AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
dated as of [ ], 1998 between Alliance Balanced Shares,
Inc. ("Balanced Shares") and Alliance Income Builder Fund, Inc.
("Income Builder"), each, a Maryland corporation.
In consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. Shareholder Approval
A meeting of the shareholders of Income Builder shall be
called and held for the purpose of acting upon this Agreement and
the transactions contemplated herein. Balanced Shares shall
furnish to Income Builder such data and information relating to
Balanced Shares as shall be reasonably requested by Income
Builder for inclusion in the information to be furnished to
shareholders of Income Builder in connection with the meeting for
the purpose of acting upon this Agreement and the transactions
contemplated herein. Approval by the shareholders of Income
Builder of this Agreement and the transactions contemplated
herein shall, to the extent necessary to permit the consummation
of the transactions contemplated herein without violating any
investment objective, policy or restriction of Income Builder, be
deemed to constitute approval by the shareholders of a temporary
amendment of any investment objective, policy or restriction that
would otherwise be inconsistent with or violated upon the
consummation of such transactions solely for the purpose of
consummating such transactions.
2. Reorganization
The transactions described in this section are
hereinafter collectively referred to as the "Reorganization."
(a) Plan of Reorganization and Liquidation.
(i) Income Builder agrees to and will grant,
bargain, sell, convey, assign, transfer and deliver to
Balanced Shares at the closing provided for in Section 2(b)
(the "Closing") all of the assets, rights, claims and
businesses of every kind, character and description (whether
tangible or intangible, whether real, personal or mixed,
whether absolute, accrued, contingent or otherwise, whether
or not determinable at the time of the Closing, and wherever
located) of Income Builder to the extent they exist on or
after the Closing. In consideration thereof, at the
Closing, Balanced Shares agrees to and will (A) assume and
pay, to the extent that they exist on the Closing, all
liabilities of Income Builder and (B) deliver to Income
Builder the number of full and fractional Class A shares,
Class B shares, Class C shares and Advisor Class share of
Balanced Shares, par value $.01 per share (the "Balanced
Shares shares"), equal to the number of full and fractional
Class A shares, Class B shares, Class C shares and Advisor
Class shares of Income Builder, par value $.001 per share
(the "Income Builder shares"), determined by multiplying the
number of Income Builder shares of that class by the
exchange ratio as computed as set forth below, the product
of such multiplication to be carried to the third decimal
place. For purposes of this section, Class A, Class B,
Class C and Advisor Class Income Builder shares will
correspond to Class A, Class B, Class C and Advisor Class
shares, respectively, of Balanced Shares. The exchange
ratio for each class of Income Builder shares shall be the
number determined by dividing the net asset value per share
of that class of Income Builder shares by the net asset
value per share of the corresponding class of the Balanced
Shares shares. In each case such net asset values are to be
determined on a consistent basis by the appropriate officers
of Income Builder or Balanced Shares, as the case may be, as
of the close of regular trading on the New York Stock
Exchange, Inc. (the "Exchange") next preceding the Closing.
The exchange ratio shall be carried to the fourth decimal
place.
(ii) At the Closing, Income Builder will
liquidate and distribute pro rata to the holders of record
of each class of Income Builder shares as of the Closing the
Balanced Shares shares of the corresponding class received
by Income Builder pursuant to this Section 2(a). Such
liquidation and distribution will be accompanied by the
establishment of an open account on the share records of
Balanced Shares in the name of each holder of a class of
Income Builder shares and representing the number of
Balanced Shares shares of the corresponding class due such
shareholder. Fractional Balanced Shares shares will be
carried to the third decimal place. Simultaneously with
such crediting of the Balanced Shares shares to the
shareholders, the Income Builder shares held by such
shareholders shall be canceled. Certificates representing
Balanced Shares shares will be issued in accordance with the
then-current Balanced Shares prospectus; provided, however,
that any certificate representing Balanced Shares shares to
be issued in replacement of a certificate representing
Income Builder shares shall be issued only upon the
surrender of such latter certificate.
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(iii) Following the Closing, Income Builder
will dissolve.
(b) Closing. The Closing shall occur at the later of
(i) the final adjournment of the meeting of the holders of Income
Builder shares at which this Agreement and the transactions
contemplated hereby will be considered and (ii) such later time
as the parties hereto may mutually agree.
3. Articles of Incorporation; By-Laws; Board of Directors;
Officers
Balanced Shares hereby covenants and agrees as follows:
(a) Charter. The Charter of Balanced Shares in effect
at the Closing shall continue to be the Charter of Balanced
Shares until altered, amended or repealed as provided by law.
(b) By-Laws. The By-laws of Balanced Shares in effect
at the Closing shall continue to be the By-laws of Balanced
Shares until the same shall thereafter be altered, amended or
repealed in accordance with the Articles of Incorporation or
By-laws of Balanced Shares
(c) Directors. The directors of Balanced Shares at the
Closing shall continue to be the directors of Balanced Shares
until they resign or their successors shall have been elected and
qualified.
(d) Officers. Subject to the provisions of the By-laws
of Balanced Shares the officers of Balanced Shares at the Closing
shall continue to be the officers of Balanced Shares until they
resign or their successors shall have been elected and qualified.
(e) Vacancies. If at the Closing a vacancy shall exist
on the Board of Directors or in any of the offices of Balanced
Shares, such vacancy may thereafter be filled in the manner
provided by the By-laws of Balanced Shares, consistent with the
provisions of Section 16 of the Investment Company Act of 1940,
as amended (the "Act").
4. Representations, Warranties and Covenants of
Balanced Shares
Balanced Shares represents and warrants to, and
covenants with, Income Builder as follows:
(a) Organization, Existence, Etc. Balanced Shares is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland and has the power to
carry on its business as it is now being conducted and as
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described in its currently effective Registration Statement on
Form N-1A. Balanced Shares is qualified to do business under the
laws of every jurisdiction in which such qualification is
required, except where the failure to so qualify would not have a
material adverse effect on Balanced Shares. Balanced Shares has
all necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as now
being conducted and as described in its currently effective
Registration Statement on Form N-1A.
(b) Registration as Investment Company. Balanced
Shares is registered under the Act as an open-end investment
company of the management type; such registration has not been
revoked or rescinded and is in full force and effect.
(c) Capitalization. The authorized capital stock of
Balanced Shares consists of 3,000,000,000 shares of Class A
Common Stock, 3,000,000,000 shares of Class B Common Stock,
3,000,000,000 shares of Class C Common Stock and 3,000,000,000
shares of Advisor Class Common Stock, each having a par value
$.01 per share. As of [ ], 1998, there were outstanding
[ ] shares of Class A Common Stock, [ ] shares of
Class B Common Stock, [ ] shares of Class C Common Stock
and [ ] shares of Advisor Class Common Stock. All of the
outstanding shares of common stock of Balanced Shares have been
duly authorized and are validly issued, fully paid and
nonassessable. Because Balanced Shares is an open-end investment
company engaged in the continuous offering and redemption of its
shares, the number of outstanding shares of Balanced Shares may
change prior to the Closing.
(d) Financial Statements. The financial statements of
Balanced Shares for the year ended July 31, 1997, which are
audited, and for the six months ended January 31, 1998, which are
unaudited (the "Balanced Shares Financial Statements"),
previously delivered to Income Builder, fairly present the
financial position of Balanced Shares as of the dates thereof and
the results of its operations and changes in its net assets for
the periods indicated.
(e) Shares to be Issued Upon Reorganization. The
Balanced Shares shares to be issued in connection with the
Reorganization have been duly authorized and upon consummation of
the Reorganization will be validly issued, fully paid and
nonassessable, and no shareholder of Balanced Shares has any
preemptive right to subscribe or purchase in respect thereof.
(f) Authority Relative to this Agreement. Balanced
Shares has the power to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions
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contemplated hereby have been duly authorized by Balanced Shares'
Board of Directors and no other action by Balanced Shares is
necessary to authorize its officers to effectuate this Agreement
and the transactions contemplated hereby. Balanced Shares is not
subject to any provision of its Charter or By-laws, nor is
Balanced Shares a party to or obligated under any charter,
by-law, indenture or contract provision or any other commitment
or obligation, or subject to any order or decree, that would be
violated by its executing and carrying out this Agreement and the
transactions contemplated hereby.
(g) Liabilities. There are no liabilities of Balanced
Shares, whether or not determined or determinable, other than
liabilities disclosed or provided for in the Balanced Shares
Financial Statements and liabilities incurred in the ordinary
course of business or otherwise previously disclosed in writing
to Income Builder.
(h) Litigation. To the knowledge of Balanced Shares,
there are no claims, actions, suits or proceedings pending
against Balanced Shares. In addition, to the knowledge of
Balanced Shares, there are no claims, actions, suits or
proceedings threatened against Balanced Shares that would
materially adversely affect Balanced Shares or its assets or
business or which would prevent or hinder consummation of the
transactions contemplated hereby.
(i) Contracts. Except for contracts, agreements,
franchises, licenses or permits entered into or granted in the
ordinary course of its business or disclosed in its current
Registration Statement on Form N-1A filed under the Act, in each
case under which no default exists, Balanced Shares is not a
party to or subject to any material contract, debt instrument,
employee benefit plan, lease, franchise, license or permit of any
kind or nature whatsoever.
(j) Taxes. The federal income tax returns of Balanced
Shares have been filed for all taxable years to and including the
taxable year ended July 31, 1997 and all taxes payable pursuant
to such returns have been paid. The federal income tax return of
Balanced Shares for the taxable year ending July 31, 1998 will be
filed, and any taxes payable pursuant thereto will be paid, prior
to their due date. Balanced Shares has qualified as a regulated
investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), in respect of each taxable year since the
commencement of its operations and has no reason to believe that
it will not so qualify in respect of its current fiscal year.
(k) Registration Statement. Balanced Shares shall file
with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form N-14 (the "Registration
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Statement") under the Securities Act of 1933 (the "Securities
Act") relating to the Balanced Shares shares issuable hereunder.
At the time it becomes effective, the Registration Statement
(i) will comply in all material respects with the provisions of
the Securities Act and the rules and regulations of the
Commission thereunder (the "Regulations") and (ii) will not
contain an 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 the
Registration Statement becomes effective, at the time of the
shareholders' meeting referred to in Section 1 hereof and at the
Closing, the prospectus (the "Prospectus") and statement of
additional information included therein (the "Statement of
Additional Information"), as amended or supplemented by any
amendments or supplements filed with the Commission by Balanced
Shares and delivered to Income Builder, will not contain an
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that none of the representations and
warranties in this subsection (k) shall apply to statements in or
omissions from the Registration Statement, Prospectus or
Statement of Additional Information made in reliance upon and in
conformity with information furnished by Income Builder for use
in the Registration Statement, Prospectus or Statement of
Additional Information as provided in Section 5(k).
(l) No Material Adverse Change. Since July 31, 1997,
there has been no material adverse change in the financial
condition, results of operations, business, properties or assets
of Balanced Shares.
(m) Operations in the Ordinary Course. Except as
otherwise contemplated by this Agreement, Balanced Shares will
conduct its business in the ordinary course.
5. Representations, Warranties and Covenants of Income Builder
Income Builder represents and warrants to, and covenants
with, Balanced Shares as follows:
(a) Organization, Existence, Etc. Income Builder is a
corporation duly organized and validly existing under the laws of
the State of Maryland and has the power to carry on its business
as it is now being conducted and as described in its current
effective Registration Statement on Form N-1A. Income Builder is
qualified to do business under the laws of every jurisdiction in
which such qualification is required, except where the failure to
so qualify would not have a material adverse effect on Income
Builder. Income Builder has all necessary federal, state and
local authorizations to own all of its properties and assets and
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to carry on its business as now being conducted and as described
in its current effective Registration Statement on Form N-1A.
(b) Registration as Investment Company. Income Builder
is registered under the Act as an open-end investment company of
the management type; such registration has not been revoked or
rescinded and is in full force and effect.
(c) Capitalization. The authorized capital stock of
Income Builder consists of 2,000,000,000 shares of Class A Common
Stock, 2,000,000,000 shares of Class B Common Stock,
2,000,000,000 shares of Class C Common Stock and 2,000,000,000
shares of Advisor Class Common Stock, par value $.001. As of
[ ], 1998, there were outstanding [ ] shares of
Class A Common Stock, [ ] shares of Class B Common Stock,
[ ] shares of Class C Common Stock and [ ] shares of
Advisor Class Common Stock. All of the outstanding shares of
Income Builder have been duly authorized and are validly issued,
fully paid and nonassessable. Because Income Builder is an open-
end investment company engaged in the continuous offering and
redemption of its shares, the number of outstanding shares of
Income Builder may change prior to the Closing.
(d) Financial Statements. The financial statements of
Income Builder for the year ended October 31, 1997, which are
audited, and for the six months ended April 30, 1998, which are
unaudited (the "Income Builder Financial Statements"), and were
previously delivered to Balanced Shares, fairly present the
financial position of Income Builder as of the date thereof and
the results of its operations and changes in its net assets for
the periods indicated.
(e) Authority Relative to this Agreement. Income
Builder has the power to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of Income Builder and, except for approval by the
shareholders of Income Builder, no other action by Income Builder
is necessary to authorize its officers to effectuate this
Agreement and the transactions contemplated hereby. Income
Builder is not subject to any provision of its Articles of
Incorporation or its By-laws, nor is Income Builder a party to or
obligated under any charter, by-law, indenture or contract
provision or any other commitment or obligation, or subject to
any order or decree, that would be violated by its executing and
carrying out this Agreement and the transactions contemplated
hereby.
(f) Liabilities. There are no liabilities of Income
Builder, whether or not determined or determinable, other than
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liabilities disclosed or provided for in the Income Builder
Financial Statements and liabilities incurred in the ordinary
course of business subsequent to April 30, 1998 or otherwise
previously disclosed in writing to Balanced Shares.
(g) Litigation. To the knowledge of Income Builder
there are no claims, actions, suits or proceedings pending
against Income Builder. In addition, to the knowledge of Income
Builder, there are no claims, actions, suits or proceedings
threatened against Income Builder that would materially adversely
affect Income Builder or its assets or business or which would
prevent or hinder consummation of the transactions contemplated
hereby.
(h) Contracts. Except for contracts, agreements,
franchises, licenses or permits entered into or granted in the
ordinary course of its business, in each case under which no
default exists, Income Builder is not a party to or subject to
any material contract, debt instrument, employee benefit plan,
lease, franchise, license or permit of any kind or nature
whatsoever.
(i) Taxes. The federal income tax returns of Income
Builder, previously delivered to Balanced Sahres, have been filed
for all taxable years to and including the taxable year ended
October 31, 1997, and all taxes payable pursuant to such returns
have been paid. The federal income tax returns of Income Builder
for the taxable year ending October 31, l998 will be filed, and
any taxes payable pursuant thereto will be paid, prior to their
due date. Income Builder has qualified as a regulated investment
company under the Code in respect of each taxable year since the
commencement of its operations and has no reason to believe that
it will not so qualify in respect of its current fiscal year.
(j) Portfolio Securities. Income Builder will prepare
and deliver to Balanced Shares at the Closing a Schedule of
Investments (the "Schedule") listing all the assets owned by
Income Builder as of the Closing. All assets to be listed on the
Schedule as of the Closing will be owned by Income Builder free
and clear of any liens, claims, charges, options and
encumbrances, except as indicated in the Schedule, and, except as
so indicated, none of such assets is, or after the Reorganization
as contemplated hereby, will be, subject to any restrictions,
legal or contractual, on the disposition thereof (including
restrictions as to the public offering or sale thereof under the
Securities Act) and, except as so indicated, all such assets are
or will be readily marketable.
(k) Registration Statement. In connection with the
Registration Statement, Income Builder will cooperate with
Balanced Shares and will furnish to Balanced Shares, as
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reasonably requested by Balanced Shares, the information relating
to Income Builder required by the Securities Act and the
Regulations to be set forth in the Registration Statement
(including the Prospectus and Statement of Additional
Information). At the time the Registration Statement becomes
effective, the Registration Statement, insofar as it relates to
Income Builder, (i) will comply in all material respects with the
provisions of the Securities Act and the Regulations and
(ii) will not contain an 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 the Registration Statement becomes effective, at the
time of the shareholders' meeting referred to in Section 1 hereof
and at the Closing, the Prospectus and Statement of Additional
Information, as amended or supplemented by any amendments or
supplements filed with the Commission by Balanced Shares and
delivered to Income Builder, insofar as they relate to Income
Builder, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations
and warranties in this subsection (k) shall apply only to
statements in or omissions from the Registration Statement,
Prospectus or Statement of Additional Information made in
reliance upon and in conformity with information furnished by
Income Builder for use in the Registration Statement, Prospectus
or Statement of Additional Information as provided in this
subsection (k).
(l) No Material Adverse Change. Since October 31, 1997
there has been no material adverse change in the financial
condition, results of operations, business, properties or assets
of Income Builder.
(m) Operations in the Ordinary Course. Except as
otherwise contemplated by this Agreement, Income Builder will
conduct its business in the ordinary course.
6. Conditions to Obligations of Income Builder
The obligations of Income Builder hereunder with respect
to the consummation of the Reorganization as it relates to Income
Builder are subject to the satisfaction of the following
conditions:
(a) Approval by Shareholders. This Agreement and the
transactions contemplated by the Reorganization shall have been
approved by the affirmative vote of a majority of the outstanding
shares of Income Builder entitled to be voted with respect
thereto.
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(b) Covenants, Warranties and Representations.
Balanced Shares shall have complied with each of its covenants
contained herein, each of the representations and warranties of
Balanced Shares contained herein shall be true in all material
respects as of the Closing, there shall have been no material
adverse change in the financial condition, results of operations,
business, properties or assets of Balanced Shares since July 31,
1997 and Income Builder shall have received a certificate of the
President of Balanced Shares satisfactory in form and substance
to Income Builder so stating.
(c) Regulatory Approval. The Registration Statement
shall have been declared effective by the Commission and no stop
order under the Securities Act pertaining thereto shall have been
issued; all necessary orders or exemptions under the Act with
respect to the transactions contemplated hereby shall have been
granted by the Commission; and all necessary approvals,
registrations, and exemptions under federal and state laws shall
have been obtained.
(d) Tax Opinion. Income Builder shall have received
the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, dated as of the Closing,
addressed to it and in form and substance satisfactory to Income
Builder, as to certain of the federal income tax consequences of
the Reorganization under the Code to Balanced Shares, Income
Builder and the shareholders of Income Builder. For purposes of
rendering the opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ may rely exclusively and
without independent verification as to factual matters upon the
statements made in this Agreement and the Registration Statement,
and upon such other written representations as to matters of fact
as an executive officer of each of Income Builder and Balanced
Shares will have verified as of the Closing. The opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇ will be to the effect that, based on the facts
and assumptions stated therein, for federal income tax purposes:
(i) the Reorganization will constitute a reorganization within
the meaning of section 368(a)(1)(C) of the Code and that Income
Builder and Balanced Shares will each be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
(ii) Income Builder or Balanced Shares will not recognize any
gain or loss upon the transfer of all the assets of Income
Builder to Balanced Shares in exchange for Balanced Shares shares
and the assumption by Balanced Shares of the liabilities of
Income Builder pursuant to this Agreement and upon distribution
(whether actual or constructive) of Balanced Shares shares to
shareholders of Income Builder in exchange for their Income
Builder shares; (iii) the shareholders of Income Builder who
receive Balanced Shares shares pursuant to the Reorganization
will not recognize any gain or loss upon the exchange (whether
actual or constructive) of their Income Builder shares for
Balanced Shares shares (including any fractional share interests
they are deemed to have received) in the Reorganization; (iv) the
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aggregate tax basis of the Balanced Shares shares received
(whether actually or constructively) by each shareholder of
Income Builder will be the same as the aggregate tax basis of the
Income Builder shares surrendered in the exchange; (v) the
holding period of Balanced Shares shares received (whether
actually or constructively) by each shareholder of Income Builder
will include the holding period of the Income Builder shares that
are surrendered in exchange therefor, provided that the Income
Builder shares constitute capital assets of such shareholder at
the Closing; (vi) the holding period and tax basis of the assets
of Income Builder acquired by Balanced Shares will be the same as
the holding period and tax basis that Income Builder had in such
assets immediately prior to the Reorganization; and
(vii) Balanced Shares will succeed to the capital loss carryovers
of Income Builder, if any, pursuant to section 381 of the Code,
but the use by Balanced Shares of any such capital loss
carryovers may be subject to limitation under section 383 of the
Code.
(e) Opinion of Counsel. Income Builder shall have
received the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, as counsel for Balanced
Shares, dated as of the Closing, addressed to and in form and
substance satisfactory to Income Builder, to the effect that:
(i) Balanced Shares is a corporation duly organized and validly
existing under the laws of the State of Maryland; (ii) Balanced
Shares is a non-diversified, open-end investment company of the
management type registered under the Act; (iii) this Agreement
and the Reorganization provided for herein and the execution of
this Agreement have been duly authorized and approved by
requisite action of Balanced Shares and this Agreement has been
duly executed and delivered by Balanced Shares and is a valid and
binding obligation of Balanced Shares, subject to applicable
bankruptcy, insolvency, fraudulent conveyance and similar laws or
court decisions regarding enforcement of creditors' rights
generally, and to general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity); (iv) the Registration Statement has been declared
effective under the Securities Act and to ▇▇▇▇▇▇ & Kissel's
knowledge no stop order has been issued or threatened suspending
its effectiveness; (v) to ▇▇▇▇▇▇ & Kissel's knowledge, no
consent, approval, order or other authorization of any federal or
state court or administrative or regulatory agency, other than
the acceptance of Articles of Transfer by the Maryland State
Department of Assessments and Taxation, is required for Balanced
Shares to enter into this Agreement or carry out its terms that
will not have been obtained by the Closing, other than as may be
required under the securities or "blue sky" laws of any state and
other than where the failure to obtain any such consent,
approval, order or authorization would not have a material
adverse effect on the operations of Balanced Shares; and (vi) the
Class A, Class B, Class C and Advisor Class shares of Balanced
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Shares to be issued in the Reorganization have been duly
authorized and upon issuance thereof in accordance with this
Agreement will be validly issued, fully paid and nonassessable,
and no shareholder of Balanced Shares has any preemptive right to
subscribe or purchase in respect thereof.
(f) Non-Termination. The parties shall not have
terminated this Agreement pursuant to Section 8(c) hereof.
(g) Further Assurances. Income Builder shall have
received such further assurances, including, but not limited to,
further assurances from Balanced Shares or any other person,
concerning the performance of its obligations hereunder and the
consummation of the Reorganization as it shall deem necessary,
advisable or appropriate.
7. Conditions to Obligations of Balanced Shares
The obligations of Balanced Shares hereunder with
respect to the consummation of the Reorganization are subject to
the satisfaction of the following conditions:
(a) Approval by Shareholders. This Agreement and the
transactions contemplated by the Reorganization shall have been
approved by the affirmative vote of a majority of the outstanding
shares of Income Builder entitled to be voted with respect
thereto.
(b) Covenants, Warranties and Representations. Income
Builder shall have complied with each of its covenants contained
herein. Each of the representations and warranties of Income
Builder contained herein shall be true in all material respects
as of the Closing, there shall have been no material adverse
change in the financial condition, results of operations,
business, properties or assets of Income Builder since
October 31, 1997, and Balanced Shares shall have received a
certificate of the President of Income Builder satisfactory in
form and substance to Balanced Shares so stating.
(c) Portfolio Securities. All securities and other
assets to be acquired by Balanced Shares in the Reorganization
shall have been approved for acquisition by the investment
adviser of Balanced Shares as consistent with the investment
policies of Balanced Shares, and all such securities and other
assets on the books of Income Builder that are not readily
marketable shall be valued on the basis of an evaluation
acceptable to Income Builder and Balanced Shares at the expense
of Income Builder.
(d) Regulatory Approval. The Registration Statement
shall have been declared effective by the Commission and no stop
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order under the Securities Act pertaining thereto shall have been
issued; all necessary orders of exemption under the Act with
respect to the transactions contemplated hereby shall have been
granted by the Commission, and all necessary approvals,
registrations, and exemptions under federal and state laws shall
have been obtained.
(e) Tax Opinion. Balanced Shares shall have received
the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Income Builder, dated
as of the Closing, addressed to and in form and substance
satisfactory to Balanced Shares, as to certain of the federal
income tax consequences of the Reorganization under the Code to
Balanced Shares, Income Builder and the shareholders of Income
Builder. For purposes of rendering the opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
may rely exclusively and without independent verification as to
factual matters upon the statements made in this Agreement and
the Registration Statement, and upon such other written
representations as to matters of fact as an executive officer of
each of Income Builder and Balanced Shares, will have verified as
of the Closing. The opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ will be to the
effect that, based on the facts and assumptions stated therein,
for federal income tax purposes: (i) the Reorganization will
constitute a reorganization within the meaning of section
368(a)(1)(C) of the Code and that Income Builder and Balanced
Shares will each be "a party to a reorganization" within the
meaning of section 368(b) of the Code; (ii) neither Income
Builder nor Balanced Shares will recognize any gain or loss upon
the transfer of all the assets of Income Builder to Balanced
Shares in exchange for Balanced Shares shares and the assumption
by Balanced Shares of the liabilities of Income Builder pursuant
to this Agreement and upon the distribution (whether actual or
constructive) of Balanced Shares shares to shareholders of Income
Builder in exchange for their respective Income Builder shares;
(iii) the holding period and tax basis of the assets of Income
Builder acquired by Balanced Shares will be the same as the
holding period and tax basis that Income Builder had in such
assets immediately prior to the Reorganization; and (iv) Balanced
Shares will succeed to the capital loss carryovers of Income
Builder, if any, pursuant to section 381 of the Code, but the use
by Balanced Shares of any such capital loss carryovers may be
subject to limitation under section 383 of the Code.
(f) Opinion of Counsel. Balanced Shares shall have
received the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, as counsel for Income
Builder, dated as of the Closing, addressed to and in form and
substance satisfactory to Balanced Shares, to the effect that
(i) Income Builder is a corporation duly organized under the laws
of the State of Maryland; (ii) Income Builder is a non-
diversified, open-end investment company of the management type
registered under the Act; (iii) this Agreement and the
Reorganization provided for herein and the execution of this
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Agreement have been duly authorized and approved by requisite
action of Income Builder, and this Agreement has been duly
executed and delivered by Income Builder, and is a valid and
binding obligation of Income Builder, subject to applicable
bankruptcy, insolvency, fraudulent conveyance and similar laws or
court decisions regarding enforcement of creditors' rights
generally, and to general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity); (iv) the Reorganization has been approved by the
requisite vote of the shareholders of Income Builder; and (v) to
▇▇▇▇▇▇ & Kissel's knowledge, no consent, approval, order or other
authorization of any federal or state court or administrative or
regulatory agency, other than the acceptance of Articles of
Transfer by the Maryland State Department of Assessments and
Taxation, is required for Income Builder to enter into this
Agreement or carry out its terms that will not have been obtained
by the Closing other than where the failure to obtain any such
consent, approval, order or authorization would not have a
material adverse effect on the operations of Income Builder.
(g) Non-Termination. The parties shall not have
terminated this Agreement pursuant to Section 8(c) hereof.
(h) Further Assurances. Balanced Shares shall have
received such further assurances, including, but not limited to,
further assurances from Income Builder or any other person,
concerning the performance of their obligations hereunder and the
consummation of the Reorganization as it shall deem necessary,
advisable or appropriate.
8. Amendments; Waivers; Termination; Survival; Cooperation
(a) Amendments. Income Builder and Balanced Shares
may, by agreement in writing authorized by their respective
Boards of Directors, amend this Agreement at any time before or
after approval hereof by the shareholders of Income Builder, but
after such approval, no amendment shall be made that materially
alters the obligations of any party hereto.
(b) Waivers. At any time prior to the Closing, any
party may by written instrument signed by it (i) waive the effect
of any inaccuracies in the representations and warranties made to
it contained herein and (ii) waive compliance with any of the
covenants or conditions made for its benefit contained herein.
(c) Termination. Each party may terminate this
Agreement at any time prior to the Closing by notice to the other
party if (i) a material condition to its performance hereunder or
a material covenant of the other party contained herein shall not
be fulfilled on or before the date specified for the fulfillment
thereof or (ii) a material default or material breach of this
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Agreement shall be made by the other party. This Agreement may
be terminated at any time prior to the Closing, whether before or
after approval by the shareholders of Income Builder, without
liability on the part of either party hereto or its respective
Board of Directors, officers or shareholders, by any party on
notice to the other party in the event that the Board of
Directors of the party giving such notice determines that
proceeding with this Agreement is not in the best interest of
that party's shareholders. Unless the parties hereto shall
otherwise agree in writing, this Agreement shall terminate,
without liability to any party, as of the close of business on
October 31, 1999 if the Closing is not held on or prior to such
date.
(d) Survival. No representations, warranties or
covenants in or pursuant to this Agreement (including
certificates of officers) shall survive the Reorganization.
(e) Cooperation. Each of the parties hereto will
cooperate with the other in fulfilling its obligations under this
Agreement and will provide such information and documentation as
is reasonably requested by the other in carrying out the terms
hereof.
9. Expenses
Alliance Capital Management L.P., the investment adviser
to each party hereto, will bear all expenses incurred in
connection with this Agreement, and all transactions contemplated
hereby, whether or not the Reorganization is consummated;
provided, however, that Income Builder shall bear any cost or
expense incurred through the time of the Closing for purposes of
satisfying the conditions set forth in Section 7(c) above.
10. General
This Agreement supersedes all prior agreements between
the parties (written or oral), is intended as a complete and
exclusive statement of the terms of the Agreement between the
parties and may not be changed or terminated orally. This
Agreement may be executed in counterparts, which shall be
considered one and the same agreement, and shall become effective
when the counterparts have been executed by Income Builder and
Balanced Shares and delivered to each of the parties hereto. The
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any other person
any rights or remedies under or by reason of this Agreement.
This Agreement shall be governed by and construed in accordance
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with the law of the State of New York applicable to agreements
made and to be performed in New York.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
ALLIANCE INCOME BUILDER FUND, INC.
By________________________
ALLIANCE BALANCED SHARES, INC.
By________________________
Accepted and agreed to as to Section 9:
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, Its General Partner
By______________________________
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00250236.AD6