1
EXHIBIT 4(b)
AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization ("Agreement") dated as of November 24,
1997, by and between Nationwide Investing Foundation II, a Massachusetts
business trust ("NIF II") and Nationwide Investing Foundation III, an Ohio
business trust ("NIF III").
WHEREAS, NIF II is registered under the Investment Company Act of 1940, as
amended ("1940 Act") as an open-end investment company of the management type
and has issued and outstanding shares of beneficial interest, par value $1.00
per share, of the following two series: Nationwide Tax-Free Income Fund ("NIF II
Tax-Free Income Fund") and Nationwide U.S. Government Income Fund ("NIF II U.S.
Government Income Fund", and together with NIF II's other series described in
this paragraph, the "Acquired Series"); and
WHEREAS, NIF III is registered under the 1940 Act as an open-end investment
company of the management type, and has authorized the issuance of Class D
shares of beneficial interest, without par value, of the following series:
Nationwide Tax-Free Income Fund ("NIF III Tax-Free Income Fund") and Nationwide
Intermediate U.S. Government Bond Fund ("NIF III Intermediate U.S. Government
Bond Fund," and, together with NIF III's other series described in this
paragraph, the "Acquiring Series"); and
WHEREAS, Each Acquiring Series currently is a shell series, without assets
or liabilities, created for the purpose of acquiring the assets or liabilities
of the corresponding Acquired Series; and
WHEREAS, Each of the Acquired Series plans to transfer all assets belonging
to such series, and to assign all of the liabilities belonging to such series,
to the corresponding Acquiring Series, in exchange for Class D shares of the
corresponding Acquiring Series ("Acquiring Series Shares"), which are voting
securities, followed by the distribution of the Acquiring Series Shares by each
Acquired Series to the shareholders of the Acquired Series in connection with
the dissolution of NIF II and the Acquired Series, all upon the terms and
provisions of this Agreement (individually and together, the "Reorganization");
and
WHEREAS, The Acquired Series and the Acquiring Series correspond to one
another as follows: NIF II Tax-Free Income Fund corresponds to NIF III Tax-Free
Income Fund and NIF II U.S. Government Income Fund corresponds to NIF III
Intermediate U.S. Government Bond Fund; and
WHEREAS, Each of the Acquired Series is, and each of the Acquiring Series
intends to be, a regulated investment company as described in Section 851 of the
United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
Code for each Acquired Series and its corresponding Acquiring Series; and
WHEREAS, The Board of Trustees of NIF II has determined that the
Reorganization is in the best interests of NIF II, and that the interests of its
shareholders will not be diluted as a result thereof; and
WHEREAS, The Board of Trustees of NIF III has determined that the
Reorganization is in the best interests of NIF III and that the interests of its
shareholders will not be diluted as a result thereof;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto covenant and agree as follows:
1. PLAN OF REORGANIZATION
(a) Sale of Assets, Assumption of Liabilities. Subject to the prior
approval of shareholders of NIF II and to the other terms and conditions
contained herein (including the condition that each Acquired Series shall
distribute to its shareholders all of its investment company taxable income
and net capital gain as described in Section 9(h) herein), NIF II and the
Acquired Series agree to assign, convey, transfer and deliver to NIF III
and the Acquiring Series, and NIF III and the Acquiring Series agree to
acquire from
▇-▇
▇
▇▇▇ ▇▇ and the Acquired Series on the Exchange Date (as defined below), all
of the Investments (as defined below), cash and other assets of NIF II in
exchange for that number of full and fractional Acquiring Series Shares of
the corresponding Acquiring Series having an aggregate net asset value
equal to the value of all assets of NIF II transferred to the Acquiring
Series, as provided in Section 4, less the liabilities of NIF II assumed by
the Acquiring Series.
(b) Assets Acquired. The assets to be acquired by the Acquiring
Series from NIF II shall consist of all of NIF II's property, including,
without limitation, all Investments (as defined below), cash and dividends
or interest receivables which are owned by NIF II and any deferred or
prepaid expenses shown as an asset on the books of NIF II as of the
Valuation Time described in Section 4.
(c) Liabilities Assumed. Prior to the Exchange Date NIF II will
endeavor to discharge or cause to be discharged, or make provision for the
payment of, all of its known liabilities and obligations. The Acquiring
Series shall assume all liabilities, expenses, costs, charges and reserves
of NIF II, contingent or otherwise, including liabilities reflected in the
unaudited statements of assets and liabilities of NIF II as of the
Valuation Time, prepared by or on behalf of NIF II as of the Valuation Time
in accordance with generally accepted accounting principles consistently
applied from and after October 31, 1996, and including all liabilities of
the NIF II under its registration statement on Form N-1A filed with the
Securities and Exchange Commission ("Commission") under the Securities Act
of 1933, as amended ("1933 Act").
(d) Liquidation and Dissolution. Upon consummation of the
transactions described in Section 1(a), 1(b) and 1(c) above, each Acquired
Series shall distribute to its shareholders of record as of the Exchange
Date the Acquiring Series Shares received by it, each Acquired Series
shareholder of record being entitled to receive that number of Acquiring
Series Shares equal to the proportion which the number of shares of
beneficial interest, par value $1.00 per share, of the Acquired Series held
by such shareholder bears to the total number of such shares of the
Acquired Series outstanding on such date, and shall take such further
action as may be required, necessary or appropriate under NIF II's Amended
Declaration of Trust, Massachusetts law and the Code to effect the complete
liquidation and dissolution of NIF II. NIF II will fulfill all reporting
requirements under the 1940 Act, both before and after the Reorganization.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF NIF II. NIF II represents
and warrants to and agrees with NIF III and the Acquiring Series that:
(a) NIF II is a business trust validly existing under the laws of the
Commonwealth of Massachusetts and has power to own all of its properties
and assets and to carry out its obligations under this Agreement.
(b) NIF II is registered under the 1940 Act as an open-end investment
company of the management type, and such registration has not been revoked
or rescinded and is in full force and effect. NIF II has elected to qualify
and has qualified each of the Acquired Series as a regulated investment
company under Part I of Subchapter M of the Code as of and since its first
taxable year, and each such Acquired Series qualified and intends to
continue to qualify as a regulated investment company for its taxable year
ending upon its liquidation. Each Acquired Series has been a regulated
investment company under such sections of the Code (and predecessors of the
Code) at all times since its inception.
(c) The statements of assets and liabilities, including the statements
of investments as of October 31, 1996, and the related statements of
operations for the year then ended, and statements of changes in net assets
for each of the two years in the period then ended, for NIF II, such
statements having been audited by KPMG Peat Marwick LLP, independent
auditors of NIF II, have been furnished to NIF III. Such statements of
assets and liabilities fairly present the financial position of NIF II as
of such date and such statements of operations and changes in net assets
fairly reflect the results of operations and changes in net assets for the
periods covered thereby in conformity with generally accepted accounting
principles, and there are no known material liabilities of NIF II as of
such dates which are not disclosed therein.
(d) The Prospectus of NIF II dated February 28, 1997 and its related
Statement of Additional Information dated February 28, 1997 (together, the
"NIF II Prospectus"), in the forms filed under the 1933 Act with the
Commission and previously furnished to NIF III, did not as of their date
and do not as of the
A-2
3
date hereof contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(e) Except as may have been previously disclosed to NIF III, there are
no material legal, administrative or other proceedings pending or, to the
knowledge of NIF II, threatened against NIF II.
(f) There are no material contracts outstanding to which NIF II is a
party, other than as disclosed in the NIF II Prospectus, and there are no
such contracts or commitments (other than this Agreement) which will be
terminated with liability to NIF II on or prior to the Exchange Date.
(g) NIF II has no known liabilities of a material nature, contingent
or otherwise, other than those shown as belonging to it on its statements
of assets and liabilities at October 31, 1996 and those incurred in the
ordinary course of NIF II's business as an investment company since that
date.
(h) As used in this Agreement, the term "Investments" shall mean NIF
II's investments shown on the statements of assets and liabilities at
October 31, 1996 referred to in Section 2(g) hereof, as supplemented with
such changes as NIF II shall make after October 31, 1996 in the ordinary
course of its business.
(i) NIF II has filed or will file all federal and state tax returns
which, to the knowledge of NIF II's officers, are required to be filed by
NIF II and has paid or will pay all federal and state taxes shown to be due
on said returns or on any assessments received by NIF II. All tax
liabilities of NIF II have been adequately provided for on its books, and
no tax deficiency or liability of NIF II has been asserted, and no question
with respect thereto has been raised, by the Internal Revenue Service or by
any state or local tax authority for taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval and otherwise as described in Section 2(1), NIF II
will have full right, power and authority to assign, transfer and deliver
the Investments and any other of its assets and liabilities to be
transferred to NIF III and the Acquiring Series pursuant to this Agreement.
On the Exchange Date, subject only to the delivery of the Investments and
any such other assets and liabilities as contemplated by this Agreement,
NIF III and the Acquiring Series will acquire the Investments and any such
other assets subject to no encumbrances, liens or security interests in
favor of any third party creditor of NIF II and, except as described in
Section 2(k), without any restrictions upon the transfer thereof.
(k) No registration under the 1933 Act of any of the Investments would
be required if they were, as of the time of such transfer, the subject of a
public distribution by either of NIF II or NIF III, except as previously
disclosed to NIF III by NIF II prior to the date hereof.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by NIF II of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the 1940 Act, state securities or blue sky laws (which term as
used herein shall include the laws of the District of Columbia and of
Puerto Rico) or state laws applicable to business trusts.
(m) The registration statement to be filed by NIF III with the
Commission on Form N-14 (the "N-14 Registration Statement") relating to the
Acquiring Series Shares issuable hereunder, and the proxy statement of NIF
II included therein (the "Proxy Statement"), on the effective date of the
N-14 Registration Statement and insofar as they relate to NIF II and the
Acquired Series, (i) will comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at
the time of the shareholders' meeting referred to in Section 7 below and on
the Exchange Date, the prospectus contained in the N-14 Registration
Statement of which the Proxy Statement is a part, as amended or
supplemented by any amendments or supplements filed with the Commission by
NIF III (together, the "N-14 Prospectus") insofar as it relates to NIF II
and the Acquired Series, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in this Section
2(m) shall apply only
A-3
4
to statements of fact relating to NIF II and the Acquired Series contained
in the N-14 Registration Statement, the N-14 Prospectus and the Proxy
Statement, or omissions to state in any thereof a material fact relating to
NIF II or any Acquired Series, as such N-14 Registration Statement, N-14
Prospectus and Proxy Statement shall be furnished to NIF II in definitive
form as soon as practicable following effectiveness of the N-14
Registration Statement and before any public distribution of the N-14
Prospectus or Proxy Statement.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF NIF III. NIF III represents
and warrants to and agrees with NIF II that:
(a) NIF III is a business trust validly existing under the laws of the
State of Ohio and has power to carry on its business as it is now being
conducted and to carry out its obligations under this Agreement.
(b) NIF III is registered under the 1940 Act as an open-end investment
company of the management type. The Acquiring Series expect to qualify as
regulated investment companies under Part I of Subchapter M of the Code.
(c) The Acquiring Series will have no assets or liabilities as of the
Valuation Time.
(d) The final prospectus of each Acquiring Series, expected to be
dated as of a date in December, 1997 or January, 1998, and the related
Statement of Additional Information for the Acquiring Series to be dated as
of such date (together, the "Acquiring Series Prospectus"), in the forms to
be filed by NIF III with the Commission, will be furnished to NIF II
promptly upon the completion thereof and will not as of their date contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of NIF III or its Acquiring Series threatened
against NIF III or the Acquiring Series, which assert liability on the part
of NIF III or the Acquiring Series.
(f) There are no material contracts outstanding to which NIF III or
the Acquiring Series is a party, other than this Agreement and material
contracts disclosed in the N-14 Registration Statement.
(g) NIF III and the Acquiring Series will file all federal and state
tax returns which, to the knowledge of NIF III's officers, are required to
be filed by NIF III and the Acquiring Series and will pay all federal and
state taxes shown to be due on such returns or on any assessments received
by NIF III of the Acquiring Series.
(h) No consent, approval, authorization or order of any governmental
authority is required for the consummation by NIF III or the Acquiring
Series of the transactions contemplated by this Agreement, except such as
may be required under the 1933 Act, 1934 Act, 1940 Act, state securities or
blue sky laws or state laws applicable to business trusts.
(i) As of both the Valuation Time and the Exchange Date and otherwise
as described in Section 3(h), NIF III and the Acquiring Series will have
full right, power and authority to acquire the Investments and any other
assets and assume the liabilities of NIF II to be transferred to the
Acquiring Series pursuant to this Agreement.
(j) The N-14 Registration Statement, the N-14 Prospectus and the Proxy
Statement, on the effective date of the N-14 Registration Statement and
insofar as they relate to NIF III and the Acquiring Series: (i) will comply
in all material respects with the provisions of the 1933 Act, the 1934 Act
and the 1940 Act and the rules and regulations thereunder, and (ii) will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time of the shareholders'
meeting referred to in Section 7 and on the Exchange Date, the N-14
Prospectus, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that none of
the representations and warranties in this subsection shall apply to
statements in or omissions from the N-14 Registration Statement, the N-14
Prospectus or the Proxy Statement made in reliance upon
A-4
5
and in conformity with information furnished by NIF II or any Acquired
Series for use in the N-14 Registration Statement, the N-14 Prospectus or
the Proxy Statement.
(k) NIF III has no plan or intention to issue additional shares of the
Acquiring Series following the Reorganization except for shares issued in
the ordinary course of NIF III's business as an open-end investment
company, nor does NIF III have any plan or intention to redeem or otherwise
reacquire any shares of the Acquiring Series issued to NIF II shareholders
pursuant to the Reorganization, other than through redemptions arising in
the ordinary course of that business. NIF III will actively continue NIF
II's business in the same manner that NIF II conducted it immediately
before the Reorganization and has no plan or intention to sell or otherwise
dispose of any of the assets to be acquired by NIF III in the
Reorganization, except for dispositions made in the course of its business
and dispositions necessary to maintain the status of each Acquiring Series
as a regulated investment company under Subchapter M of the Code.
(l) The Acquiring Series Shares to be issued by NIF III have been duly
authorized and when issued and delivered by NIF III to NIF II pursuant to
this Agreement will be legally and validly issued by NIF III and will be
fully paid and nonassessable and no shareholder of NIF III will have any
preemptive right of subscription or purchase in respect thereof.
(m) The issuance of Acquiring Series Shares pursuant to this Agreement
will be in compliance with all applicable federal and state securities
laws.
(n) Each Acquiring Series, upon filing of its first income tax return
at the completion of its first taxable year, will elect to be a regulated
investment company and until such time will take all steps necessary to
ensure its qualification as a regulated investment company.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, NIF III will deliver
to NIF II a number of corresponding Acquiring Series Shares having an
aggregate net asset value equal to the value of the assets of NIF II
acquired by the respective Acquiring Series, less the value of the
liabilities of NIF II assumed, determined as hereafter provided in this
Section 4.
(a) The net assets of NIF II and each Acquired Series will be computed
as of the Valuation Time, using the valuation procedures set forth in the
NIF II Prospectus.
(b) The net asset value of each of the Acquiring Series Shares will be
determined to the nearest full cent as of the Valuation Time, and shall be
set at the net asset value per share of the corresponding Acquired Series
as of the Valuation Time.
(c) The Valuation Time shall be 4:00 P.M., Eastern Standard Time, on
February 28, 1998, or such earlier or later day as may be mutually agreed
upon in writing by the parties hereto (the "Valuation Time").
(d) The Acquiring Series shall issue its Acquiring Series Shares to
NIF II on a share deposit receipt registered in the name of NIF II. NIF II
shall distribute in liquidation the Acquiring Series Shares received by it
hereunder pro rata to its shareholders by redelivering such share deposit
receipt to NIF III's transfer agent, which will as soon as practicable make
such modifications to the accounts for each former NIF II shareholder as
may be necessary and appropriate.
(e) The Acquiring Series shall assume all liabilities of NIF II,
whether accrued or contingent, described in subsection l(c) hereof in
connection with the acquisition of assets and subsequent dissolution of NIF
II or otherwise, except that recourse for assumed liabilities relating to
an Acquired Series shall be limited to the corresponding Acquiring Series.
5. EXPENSES, FEES. ETC. Except as set forth below, each of NIF II and NIF III
shall be responsible for its respective fees and expenses of the
Reorganization; NIF III will be responsible for its organization costs; and
NIF II will be responsible for proxy solicitation and other costs
associated with the special meeting. Notwithstanding the foregoing,
Nationwide Advisory Services, Inc., investment adviser of NIF II and NIF
III, will be responsible for 50% of NIF II's and NIF III's fees and
expenses of the Reorganization and 50% of NIF II's proxy solicitation and
other costs associated with the special meeting.
A-5
6
6. EXCHANGE DATE. Delivery of the assets of NIF II to be transferred,
assumption of the liabilities of NIF II to be assumed, and the delivery of
Acquiring Series Shares to be issued shall be made at the offices of NIF
II, at 9:00 A.M. on March 1, 1998, or at such other time, date, and
location agreed to by NIF II and NIF III, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date."
7. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION
(a) NIF II agrees to call a special meeting of its shareholders as
soon as is practicable for the purpose of considering the transfer of all
of the assets of NIF II to, and the assumption of all of the liabilities of
NIF II by, the Acquiring Series as herein provided, authorizing and
approving this Agreement, and authorizing and approving the liquidation and
dissolution of NIF II, and it shall be a condition to the obligations of
each of the parties hereto that the holders of shares of beneficial
interest, par value $1.00 per share, of NIF II shall have approved this
Agreement, and the transactions contemplated herein, including the
liquidation and dissolution of NIF II, in the manner required by law and
NIF II's Amended Declaration of Trust at such a meeting on or before the
Valuation Time.
(b) NIF II agrees that the liquidation and dissolution of NIF II will
be effected in the manner provided in NIF II's Amended Declaration of Trust
and in accordance with applicable law, and that it will not make any
constructive distribution of any Acquiring Series Shares to the
shareholders of NIF II without first paying or adequately providing for the
payment of all of NIF II's known debts, obligations and liabilities.
(c) Each of NIF II and NIF III will cooperate with the other, and each
will furnish to the other the information relating to itself required by
the 1934 Act and 1940 Act and the rules and regulations thereunder to be
set forth in the N-14 Registration Statement, including the N-14 Prospectus
and Proxy Statement included therein.
8. CONDITIONS OF NIF II'S OBLIGATIONS. The obligations of NIF II hereunder
shall be subject to the following conditions:
(a) This Agreement shall have been authorized and the transactions
contemplated hereby, including the liquidation and dissolution of NIF II,
shall have been approved by the trustees and shareholders of NIF II in the
manner required by law.
(b) NIF III shall have executed and delivered to NIF II an Assumption
of Liabilities dated as of the Exchange Date pursuant to which the
Acquiring Series will assume all of the liabilities, expenses, costs,
charges and reserves of NIF II, contingent or otherwise, including
liabilities existing at the Valuation Time and described in Section 1(c)
hereof in connection with the transactions contemplated by this Agreement;
provided that recourse for assumed liabilities relating to an Acquired
Series shall be limited to the corresponding Acquiring Series.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of NIF III made in this Agreement are true
and correct in all material respects as if made at and as of such dates,
NIF III and the Acquiring Series have complied with all of the agreements
and satisfied all of the conditions on their part to be performed or
satisfied at or prior to each of such dates, and NIF III shall have
furnished to NIF II a statement, dated the Exchange Date, signed by NIF
III's Chairman and Treasurer (or other financial officer) certifying those
facts as of such dates.
(d) There shall not be any material litigation pending or overtly
threatened with respect to the matters contemplated by this Agreement.
(e) NIF II shall have received an opinion of Druen, Dietrich, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ in form reasonably satisfactory to NIF II, and dated the Exchange
Date, to the effect that (i) NIF III is a business trust validly existing
under the laws of the State of Ohio, (ii) the Acquiring Series Shares to be
delivered to NIF II as provided for by this Agreement are duly authorized
and upon such delivery will be validly issued and will be fully paid and
nonassessable by NIF III and no shareholder of NIF III has any preemptive
right to subscription or purchase in respect thereof, (iii) this Agreement
has been duly authorized, executed and delivered by NIF III, and assuming
due authorization, execution and delivery of this Agreement by ▇▇▇ ▇▇,
▇-▇
7
is a valid and binding obligation of NIF III, enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and other equitable principles, (iv) the
execution and delivery of this Agreement did not, and the consummation of
the transactions contemplated hereby will not, violate NIF III's
Declaration of Trust or its By-Laws or any provision of any agreement known
to such counsel to which NIF III or the Acquiring Series is a party or by
which it is bound, (v) to the knowledge of such counsel no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by NIF III or the Acquiring Series of the
transactions contemplated herein, except such as have been obtained under
the 1933 Act, 1934 Act and 1940 Act and such as may be required under state
securities or blue sky laws or as may be required under state laws
applicable to business trusts laws. In rendering such opinion Druen,
Dietrich, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may rely on certain reasonable assumptions and
certifications of fact received from NIF III and its officers.
(f) NIF II shall have received an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
addressed to NIF II, NIF III and each Acquiring Series and in a form
reasonably satisfactory to NIF II dated the Exchange Date, with respect to
the matters specified in Section 9(e) of this Agreement. In rendering such
opinion ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP may rely on certain reasonable assumptions
and certifications of fact received from NIF III, NIF II and certain of its
shareholders.
(g) All necessary proceedings taken by NIF III in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to NIF II,
Druen, Dietrich, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP.
(h) The N-14 Registration Statement shall have become effective under
the 1933 Act and applicable Blue Sky provisions, and no stop order
suspending such effectiveness shall have been instituted or, to the
knowledge of NIF II, contemplated by the Commission or any state regulatory
authority.
(i) NIF III and NIF II shall have received from the Commission, if
necessary, a written order of exemption, satisfactory in form and substance
to NIF III and NIF II, exempting the Reorganization from the provisions of
Section 17(a) of the 1940 Act.
9. CONDITIONS OF NIF III'S OBLIGATIONS. The obligations of NIF III and the
Acquiring Series hereunder shall be subject to the following conditions:
(a) This Agreement shall have been authorized and the transactions
contemplated hereby, including the liquidation and dissolution of NIF II,
shall have been approved by the trustees and shareholders of NIF II in the
manner required by law.
(b) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of NIF II made in this Agreement are true
and correct in all material respects as if made at and as of such dates,
NIF II has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to each of
such dates, and NIF II shall have furnished to NIF III a statement, dated
the Exchange Date, signed by NIF II's Chairman and Treasurer (or other
financial officer) certifying those facts as of such dates.
(c) There shall not be any material litigation pending or overtly
threatened with respect to the matters contemplated by this Agreement.
(d) NIF III shall have received an opinion of Druen, Dietrich,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, in form reasonably satisfactory to NIF III and dated
the Exchange Date, to the effect that (i) NIF II is a business trust
validly existing under the laws of the Commonwealth of Massachusetts, (ii)
this Agreement has been duly authorized, executed and delivered by NIF II
and, assuming due authorization, execution and delivery of this Agreement
by NIF III, is a valid and binding obligation of NIF II, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and other equitable principles, (iii) NIF II
has power to assign, convey, transfer and deliver the Investments and other
assets contemplated hereby and, upon consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement, NIF II
will have
A-7
8
duly assigned, conveyed, transferred and delivered such Investments and
other assets to NIF III, (iv) the execution and delivery of this Agreement
did not and the consummation of the transactions contemplated hereby will
not, violate NIF II's Amended Declaration of Trust or its Amended Bylaws,
as amended, or any provision of any agreement known to such counsel to
which NIF II is a party or by which it is bound, and (v) to the knowledge
of such counsel no consent, approval, authorization or order of any court
or governmental authority is required for the consummation by NIF II of the
transactions contemplated herein, except such as have been obtained under
the 1933 Act, 1934 Act and 1940 Act and such as may be required under state
securities or blue sky laws or state laws applicable to business trusts. In
rendering such opinion, Druen, Dietrich, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may rely upon
certain reasonable and customary assumptions and certifications of fact
received from NIF II and its officers.
(e) NIF III shall have received an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP,
addressed to NIF III, each Acquiring Series and NIF II, in form reasonably
satisfactory to NIF III and dated the Exchange Date, to the effect that for
Federal income tax purposes (i) the transfer of all or substantially all of
the Acquired Series' assets in exchange for the Acquiring Series Shares and
the assumption by the Acquiring Series of the liabilities of Acquired
Series will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and each of the Acquiring Series and Acquired Series is
a "party to a reorganization" within the meaning of Section 368(b) of the
Code; (ii) no gain or loss will be recognized by Acquired Series upon the
transfer of the assets of the Acquired Series in exchange for Acquiring
Series Shares and the assumption by the Acquiring Series of the liabilities
of Acquired Series or upon the distribution of Acquiring Series Shares by
Acquired Series to its shareholders in liquidation; (iii) no gain or loss
will be recognized by the shareholders of Acquired Series upon the exchange
of their shares for Acquiring Series Shares, (iv) the basis of the
Acquiring Series Shares an Acquired Series shareholder receives in
connection with the Reorganization will be the same as the basis of his or
her shares exchanged therefor; (v) an Acquired Series shareholder's holding
period for his or her Acquiring Series Shares will be determined by
including the period for which he or she held Acquired Series Shares
exchanged therefor, provided that he or she held such Shares as capital
assets; (vi) no gain or loss will be recognized by the Acquiring Series
upon the receipt of the assets of the corresponding Acquired Series in
exchange for Acquiring Series Shares and the assumption by the Acquiring
Series of the liabilities of the corresponding Acquired Series (vii) the
basis in the hands of the Acquiring Series of the assets of the
corresponding Acquired Series transferred to the Acquiring Series will be
the same as the basis of the assets in the hands of the corresponding
Acquired Series immediately prior to the transfer and (viii) the Acquiring
Series' holding periods of the assets of the corresponding Acquired Series
will include the period for which such assets of the corresponding Acquired
Series were held by the corresponding Acquired Series. In rendering such
opinion, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP may rely upon certain reasonable and
customary assumptions and certifications of fact received from NIF III, NIF
II, and certain of its shareholders.
(f) The N-14 Registration Statement shall have become effective under
the 1933 Act and applicable Blue Sky provisions, and no stop order
suspending such effectiveness shall have been instituted or, to the
knowledge of NIF III, contemplated by the Commission or any state
regulatory authority.
(g) All necessary proceedings taken by NIF II in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto reasonably shall be satisfactory in form and substance to NIF III,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP.
(h) Prior to the Exchange Date, each Acquired Series shall have
declared a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders all of
its investment company taxable income for its taxable year ended October
31, 1997 and the short taxable year beginning on November 1, 1997 and
ending on the Valuation Time (computed without regard to any deduction for
dividends paid), and all of its net capital gain realized in its taxable
year ended October 31, 1997 and the short taxable year beginning November
1, 1997 and ending on the Valuation Time (after reduction for any capital
loss carryover).
A-8
9
(i) NIF II shall have duly executed and delivered to NIF III a ▇▇▇▇ of
sale, assignment, certificate and other instruments of transfer ("Transfer
Documents") as NIF III may deem necessary or desirable to transfer all of
NIF II's entire right, title and interest in and to the Investments and all
other assets of NIF II to the Acquiring Series.
(j) NIF III and NIF II shall have received from the Commission, if
necessary, a written order of exemption, satisfactory in form and substance
to NIF III and NIF II, exempting the Reorganization from the provisions of
Section 17(a) of the 1940 Act.
10. TERMINATION. NIF III and NIF II may, by mutual consent of their respective
trustees, terminate this Agreement, and NIF III or NIF II, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees may, subject to Section 11 of this
Agreement, waive any condition to their respective obligations hereunder.
11. SOLE AGREEMENT; GOVERNING LAW; AMENDMENTS. This Agreement supersedes all
previous correspondence and oral communications between the parties
regarding the subject matter hereof, constitutes the only understanding
with respect to such subject matter and shall be construed in accordance
with and governed by the laws of the State of Ohio.
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officer of NIF III and
NIF II; provided, however, that following the special meeting of NIF II's
shareholders called by NIF II pursuant to Section 7 of this Agreement, no such
amendment may have the effect of altering or changing the amount or kind of
shares received by NIF II, or altering or changing to any material extent the
amount or kind of liabilities assumed by NIF III and the Acquiring Series, or
altering or changing any other terms and conditions of the Reorganization if any
of the alterations or changes, alone or in the aggregate, would materially
adversely affect NIF II's shareholders without their further approval.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
NATIONWIDE INVESTING FOUNDATION II
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
NATIONWIDE INVESTING FOUNDATION III
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
A-9
