any expenses (even Reorganization Expenses) thereof.
(gg) The
Acquired Fund Shareholders will pay their own expenses (such as fees of personal
investment or tax advisers for advice regarding the Reorganization), if any,
incurred in connection with the Reorganization.
4.2 REPRESENTATIONS
OF THE ACQUIRING FUND. Except as has been disclosed to Forum in a
written instrument executed by an officer of IMST, IMST and the Acquiring Fund
represent and warrant to Forum and the Acquired Fund as follows:
(a) The
Acquiring Fund will be duly organized, as of the Effective Time, as a series of
IMST, which is a statutory trust duly organized, validly existing and in good
standing under the laws of the State of Delaware, with power under IMST’s
Amended and Restated Agreement and Declaration of Trust (the “Declaration of Trust”) to own
all of its properties and assets and to carry on its business as it is now being
conducted.
(b) IMST
is a registered open-end management investment company, and its registration
with the Commission as an investment company under the 1940 Act is in full force
and effect, and the registration of shares of the Acquiring Fund under the 1933
Act is, or will be on or before the Closing Date, in full force and
effect.
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(c) No
consent, approval, authorization, or order of any court or governmental
authority is required for the consummation by the Acquiring Fund of the
transactions contemplated herein, except such as have been obtained under the
1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The
preliminary Prospectus and Statement of Additional Information of the Acquiring
Fund filed pursuant to Rule 485(a)(2) of the 1933 Act in an amendment to IMST’s
registration statement on Form N-1A (the “IMST Registration Statement”)
with the Commission on April 24, 2009, which will become effective prior to the
Closing Date, conforms and, as of its effective date, will conform in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations thereunder and do not and, as of its effective
date, will not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) 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.
(f) There
is no plan or intention for the Acquiring Fund to be dissolved or merged into
another statutory trust or a corporation or business trust or any “fund” thereof
(as defined in Section 851(g)(2) of the Code) following the
Reorganization.
(g) The
execution, delivery and performance of this Agreement will not result in a
material violation of the Declaration of Trust or IMST’s By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
IMST, on behalf of the Acquiring Fund, is a party or by which it is bound, other
than as disclosed to Forum.
(h) The
execution, delivery and performance of this Agreement will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
IMST, on behalf of the Acquiring Fund, is a party or by which it is bound that
would materially and adversely affect its business or its ability to consummate
the transactions contemplated by this Agreement, other than as disclosed to
Forum.
(i) Except
as otherwise disclosed in writing to and accepted by Forum, no litigation,
administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to the best of its knowledge,
threatened against IMST or the Acquiring Fund that, if adversely determined,
would materially and adversely affect the Acquiring Fund’s financial condition,
the conduct of its business or its ability to consummate the transactions
contemplated by this Agreement. IMST, on behalf of the Acquiring
Fund, knows of no facts which might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that materially and
adversely affects the Acquiring Fund’s business or its ability to consummate the
transactions contemplated herein.
(j) The
Acquiring Fund was formed for the purpose of effecting the Reorganization, and,
prior to the Closing, will have not commenced operations or carried on any
business activity, will have had no assets or liabilities, will never have had
an operating business, and will have no issued or outstanding shares other than
as contemplated by the payment received from Atlantic with respect to the Initial Shares (as defined in
paragraph 6.4) issued to Atlantic pursuant to that paragraph.
(k) Acquiring
Fund Shares to be issued and delivered to the Acquired Fund, for the account of
the Acquired Fund Shareholders, pursuant to the terms of this Agreement will be
on or before the Closing Date, duly and validly issued and outstanding, fully
paid and non-assessable and will be offered and sold in compliance in all
material respects with applicable registration or qualification requirements of
the 1933 Act and state securities laws. The Acquiring Fund has no
outstanding options, warrants or other rights to subscribe for or purchase any
shares, including the Acquiring Fund Shares, of the Acquiring Fund and has no
outstanding securities convertible into any shares, including the Acquiring Fund
Shares, of the Acquiring Fund.
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(l) The
execution, delivery and performance of this Agreement will have been duly
authorized prior to the Closing Date by all necessary action on the part of the
Board of IMST, on behalf of the Acquiring Fund, and subject to approval by the
Acquired Fund’s shareholders and assuming the due authorization, execution and
delivery of this Agreement by Forum, this Agreement constitutes a valid and
binding obligation of IMST with respect to the Acquiring Fund, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general equity principles.
(m) The
information to be furnished by IMST for use in no-action letters, applications
for orders, registration statements, proxy materials and other documents filed
or to be filed with any federal, state or local regulatory authority (including
FINRA) that may be necessary in connection with the transactions contemplated
herein shall be accurate and complete in all material respects and shall comply
in all material respects with federal securities laws and other laws and
regulations.
(n) From
the effective date of the Registration Statement (as
defined in paragraph 5.6), through the time of the meeting of the Acquired
Fund’s shareholders and on the Closing Date, any written information furnished
by IMST with respect to the Acquiring Fund for use in the Proxy Statement/Prospectus (as
defined paragraph 5.6), the Registration Statement or any other materials
provided in connection with the Reorganization, does not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not materially
misleading.
(o) The
Acquiring Fund has no unamortized or unpaid organizational fees or
expenses.
(p) The
Acquiring Fund will be a “fund” (as defined in Section 851(g)(2) of the Code),
will qualify for treatment under Subchapter M of the Code as a RIC in the
future, and, from the date of this Agreement until the Closing Date, shall not
take any action inconsistent with such efforts to qualify for treatment as a RIC
in the future.
(q) The
Acquiring Fund has no plan or intention (i) to sell or dispose of any of the
Assets, except for dispositions made in the ordinary course of business or
dispositions necessary to maintain its status as a RIC, or (ii) to redeem or
reacquire any of the shares issued by it, except in the ordinary course of
business.
(r) The
fair market value of the Acquiring Fund Shares received by each Acquired Fund
Shareholder will be approximately equal to the fair market value of the Acquired
Fund Shares actually or constructively surrendered in the exchange.
(s) The
Acquiring Fund Shares constitute voting stock for purposes of Sections
368(a)(1)(C) and 368(c) of the Code.
(t) No
expenses incurred by the Acquired Fund or on its behalf in connection with the
Reorganization will be paid or assumed by the Manager, the Acquiring Fund, or
any third party unless those expenses are Reorganization Expenses, and no cash
or property other than Acquiring Fund Shares will be transferred to the Acquired
Fund or any of its shareholders with the intention that it be used to pay any
expenses (even Reorganization Expenses) thereof.
(u) Immediately
following consummation of the Reorganization, (i) the Acquired Fund
Shareholders will own all the Acquiring Fund Shares and will own those shares
solely by reason of their ownership of the Acquired Fund Shares immediately
before the Reorganization and (ii) the Acquiring Fund will hold the same
assets -- except for assets used to pay the Funds’ expenses incurred in
connection with the Reorganization -- and be subject to the same liabilities
that the Acquired Fund held or was subject to immediately before the
Reorganization, plus any liabilities for those expenses; and those excepted
assets, together with the amount of all redemptions and distributions (other
than regular, normal dividends) the Acquired Fund makes immediately preceding
the Reorganization, will, in the aggregate, constitute less than 1% of its net
assets.
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ARTICLE
V
COVENANTS
5.1 OPERATION
IN ORDINARY COURSE. The Acquired Fund will operate its business in
the ordinary course between the date of this Agreement and the Closing Date, it
being understood that such ordinary course of business will include payment of
customary dividends and other distributions and shareholder
redemptions.
5.2 APPROVAL
OF SHAREHOLDERS. Forum will call a special meeting of the Acquired
Fund’s shareholders to consider and act upon this Agreement.
5.3 ADDITIONAL
INFORMATION. Forum will assist IMST in obtaining such information as
IMST reasonably requests concerning the beneficial ownership of the Acquired
Fund Shares.
5.4 FURTHER
ACTION. Subject to the provisions of this Agreement, each Investment
Company will take or cause to be taken, all action, and do or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement, including any actions
required to be taken after the Closing Date.
5.5 STATEMENT
OF EARNINGS AND PROFITS. As promptly as practicable, but in any case
within sixty (60) days after the Closing Date, Forum shall furnish IMST, in such
form as is reasonably satisfactory to IMST, a statement of the earnings and
profits of the Acquired Fund for federal income tax purposes that will be
carried over by the Acquiring Fund as a result of Section 381 of the Code, and
which will be reviewed by Deloitte & Touche LLP and certified by Forum’s
Treasurer.
5.6 PREPARATION
OF FORM N-14 REGISTRATION STATEMENT. IMST will prepare and file with
the Commission a registration statement on Form N-14 (the “Registration Statement”),
under the 1933 Act, relating to the Acquiring Fund Shares, which, without
limitation, shall include a proxy statement of the Acquired Fund and the
prospectus of the Acquiring Fund relating to the Reorganization (the “Proxy Statement/Prospectus”)
subject to approval of Board of Forum, which shall not be unreasonably
withheld. The Registration Statement shall be in compliance with the
1933 Act, the 1934 Act and the 1940 Act. Forum will provide IMST with
the materials and information necessary to prepare the Proxy
Statement/Prospectus for inclusion in the Registration Statement in connection
with the meeting of the Acquired Fund’s shareholders to consider and act on this
Agreement and the transactions contemplated herein. IMST agrees to
use all commercially reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act and any state blue sky or
securities laws as it may deem appropriate in order for the Acquiring Fund to
operate after the Closing Date.
5.7 LIQUIDATING
DISTRIBUTION. As soon as is reasonably practicable after the Closing,
the Acquired Fund will make a liquidating distribution to the Acquired Fund
Shareholders consisting of the Acquiring Fund Shares received at the
Closing.
5.8 FULFILLMENT
OF CONDITIONS. Each Investment Company shall use its commercially
reasonable efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.9 DELIVERY
OF INSTRUMENTS. Each Investment Company, on behalf of its Fund,
covenants that it will, from time to time, as and when reasonably requested by
the other Investment Company, execute and deliver or cause to be executed and
delivered all such assignments and other instruments, and will take or cause to
be taken such further action as such other Investment Company, on behalf of its
Fund, may reasonably deem necessary or desirable in order to vest in and confirm
(a) Forum’s, on behalf of the Acquired Fund’s, title to and possession of
the Acquiring Fund Shares to be delivered hereunder, and (b) IMST’s, on behalf
of the Acquiring Fund’s, title to and possession of all the Assets and otherwise
to carry out the intent and purpose of this Agreement.
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5.10 REORGANIZATION
UNDER THE CODE. It is the intention of the parties that the
Reorganization will qualify as a reorganization within the meaning of Section
368(a) of the Code. Neither Forum nor IMST shall take any action or
cause any action to be taken (including, without limitation, the filing of any
tax return) that is inconsistent with such treatment or results in the failure
of the Reorganization to qualify as such a reorganization.
5.11 INDEMNIFICATION.
(a) IMST
agrees to indemnify and hold harmless Forum and each of Forum’s officers and
Trustees (for purposes of this sub-paragraph 5.11a), the “Indemnified Parties”) from and
against any and all losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Indemnified Parties may
become subject, insofar as such loss, claim, damage, liability or expense (or
actions with respect thereto) arises out of or is based on any breach by IMST of
any of its representations, warranties, covenants or agreements set forth in
this Agreement or as a result of any willful misconduct or gross negligence by
IMST in the performance (or failure to perform) of IMST’s obligations under this
Agreement. The Indemnified Parties will notify IMST in writing within
ten (10) days after the receipt by any one or more of the Indemnified Parties of
any notice of legal process or any suit brought against or claim made against
such Indemnified Parties as to any matters covered by this sub-paragraph
5.11(a). IMST shall be entitled to participate at its own expense in
the defense of any claim, action, suit or proceeding covered by this
sub-paragraph 5.11(a), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and if IMST elects to assume such defense, IMST’s obligation
under this sub-paragraph 5.11(a) to indemnify and hold harmless the Indemnified
Parties shall constitute a guarantee of payment so that IMST will pay in the
first instance any losses, claims, damages, liabilities and expenses required to
be paid by it under this sub-paragraph 5.11(a) without the necessity of the
Indemnified Parties’ first paying the same.
(b) Forum
agrees to indemnify and hold harmless IMST and each of IMST's officers and
Trustees (for purposes of this sub-paragraph 5.11(b), the “Indemnified Parties”) from and
against any and all losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Indemnified Parties may
become subject, insofar as such loss, claim, damage, liability or expense (or
actions with respect thereto) arises out of or is based on any breach by Forum
of any of its representations, warranties, covenants or agreements set forth in
this Agreement or as a result of any willful misconduct or gross negligence by
Forum in the performance (or failure to perform) of Forum's obligations under
this Agreement. The Indemnified Parties will notify Forum in writing
within ten (10) days after the receipt by any one or more of the Indemnified
Parties of any notice of legal process or any suit brought against or claim made
against such Indemnified Parties as to any matters covered by this sub-paragraph
5.11(b). Forum shall be entitled to participate at its own expense in
the defense of any claim, action, suit or proceeding covered by this
sub-paragraph 5.11(b), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and if Forum elects to assume such defense, Forum’s
obligation under this sub-paragraph 5.11(b) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that Forum will
pay in the first instance any losses, claims, damages, liabilities and expenses
required to be paid by it under this sub-paragraph 5.11(b) without the necessity
of the Indemnified Parties’ first paying the same.
(c) The
Manager agrees to provide the Trustees of Forum with tail insurance in
connection with the Reorganization, for a two-year period following the Closing
Date, to indemnify those Trustees to the extent that they would have been
subject to indemnification under the Trust Instrument with respect to any
matters relating to the Acquired Fund.
5.12 HOLDING
PERIOD. IMST covenants that, if the Reorganization is consummated,
each Acquired Fund Shareholder’s holding period for the Acquiring Fund Shares
the shareholder receives in the Reorganization will be deemed to include that
shareholder’s holding period for the Acquired Fund Shares it actually or
constructively exchanges for those Acquiring Fund Shares for purposes of
determining the application of any applicable contingent deferred sales charge,
redemption or exchange fees.
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5.13 EXPENSES. The
Manager covenants that, if the Reorganization is consummated, total annual fund
operating expenses of Class A Acquiring Fund Shares, Class C Acquiring Fund
Shares, and Institutional Acquiring Fund Shares will be equal to or less than
1.50%, 2.00%, and 1.25% of the average daily net asset value of each class,
respectively, for a period of two years after the Closing Date.
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF FORUM
The
obligations of Forum to consummate the transactions provided for herein shall be
subject, at its election, to the performance by IMST of all the obligations to
be performed by it pursuant to this Agreement on or before the Closing Date and,
in addition, subject to the following conditions:
6.1 All
representations, covenants, and warranties of IMST contained in this Agreement
shall be true and correct in all material respects as of the date hereof and as
of the Closing Date, with the same force and effect as if made on and as of the
Closing Date. IMST shall have delivered to Forum at the Closing a
certificate executed in the Acquiring Fund’s name by IMST’s President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
reasonably satisfactory to Forum and dated as of the Closing Date, to such
effect and as to such other matters as Forum shall reasonably
request.
6.2 Forum
shall have received on the Closing Date an opinion from Paul, Hastings, Xxxxxxxx
and Xxxxxx LLP, counsel to IMST, dated as of the Closing Date, in a form
reasonably satisfactory to Forum, covering the following points:
(a) The
Acquiring Fund is a series of shares of IMST duly established and designated by
the Declaration of Trust. IMST is a statutory trust validly existing
and in good standing under the Delaware Statutory Trust Act. The
Declaration of Trust provides IMST with the statutory trust power necessary for
it to own its properties and assets and conduct its business as described in the
Registration Statement.
(b) IMST
is registered with the Commission as an investment company under the 1940
Act. Based solely on telephonic advice by staff of the Commission,
the Registration Statement has been declared effective by the Commission under
the 1933 Act. To the knowledge of such counsel, based solely on a
telephone conversation with staff of the Commission, such counsel is not aware
of any stop order suspending the effectiveness of the Registration Statement,
and, to the knowledge of such counsel, no stop order proceedings for such
purpose are pending by the Commission.
(c) The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary statutory trust action by IMST on behalf of the Acquiring Fund,
this Agreement has been duly executed and delivered by IMST on behalf of the
Acquiring Fund, and, assuming that the Registration Statement and the Proxy
Statement/Prospectus comply with the 1933 Act, the 1934 Act, and the 1940 Act,
this Agreement constitutes a valid and binding obligation of IMST and the
Acquiring Fund, enforceable against IMST and the Acquiring Fund in accordance
with its terms.
(d) The
Acquiring Fund Shares to be delivered pursuant to this Agreement are duly
authorized and, when issued in accordance with this Agreement, will be validly
issued, fully paid and non-assessable.
(e) To
the knowledge of such counsel, no consent, approval, authorization or order of
or filing with any federal or Delaware court or governmental authority is
required for IMST’s execution and delivery of this Agreement, and the receipt of
the Assets and the assumption of the Liabilities by the Acquiring Fund in
accordance with this Agreement, other than (a) those that have been obtained
under the 1933 Act, the 1934 Act or the 1940 Act, and (b) those that
may be required under state securities or blue sky laws (as to which such
counsel need express no opinion).
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(f) The
execution and delivery of this Agreement did not, and the receipt of the Assets
and the assumption of the Liabilities by the Acquiring Fund in accordance with
this Agreement will not, violate the Declaration of Trust or IMST’s
By-laws.
(g) To
the knowledge of such counsel, there is no action, suit or proceeding at law or
in equity, or by or before any federal or Delaware state court or governmental
or regulatory body or agency or arbitration board or panel pending or overtly
threatened against IMST or the Acquiring Fund or any of their assets that
challenges or seeks to prohibit, restrain or enjoin the
Reorganization.
6.3 The
post-effective amendment to the IMST Registration Statement filed by IMST with
the Commission to create the Acquiring Fund has been declared effective by the
Commission.
6.4 Prior
to the Closing Date, IMST shall have authorized the issuance of and shall have
issued an Acquiring Fund Share in each class (the “Initial Shares”) to Atlantic in
consideration of the payment of a reasonable offering price of such Initial
Shares, as determined by IMST’s Board, for the purpose of enabling Atlantic to
vote to (a) approve the investment management agreement between IMST, on behalf
of the Acquiring Fund, and the Manager, (b) approve any plan adopted by the
Acquiring Fund pursuant to Rule 12b-1 under the 1940 Act, and (c) take such
other steps related to the inception, establishment and organization of the
Acquiring Fund as deemed necessary or appropriate by the Boards in order to
conform the Acquiring Fund to the description of the Acquiring Fund included in
the Proxy Statement/Prospectus. At or before the Effective Time, each
Initial Share shall be redeemed by the Acquiring Fund for the price at which it
is issued.
6.5 The
Investment Companies shall have agreed on the number of full and fractional
Acquiring Fund Shares of each class to be issued in connection with the
Reorganization after such number has been calculated in accordance with
paragraph 1.1 of this Agreement.
6.6 IMST,
on behalf of the Acquiring Fund, shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by IMST, on behalf of the Acquiring Fund, on or before the
Closing Date.
ARTICLE
VII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF IMST
The
obligations of IMST to consummate the transactions provided for herein shall be
subject, at its election, to the performance by Forum of all the obligations to
be performed by it pursuant to this Agreement on or before the Closing Date and,
in addition, shall be subject to the following conditions:
7.1 All
representations, covenants, and warranties of Forum contained in this Agreement
shall be true and correct in all material respects as of the date hereof and as
of the Closing Date, with the same force and effect as if made on and as of such
Closing Date. Forum shall have delivered to IMST at the Closing a
certificate executed in the Acquired Fund’s name by Forum’s President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
reasonably satisfactory to IMST and dated as of the Closing Date, to such effect
and as to such other matters as IMST shall reasonably request.
7.2 IMST
shall have received on the Closing Date an opinion from K&L Gates LLP,
counsel to Forum, dated as of the Closing Date, in a form reasonably
satisfactory to IMST, covering the following points:
(a) Forum
is a statutory trust validly existing and in good standing under the laws of the
State of Delaware and has power as a statutory trust to own all of its
properties and assets and to carry on its business as described in its
registration statement on Form N-1A, as amended, and the Acquired Fund is a
separate series of Forum constituted in accordance with the applicable
provisions of the 1940 Act, the Trust Instrument, and Forum’s
By-laws.
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(b) Forum
has the trust power on behalf of the Acquired Fund to execute, deliver, and
perform its obligations under this Agreement in accordance with the applicable
provisions of the Trust Instrument and Forum’s By-laws and has taken all action
required by those documents to authorize the execution, delivery, and
performance of this Agreement; and this Agreement has been duly authorized,
executed, and delivered by Forum on behalf of the Acquired Fund.
(c) The
execution and delivery of this Agreement did not, and the performance by Forum
on behalf of the Acquired Fund of its obligations under this Agreement will not,
violate the Trust Instrument or Forum’s By-laws.
(d) No
consent, approval, authorization, or order of any court or governmental
authority is required for the consummation by Forum on behalf of the Acquired
Fund of the transactions contemplated by this Agreement, except such as have
been obtained.
(e) Forum
is registered with the Commission as an investment company under the 0000
Xxx.
7.3 Forum
shall have delivered to IMST a statement of the Acquired Fund’s assets and
liabilities, together with a list of the Acquired Fund’s portfolio securities
showing the tax costs of such securities by lot and the holding periods of such
securities, as of the Closing Date, certified by the Treasurer of
Forum.
7.4 Forum
shall have furnished to IMST a certificate, signed by the President or
Vice-President and the Treasurer or any Assistant Treasurer of Forum, as to the
adjusted tax basis in the hands of the Acquired Fund of the securities delivered
to the Acquiring Fund pursuant to this Agreement.
7.5 The
Investment Companies shall have agreed on the number of full and fractional
Acquiring Fund Shares of each class to be issued in connection with the
Reorganization after such number has been calculated in accordance with
paragraph 1.1 of this Agreement.
7.6. Forum,
on behalf of the Acquired Fund, shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by Forum, on behalf of the Acquired Fund, on or before the
Closing Date.
ARTICLE
VIII
FURTHER
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INVESTMENT COMPANIES
If any of
the conditions set forth below does not exist on or before the Closing Date with
respect to either Investment Company, the other Investment Company shall, at its
option, not be required to consummate the transactions contemplated by this
Agreement:
8.1 This
Agreement and the transactions contemplated herein shall have been approved by
the requisite vote of the holders of the outstanding shares of the Acquired Fund
in accordance with Delaware law and the provisions of the Trust Instrument and
Forum’s By-Laws. Certified copies of the resolutions evidencing such
approval shall have been delivered to IMST. Notwithstanding anything
herein to the contrary, neither Investment Company may waive the conditions set
forth in this paragraph 8.1.
8.2 This
Agreement and the transactions contemplated herein shall have been approved by
the Board of each Investment Company, and each Investment Company shall have
delivered to the other a copy of the resolutions approving this Agreement
adopted by its Board, certified by the Secretary or equivalent
officer.
8.3 On
the Closing Date, the Commission shall not have issued an unfavorable report
under Section 25(b) of the 1940 Act, or instituted any proceeding seeking to
enjoin the consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act. Furthermore, 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 this Agreement or the transactions contemplated
herein.
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8.4 All
required consents of other parties and all other consents, orders, and permits
of federal, state and local regulatory authorities (including those of the
Commission and of state blue sky securities authorities, including any necessary
“no-action” positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
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 the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
8.5 The
amendment to the IMST Registration Statement with respect to the Acquiring Fund
referred to in paragraph 4.2(d) shall have become effective under the 1933 Act
and no stop orders suspending the effectiveness thereof shall have been
issued. To the best knowledge of the Investment Companies, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 0000 Xxx.
8.6 The
parties shall have received an opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx
LLP dated as of the Closing Date and addressed to the Investment Companies
substantially to the effect that for federal income tax purposes:
(a) The
transfer of all of the Assets in exchange solely for Acquiring Fund Shares and
the assumption by the Acquiring Fund of the Liabilities (followed by the
distribution of those Acquiring Fund Shares to the Acquired Fund Shareholders
and the termination of the Acquired Fund) will constitute a “reorganization”
within the meaning of Section 368(a) of the Code, and each Fund will be a “party
to a reorganization” within the meaning of Section 368(b) of the
Code.
(b) No
gain or loss will be recognized by the Acquiring Fund upon the receipt of the
Assets solely in exchange for Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Liabilities.
(c) No
gain or loss will be recognized by the Acquired Fund upon the transfer of the
Assets to the Acquiring Fund in exchange for Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Liabilities or upon the distribution of
those Acquiring Fund Shares to the Acquired Fund Shareholders in exchange
(whether actual or constructive) for such shareholders’ Acquired Fund
Shares.
(d) No
gain or loss will be recognized by the Acquired Fund Shareholders upon the
exchange (whether actual or constructive) of their Acquired Fund shares for
Acquiring Fund Shares in the Reorganization.
(e) The
aggregate tax basis for Acquiring Fund Shares received by an Acquired Fund
Shareholder pursuant to the Reorganization will be the same as the aggregate tax
basis of the Acquired Fund Shares exchanged (whether actual or constructive)
therefor by such shareholder. The holding period of Acquiring Fund
Shares received by an Acquired Fund Shareholder will include the period during
which the Acquired Fund Shares exchanged (whether actual or constructive)
therefor were held by such shareholder, provided the Acquired Fund Shares are
held as capital assets at the Effective Time.
(f) The
Acquiring Fund’s tax basis of each Asset will be the same as the tax basis of
such Asset to the Acquired Fund immediately prior to the
Reorganization. The holding period of each Asset in the hands of the
Acquiring Fund will include the period during which that Asset was held by the
Acquired Fund.
(g) For
purposes of Section 381 of the Code, the Acquiring Fund will be treated just as
the Acquired Fund would have been treated if there had been no
Reorganization. Accordingly, the Reorganization will not result in
the termination of the Acquired Fund’s taxable year and the part of the Acquired
Fund’s taxable year before the Reorganization will be included in the Acquiring
Fund’s taxable year after the Reorganization. The Acquiring Fund will
succeed to and take into account the items of the Acquired Fund described in
Section 381(c) of the Code, subject to any applicable conditions and limitations
specified in Sections 381, 382, 383 and 384 of the Code and the regulations
thereunder.
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Such
opinion shall be based on customary assumptions and such representations as
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP may reasonably request, and each
Investment Company will cooperate to make and certify the accuracy of its
representations. Notwithstanding anything herein to the contrary,
neither Investment Company may waive the condition set forth in this paragraph
8.6.
8.7 Prior
to the Closing, IMST's Board shall have approved an investment management
agreement between IMST, on behalf of the Acquiring Fund, and the
Manager.
ARTICLE
IX
EXPENSES
9.1 Except
as otherwise provided for herein and subject to complying with the
representations contained in paragraphs 4.1(ff) and 4.2(t), the Manager, or an
affiliate thereof, shall bear all expenses of the transactions contemplated by
this Agreement. Such expenses include (a) expenses associated
with the preparation and filing of the Registration Statement (including the
Proxy Statement/Prospectus), (b) postage, (c) printing,
(d) accounting fees, (e) audit and legal fees, including reasonable
fees for this transaction of the Acquired Fund’s counsel and counsel of Forum’s
Independent Trustees, and (f) costs of soliciting proxies. The
Manager, or an affiliate thereof, shall remain liable for expenses, regardless
of whether the transactions contemplated by this Agreement occur, and this
paragraph 9.1 shall survive the Closing and any termination of this Agreement,
pursuant to paragraph 11.1. Notwithstanding the foregoing, expenses
shall be paid by the party directly incurring them if and to the extent that the
payment thereof by another person would result in that party’s disqualification
as a RIC or would prevent the Reorganization from qualifying as a tax-free
reorganization.
ARTICLE
X
ENTIRE
AGREEMENT; SURVIVAL; CONFIDENTIALITY
10.1 IMST,
on behalf of the Acquiring Fund, and Forum, on behalf of the Acquired Fund,
agree that neither has made to the other any representation, warranty and/or
covenant not set forth herein and that this Agreement constitutes the entire
agreement among the parties.
10.2 The
representations, warranties, and covenants contained in this Agreement or in any
document delivered pursuant to or in connection with this Agreement shall
survive the consummation of the transactions contemplated
hereunder. The covenants to be performed after the Closing Date, and
the obligations of IMST, on behalf of the Acquiring Fund, shall continue in
effect beyond the consummation of the transactions contemplated
hereunder.
10.3 Each
Investment Company agrees to treat confidentially and as proprietary information
of the other Investment Company all records and other information, including any
information relating to portfolio holdings, of its Fund and not to use such
records and information for any purpose other than the performance of its duties
under this Agreement; provided, however, that after prior notification of and
written approval by the Investment Company (which approval shall not be withheld
if the other Investment Company would be exposed to civil or criminal contempt
proceedings for failure to comply when requested to divulge such information by
duly constituted authorities having proper jurisdiction, and which approval
shall not be withheld unreasonably in any other circumstance), an Investment
Company may disclose such records and/or information as so
approved.
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ARTICLE
XI
TERMINATION
11.1 This
Agreement may be terminated by the mutual agreement of IMST and
Forum. In addition, either IMST or Forum may at its option terminate
this Agreement, by written notice to the other, at or prior to the Closing Date
due to:
(a) a
breach by the other of any representation, warranty, or agreement contained
herein to be performed at or prior to the Closing Date, if not cured within 30
days of written notice thereof;
(b) a
condition herein expressed to be precedent to the obligations of the terminating
party that has not been met and it reasonably appears that it will not or cannot
be met; or
(c) a
determination by the party’s Board that the consummation of the transactions
contemplated herein is not in the best interest of the party.
11.2 In
the event of any such termination, in the absence of willful default, there
shall be no liability for damages on the part of any of the Acquiring Fund, the
Acquired Fund, IMST, Forum, or the respective Trustees or officers to the other
party or its Trustees or officers, but paragraph 9.1 shall continue to
apply.
ARTICLE
XII
AMENDMENTS
AND NOTICES
12.1 This
Agreement may be amended, modified, or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Investment
Companies; provided, however, that following the meeting of the Acquired Fund’s
shareholders called by Forum pursuant to paragraph 5.2, no such amendment may
have the effect of changing the provisions hereof to the detriment of such
shareholders without their further approval.
12.2 Any
notice, report, statement or demand required or permitted by any provisions of
this Agreement shall be in writing and shall be given by facsimile, personal
service or prepaid or certified mail addressed:
In the
case of FORUM, to:
Forum
Funds
Attn:
Xxxxxx X. Xxxx
Three
Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
In the
case of IMST, to:
000 Xxxx
Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxx,
XX 00000
Attn:
President.
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ARTICLE
XIII
HEADINGS;
COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION
OF LIABILITY
13.1 The
Article and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
13.2 This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original.
13.3 This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to the conflicts of laws provisions
thereof; provided that, in the case of any conflict between those laws and the
federal securities laws, the latter shall govern.
13.4 This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but, except as provided in this paragraph, no
assignment or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm, or corporation, other than
the parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
13.5 It
is expressly agreed that the obligations of IMST hereunder shall not be binding
upon any of the Trustees, shareholders, officers, agents, or employees of IMST
personally, but shall bind only the trust property of the Acquiring Fund, as
provided in the Declaration of Trust. The execution and delivery of
this Agreement have been authorized by the Trustees of IMST on behalf of the
Acquiring Fund and signed by authorized officers of IMST, acting as
such. Such authorization by such Trustees and such execution and
delivery by such 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 trust property of the Acquiring Fund as provided in the
Declaration of Trust.
13.6 It
is expressly agreed that the obligations of Forum hereunder shall not be binding
upon any of the Trustees, shareholders, officers, agents, or employees of Forum
personally, but shall bind only the trust property of the Acquired Fund, as
provided in the Trust Instrument. The execution and delivery of this
Agreement have been authorized by the Trustees of Forum on behalf of the
Acquired Fund and signed by authorized officers of Forum, acting as
such. Such authorization by such Trustees and such execution and
delivery by such 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 trust property of the Acquired Fund as provided in the Trust
Instrument.
***Signature
Page Follows***
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the
date first written above.
INVESTMENT
MANAGERS SERIES TRUST, on behalf of
the
Acquiring Fund
By:
______________________________
Name:
____________________________
Title: President
FORUM
FUNDS, on behalf of the Acquired Fund
By:
______________________________
Name:
____________________________
Title: President
LIBERTY
STREET ADVISORS, INC. with respect to
Paragraphs
5.11(c), 5.12, and 9.1 only
By:
______________________________
Name:
____________________________
Title: President
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