Agreement and Plan of Reorganization
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of [.], 2015, is by and
among PNC Advantage Funds ("Target Company"), on behalf of its series PNC
Advantage Institutional Government Money Market Fund ("Target Fund"), PNC
Funds ("Acquiring Company"), on behalf of its series PNC Government Money
Market Fund ("Acquiring Fund"), and, for purposes of paragraph 10.2 of
this Agreement only, PNC Capital Advisors, LLC ("PCA").
The reorganization contemplated by this Agreement consists of the transfer
of all assets attributable to each class of the Target Fund's shares in
exchange for Acquisition Shares (as defined in paragraph 1) of the
corresponding class of shares of the Acquiring Fund (as set forth in
Exhibit A), the Acquiring Fund's assumption of all liabilities of the
Target Fund and the distribution of the Acquisition Shares to the Target
Fund shareholders in liquidation of the Target Fund, all upon the terms
and conditions set forth in this Agreement.
Each of the Target Fund and the Target Company acting for itself and on
behalf of the Target Fund, and the Acquiring Fund and the Acquiring
Company acting for itself and on behalf of the Acquiring Fund, is acting
separately from all of the other parties and their series, and not jointly
or jointly and severally with any other party.
This Agreement is adopted as a plan of reorganization and liquidation
within the meaning of Section 361(a) and Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), and any
successor provision.
Provisions in this Agreement relating to shareholder approval of the
transactions discussed herein are applicable only in the event deemed
necessary; it is contemplated that no such shareholder approval will be
required.
The parties therefore agree as follows:
1. DEFINITIONS.
"Acquiring Fund" has the meaning set forth above.
"Acquiring Fund Prospectus" means, collectively, the prospectus(es)
and statement(s) of additional information of the Acquiring Fund, as
amended or supplemented from time to time.
"Acquiring Company" has the meaning set forth above.
"Acquisition Shares" means the shares of the Acquiring Fund to be
issued to the Target Fund in the reorganization under this Agreement.
"Closing" means the time at which the transaction contemplated by
paragraph 4.1 is consummated.
"Closing Date" means the date on which the Closing occurs.
"Investments" means the Target Fund's investments that would be shown
on its schedule of investments if such a schedule were prepared as
of the close of business on the Valuation Date.
"Liquidation Date" means the date on which the Target Fund liquidates
and distributes the Acquisition Shares to its shareholders of record
pursuant to paragraph 2.1.
"Obligations" means all liabilities and obligations of the Target
Fund of any kind whatsoever, whether absolute, accrued, contingent or
otherwise, in existence on the Closing Date.
"Organizational Documents" means the Agreement and Declaration of
Trust and Bylaws for each of the Target Company or the Acquiring
Company, as applicable, each as may be amended from time to time.
"Target Fund" has the meaning set forth above.
"Target Fund Prospectus" means, collectively, the prospectus(es) or
statement(s) of additional information of the Target Fund, as amended
or supplemented from time to time.
"Target Company" has the meaning set forth above.
"Valuation Date" means the business day preceding the Closing Date.
2. TRANSFER OF ASSETS OF THE TARGET FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ACQUISITION SHARES AND LIQUIDATION OF THE TARGET FUND.
2.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein,
(a) The Target Fund will transfer and deliver to the Acquiring
Fund all its assets, as set forth in paragraph 2.2;
(b) The Acquiring Fund will assume all Obligations; and
(c) The Acquiring Fund will issue and deliver to the Target
Fund in exchange for the net assets attributable to each
class of its shares a number of Acquisition Shares of the
corresponding class set forth in Exhibit A (including
fractional shares, if any) determined by dividing the value
of such net assets, computed in the manner and as of the
time and date set forth in paragraph 3.1, by the net asset
value of one Acquisition Share of the corresponding class
set forth in Exhibit A computed in the manner and as of the
time and date set forth in paragraph 3.2. Such transactions
shall take place at the Closing.
2.2. The assets of the Target Fund to be acquired by the Acquiring
Fund shall consist of all cash, securities, dividends and
interest receivable, receivables for shares sold and all other
assets that are owned by the Target Fund on the Closing Date,
including any prepaid expenses, other than unamortized
reorganizational expenses, shown as an asset on the books of the
Target Fund on the Closing Date. The Acquiring Fund agrees that
all rights to indemnification and all limitations of liability
existing in favor of the Target Fund's current and former
trustees and officers, acting in their capacities as such, shall
survive the reorganization, and shall continue in full force and
effect, without any amendment thereto. The Acquiring Fund
further agrees that such rights and limitations may be asserted
against the Acquiring Fund, its successors or assigns.
2.3. As provided in paragraph 4.4, on the Liquidation Date, the
Target Fund will liquidate and distribute pro rata to its
shareholders of record of each class of its shares, determined
as of the close of business on the Valuation Date, the
Acquisition Shares of the corresponding class received by the
Target Fund pursuant to paragraph 2.1. Such liquidation and
distribution will be accomplished by the transfer of the
Acquisition Shares then credited to the account of the Target
Fund on the books of the Acquiring Fund to open accounts on the
share records of the Acquiring Fund in the names of the Target
Fund's shareholders and representing the respective pro rata
number of Acquisition Shares due such shareholders. The
Acquiring Fund shall not be obligated to issue certificates
representing Acquisition Shares in connection with such
exchange.
2.4. With respect to Acquisition Shares distributable pursuant to
paragraph 2.3 to a Target Fund shareholder holding a certificate
or certificates for shares of the Target Fund, if any, on the
Valuation Date, the Target Fund will not permit such shareholder
to receive Acquisition Share certificates therefor, to exchange
such Acquisition Shares for shares of other investment
companies, to effect an account transfer of such Acquisition
Shares or to pledge or redeem such Acquisition Shares until such
Target Fund shareholder has surrendered all his or her
outstanding certificates for Target Fund shares or, in the event
of lost certificates, posted adequate bond.
2.5. If applicable, as soon as practicable after the Closing Date,
the Target Company shall, on behalf of the Target Fund, make all
filings and take all other steps as shall be necessary and
proper to effect the Target Fund's complete dissolution under
the Target Company's Declaration of Trust and applicable state
law. After the Closing Date, the Target Fund shall conduct no
business except in connection with its dissolution.
3. VALUATION.
3.1. The value of the Target Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets
computed as of the close of regular trading on the New York
Stock Exchange on the Valuation Date using the valuation
procedures set forth in the Organizational Documents of the
Acquiring Fund and/or the then current Acquiring Fund Prospectus
for determining net asset value, after deduction for any
expenses of the reorganization contemplated hereby to be paid by
the Target Fund, and shall be certified by the Target Fund.
3.2. For the purpose of paragraph 3.1, the net asset value of an
Acquisition Share of each class shall be the net asset value per
share computed as of the close of regular trading on the New
York Stock Exchange on the Valuation Date, using the valuation
procedures set forth in the Organizational Documents of the
Acquiring Fund and/or the Acquiring Fund Prospectus for
determining net asset value.
4. CLOSING AND CLOSING DATE.
4.1. The Closing Date shall be on such date as the Acquiring Fund
and Target Fund may agree. The Closing shall be held at the
offices of the Acquiring Fund (or such other place as the
parties may agree), at such time as the parties may agree.
4.2. On the Closing Date, the Target Fund's assets, including all
the Target Fund's cash, shall be delivered by the Target Fund to
The Bank of New York Mellon (the "Custodian") for the account of
the Acquiring Fund. All portfolio securities so delivered to be
duly endorsed in proper form for transfer in such manner and
condition as to constitute good delivery thereof in accordance
with the custom of brokers or, in the case of portfolio
securities held in the U.S. Treasury Department's book-entry
system or by the Depository Trust Company, Participants Trust
Company or other third-party depositories, by transfer to the
account of the Custodian in accordance with Rule 17f-4, Rule
17f-5 or Rule 17f-7, as the case may be, under the Investment
Company Act of 1940, as amended (the "1940 Act"), and
accompanied by all necessary federal and state stock transfer
stamps or a check for the appropriate purchase price thereof.
The cash delivered shall be in the form of currency or certified
or official bank checks, payable to the order of "The Bank of
New York Mellon, custodian for PNC Government Money Market
Fund."
4.3. In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be
restricted, or (b) trading or the reporting of trading on the
New York Stock Exchange or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the Target
Fund or the Acquiring Fund is impracticable, the Closing Date
shall be postponed until the first business day after the day on
which trading shall have been fully resumed and reporting shall
have been restored; provided that if trading shall not be fully
resumed and reporting restored within three business days of the
Valuation Date, this Agreement may be terminated by either the
Target Fund or the Acquiring Fund upon the giving of written
notice to the other party.
4.4. At the Closing, the Target Fund or its transfer agent shall
deliver to the Acquiring Fund or its designated agent a list of
the names and addresses of the Target Fund's shareholders and
the number of outstanding shares of each class of the Target
Fund owned by each Target Fund shareholder, and indicating the
number, if any, of such shares represented by an outstanding
share certificate, all as of the close of business on the
Valuation Date. On the Closing Date, the Acquiring Fund will
provide to the Target Fund evidence satisfactory to the Target
Fund that the Acquisition Shares issuable pursuant to paragraph
2.1 have been credited to the Target Fund's account on the books
of the Acquiring Fund. On the Liquidation Date, the Acquiring
Fund will provide to the Target Fund evidence satisfactory to
the Target Fund that such Acquisition Shares have been credited
pro rata to open accounts in the names of the Target Fund's
shareholders as provided in paragraph 2.3.
4.5. At the Closing, each party shall deliver to the other such
bills of sale, instruments of assumption of liabilities, checks,
assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request in
connection with the transfer of assets, assumption of
liabilities and liquidation contemplated by paragraph 2.
5. REPRESENTATIONS AND WARRANTIES.
5.1. The Target Fund represents and warrants the following to the
Acquiring Fund as of the date hereof and agrees to confirm the
continuing accuracy and completeness in all material respects of
the following on the Closing Date:
(a) The Target Company is duly formed, validly existing and in
good standing under the laws of its state of organization;
(b) The Target Company is a duly registered investment company
classified as a management company of the open-end type and
its registration with the Securities and Exchange
Commission as an investment company under the 1940 Act is
in full force and effect, and the Target Fund is a separate
series thereof duly designated in accordance with the
applicable provisions of the Organizational Documents of
the Target Company, the laws of the jurisdiction of
formation of the Target Company and the 1940 Act;
(c) The Target Fund is not in violation in any material respect
of any provision of its Organizational Documents or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Target Fund is a party or by which
the Target Fund is bound, and the execution, delivery and
performance of this Agreement will not result in any such
violation;
(d) The Target Fund has no material contracts or other
commitments (other than this Agreement and such other
contracts as may be entered into in the ordinary course of
its business) that, if terminated, may result in material
liability to the Target Fund or under which (whether or not
terminated) any material payments for periods subsequent to
the Closing Date will be due from the Target Fund;
(e) To the knowledge of the Target Fund, except as has been
disclosed in writing to the Acquiring Fund, no litigation
or administrative proceeding or investigation of or before
any court or governmental body is currently pending or
threatened as to the Target Fund, any of its properties or
assets, or any person whom the Target Fund may be obligated
to indemnify in connection with such litigation, proceeding
or investigation, and the Target Fund is not a party to or
subject to the provisions of any order, decree or judgment
of any court or governmental body that materially and
adversely affects its business or its ability to consummate
the transactions contemplated hereby;
(f) The statement of assets and liabilities, the statement of
operations, the statement of changes in net assets, and the
schedule of investments of the Target Fund, as of the last
day of and for its most recently completed fiscal year,
audited by the Target Fund's independent registered public
accounting firm (and, if applicable, an unaudited statement
of assets and liabilities, statement of operations,
statement of changes in net assets and schedule of
investments for any subsequent semiannual period following
the most recently completed fiscal year), copies of which
have been filed with the Securities and Exchange Commission
or furnished to the Acquiring Fund, fairly reflect the
financial condition and results of operations of the Target
Fund as of such dates and for the periods then ended in
accordance with generally accepted accounting principles
consistently applied. In addition, the Target Fund has no
known liabilities of a material amount, contingent or
otherwise, other than those shown on the statements of
assets and liabilities referred to above or those incurred
in the ordinary course of its business since the last day
of the Target Fund's most recently completed fiscal year;
(g) Since the last day of the Target Fund's most recently
completed fiscal year, there has not been any material
adverse change in the Target Fund's financial condition,
assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any
incurrence by the Target Fund of indebtedness, except as
disclosed in writing to the Acquiring Fund. For the
purposes of this subparagraph (g), distributions of net
investment income and net realized capital gains, changes
in portfolio securities, changes in the market value of
portfolio securities or net redemptions shall be deemed to
be in the ordinary course of business;
(h) The Target Fund has met the requirements of subchapter M of
the Code for treatment as a "regulated investment company"
under Sections 851 and 852 of the Code in respect of each
taxable year since the commencement of its operations, and
will continue to meet such requirements at all times
through the Closing Date;
(i) The Target Fund is and, at all times through the Closing
Date, will continue to be in compliance with Rule 2a-7
under the 1940 Act.
(j) As of the Closing Date, all federal, state and other tax
returns and reports of the Target Fund required by law to
have been filed by such date (giving effect to extensions)
shall have been timely filed and all federal, state and
other taxes shown to be due on such returns and reports or
on any assessment received shall have been timely paid, or
provisions have been made for the payment thereof. All of
the Target Fund's tax liabilities are adequately provided
for on its books. The Target Fund has not had any tax
deficiency or liability asserted against it or question
with respect thereto raised by the Internal Revenue Service
or by any state or local tax authority for taxes in excess
of those already paid; and the Target Fund is not under
audit by the Internal Revenue Service or by any state or
local tax authority for taxes in excess of those already
paid;
(k) All issued and outstanding shares of the Target Fund are,
and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable and will
have been issued in compliance with all applicable
registration or qualification requirements of federal and
state securities laws. No options, warrants or other rights
to subscribe for or purchase, or securities convertible
into, any shares of the Target Fund are outstanding and
none will be outstanding on the Closing Date;
(l) The Target 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 Target Fund Prospectus,
except as previously disclosed in writing to the Acquiring
Fund;
(m) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the
part of the Target Fund and this Agreement constitutes the
valid and binding obligation of the Target Fund 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;
(n) The Acquisition Shares to be issued to the Target Fund
pursuant to paragraph 2 will not be acquired for the
purpose of making any distribution thereof other than to
the Target Fund's shareholders as provided in paragraph
2.3;
(o) The information provided by the Target Fund for use in the
Registration Statement and Prospectus/Proxy Statement
referred to in paragraph 6.3, if any, shall be accurate and
complete in all material respects and shall comply with
federal securities and other laws and regulations as
applicable thereto;
(p) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation
by the Target Fund of the transactions contemplated by this
Agreement, except such as may be required under the
Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "1934
Act"), the 1940 Act and state securities or "Blue Sky" laws
(which terms used herein shall include the laws of the
District of Columbia and of Puerto Rico);
(q) On the Closing Date, the Target Fund will have good and
marketable title to its assets to be transferred to the
Acquiring Fund pursuant to paragraph 2.1 and will have full
right, power and authority to sell, assign, transfer and
deliver the Investments and any other of its assets and
liabilities to be transferred to the Acquiring Fund
pursuant to this Agreement. At the Closing Date, subject
only to the delivery of the Investments and any such other
assets and liabilities and payment therefor as contemplated
by this Agreement, the Acquiring Fund will acquire good and
marketable title thereto and will acquire the Investments
and any such other assets and liabilities subject to no
encumbrances, liens or security interests whatsoever and
without any restrictions upon the transfer thereof, except
as previously disclosed to the Acquiring Fund;
(r) On the Closing Date, the Target Fund will have sold such of
its assets, if any, as are necessary based on information
provided by the Acquiring Fund and contingent on the
accuracy of such information to assure that, after giving
effect to the acquisition of the assets of the Target Fund
pursuant to this Agreement, the Acquiring Fund, if
classified as a "diversified company" within the meaning of
Section 5(b)(1) of the 1940 Act, will remain a "diversified
company" and in compliance in all material respects with
such other investment restrictions as are set forth in the
Acquiring Fund Prospectus, as amended through the Closing
Date; and
(s) No registration 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 the Target Fund or
the Acquiring Fund, except as previously disclosed by the
Target Fund to the Acquiring Fund.
5.2. The Acquiring Fund represents and warrants the following to the
Target Fund as of the date hereof and agrees to confirm the
continuing accuracy and completeness in all material respects of
the following on the Closing Date:
(a) The Acquiring Company is duly formed, validly existing and
in good standing under the laws of its state of
organization;
(b) The Acquiring Company is a duly registered investment
company classified as a management company of the open-end
type and its registration with the Securities and Exchange
Commission as an investment company under the 1940 Act is
in full force and effect, and the Acquiring Fund is a
separate series thereof duly designated in accordance with
the applicable provisions of the Organizational Documents
of the Acquiring Company, the laws of the jurisdiction of
formation of the Acquiring Company and the 1940 Act;
(c) On the Closing Date, the registration statement under the
1933 Act with respect to the Acquisition Shares will, as of
the Closing Date, be in full force and effect and no stop
order suspending such effectiveness shall have been
instituted or, to the knowledge of the Acquiring Fund or
the Target Fund, threatened by the Securities and Exchange
Commission, and such registration statement will conform in
all material respects to the applicable requirements of the
1933 Act and the rules and regulations of the Securities
and Exchange Commission thereunder and does 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, and there are
no material contracts to which the Acquiring Fund is a
party that are not referred to in the Acquiring Fund
Prospectus or in the registration statement of which it is
a part;
(d) On the Closing Date, the Acquiring Fund will have good and
marketable title to its assets;
(e) The Acquiring Fund is not in violation in any material
respect of any provisions of its Organizational Documents
or of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Acquiring Fund is a party
or by which the Acquiring Fund is bound, and the execution,
delivery and performance of this Agreement will not result
in any such violation;
(f) To the knowledge of the Acquiring Fund, except as has been
disclosed in writing to the Target Fund, no litigation or
administrative proceeding or investigation of or before any
court or governmental body is presently pending or
threatened as to the Acquiring Fund, any of its properties
or assets, or any person whom the Acquiring Fund may be
obligated to indemnify in connection with such litigation,
proceeding or investigation, and the Acquiring Fund is not
a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that
materially and adversely affects its business or its
ability to consummate the transactions contemplated hereby;
(g) The statement of assets and liabilities, the statement of
operations, the statement of changes in net assets, and the
schedule of investments of the Acquiring Fund, as of the
last day of and for its most recently completed fiscal
year, audited by the Acquiring Fund's independent
registered public accounting firm (and, if applicable, an
unaudited statement of assets and liabilities, statement of
operations, statement of changes in net assets and schedule
of investments for any subsequent semiannual period
following the most recently completed fiscal year), copies
of which have been furnished to the Target Fund, fairly
reflect the financial condition and results of operations
of the Acquiring Fund as of such dates and for the periods
then ended in accordance with generally accepted accounting
principles consistently applied, and the Acquiring Fund has
no known liabilities of a material amount, contingent or
otherwise, other than those shown on the statements of
assets and liabilities referred to above or those incurred
in the ordinary course of its business since the last day
of the Acquiring Fund's most recently completed fiscal
year;
(h) Since the last day of the Acquiring Fund's most recently
completed fiscal year, there has not been any material
adverse change in the Acquiring Fund's financial condition,
assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any
incurrence by the Acquiring Fund of indebtedness, except as
disclosed in writing to the Target Fund. For the purposes
of this subparagraph (h), any distributions of net
investment income and net realized capital gains, changes
in portfolio securities, changes in the market value of
portfolio securities or net redemptions shall be deemed to
be in the ordinary course of business;
(i) The Acquiring Fund has met the requirements of subchapter M
of the Code for treatment as a "regulated investment
company" under Sections 851 and 852 of the Code in respect
of each taxable year since the commencement of operations,
and will continue to meet such requirements at all times
through the Closing Date;
(j) The Acquiring Fund is and, at all times through the Closing
Date, will continue to be in compliance with Rule 2a-7
under the 1940 Act.
(k) As of the Closing Date, all federal, state and other tax
returns and reports of the Acquiring Fund required by law
to have been filed by such date (giving effect to
extensions) shall have been timely filed and all federal,
state and other taxes shown to be due on such returns and
reports or any assessments received shall have been timely
paid, or provisions have been made for the payment thereof.
All of the Acquiring Fund's tax liabilities are adequately
provided for on its books. The Acquiring Fund has not had
any tax deficiency or liability asserted against it or
question with respect thereto raised by the Internal
Revenue Service or by any state or local tax authority for
taxes in excess of those already paid, and the Acquiring
Fund is not be under audit by the Internal Revenue Service
or by any state or local tax authority for taxes in excess
of those already paid;
(l) All issued and outstanding shares of the Acquiring Fund
are, and at the Closing Date will be, duly and validly
issued and outstanding, fully paid and non-assessable
(except as set forth in the Acquiring Fund Prospectus) by
the Acquiring Fund and will have been issued in compliance
with all applicable registration or qualification
requirements of federal and state securities laws. No
options, warrants or other rights to subscribe for or
purchase, or securities convertible into, any shares of
common stock of the Acquiring Fund are outstanding and none
will be outstanding on the Closing Date;
(m) The Acquiring 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 Acquiring Fund Prospectus;
(n) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the
part of the Acquiring Fund, and this Agreement constitutes
the valid and binding obligation of the Acquiring Fund
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;
(o) The Acquisition Shares to be issued and delivered to the
Target Fund pursuant to the terms of this Agreement will at
the Closing Date have been duly authorized and, when so
issued and delivered, will be duly and validly issued
shares in the Acquiring Fund, and will be fully paid and
non-assessable by the Acquiring Fund, and no shareholder of
the Acquiring Fund will have any preemptive right of
subscription or purchase in respect thereof;
(p) The information provided by the Acquiring Fund for use in
the Registration Statement and Prospectus/Proxy Statement
referred to in paragraph 6.3, if any, shall be accurate and
complete in all material respects and shall comply with
federal securities and other laws and regulations
applicable thereto; and
(q) 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 by
this Agreement, except such as may be required under the
1933 Act, the 1934 Act, the 1940 Act and state securities
or "Blue Sky" laws (which term as used herein shall include
the laws of the District of Columbia and of Puerto Rico).
6. COVENANTS OF THE TARGET FUND AND THE ACQUIRING FUND.
The Target Fund and the Acquiring Fund hereby covenant and agree with
one another as follows:
6.1. The Acquiring Fund and the Target Fund will each operate its
business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of
business will include regular and customary periodic dividends
and distributions.
6.2. If shareholder approval of the transactions contemplated hereby
is required in respect of the Target Fund under the 1940 Act,
applicable state law or the Target Company's charter, the Target
Fund will call a meeting of its shareholders to be held prior to
the Closing Date to consider and act upon this Agreement and
take all other reasonable action necessary to obtain the
required shareholder approval of the transactions contemplated
hereby.
6.3. In connection with the Target Fund shareholders' meeting
referred to in paragraph 6.2, if any, the Acquiring Fund will
prepare a Prospectus/Proxy Statement for such meeting, to be
included in a Registration Statement on Form N-14 (the
"Registration Statement"), which the Acquiring Fund will prepare
and file for registration under the 1933 Act of the Acquisition
Shares to be distributed to the Target Fund's shareholders
pursuant hereto, all in compliance with the applicable
requirements of the 1933 Act, the 1934 Act, and the ▇▇▇▇ ▇▇▇.
6.4. The information to be furnished by the Target Fund for use in
the Registration Statement, if any, and the information to be
furnished by the Acquiring Fund for use in the Prospectus/Proxy
Statement, if any, each as referred to in paragraph 6.3, shall
be accurate and complete in all material respects and shall
comply with federal securities and other laws and regulations
thereunder applicable thereto.
6.5. The Acquiring Fund will advise the Target Fund promptly if at
any time prior to the Closing Date the assets of the Target Fund
include any securities that the Acquiring Fund is not permitted
to acquire.
6.6. Subject to the provisions of this Agreement, the Target Fund
and the Acquiring Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably
necessary, proper or advisable to cause the conditions to the
other party's obligations to consummate the transactions
contemplated hereby to be met or fulfilled and otherwise to
consummate and make effective such transactions.
6.7. The Acquiring Fund will use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the
1940 Act and such of the state securities or "Blue Sky" laws as
it may deem appropriate in order to continue its operations
after the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND.
The obligation of the Target Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance
by the Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, to the
following further conditions:
7.1. The Acquiring Fund shall have delivered to the Target Fund a
certificate executed in its name by its President or a Vice
President and its Treasurer or an Assistant Treasurer, in form
and substance satisfactory to the Target Fund and dated as of
the Closing Date, to the effect that the representations and
warranties of the Acquiring Fund made in this Agreement are true
and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and
that the Acquiring Fund has complied with all the covenants and
agreements and satisfied all of the conditions on its part to be
performed or satisfied under this Agreement at or prior to the
Closing Date.
7.2. The Target Fund shall have received a favorable opinion of
special counsel to the Acquiring Fund, dated as of the Closing
Date and in a form satisfactory to the Target Fund, to the
following effect:
(a) The Acquiring Company is duly formed and validly existing
under the laws of its state of organization and has power
to own all of its properties and assets and to carry on its
business as currently conducted, and the Acquiring Fund is
a separate series thereof duly constituted in accordance
with the applicable provisions of the 1940 Act and the
Organizational Documents of the Acquiring Company;
(b) This Agreement has been duly authorized, executed and
delivered on behalf of the Acquiring Fund and, assuming the
Registration Statement and Prospectus/Proxy Statement
referred to in paragraph 6.3, if any, comply with
applicable federal securities laws and assuming the due
authorization, execution and delivery of this Agreement by
the Target Fund, is the valid and binding obligation of the
Acquiring Fund enforceable against the Acquiring Fund 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;
(c) The Acquiring Fund has the power to assume the liabilities
to be assumed by it hereunder and, upon consummation of the
transactions contemplated hereby, the Acquiring Fund will
have duly assumed such liabilities;
(d) The Acquisition Shares to be issued for transfer to the
Target Fund's shareholders as provided by this Agreement
are duly authorized and upon such transfer and delivery
will be validly issued and outstanding and, assuming
receipt by the Acquiring Fund of the consideration
contemplated hereby, fully paid and non-assessable shares
in the Acquiring Fund, and no shareholder of the Acquiring
Fund has any preemptive right of subscription or purchase
in respect thereof; and
(e) The execution and delivery of this Agreement did not, and
the performance by the Acquiring Fund of its obligations
hereunder will not, violate the Acquiring Fund's
Organizational Documents.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance
by the Target Fund of all the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, to the following
further conditions:
8.1. The Target Fund shall have delivered to the Acquiring Fund a
certificate executed in its name by its President or a Vice
President and its Treasurer or an Assistant Treasurer, in form
and substance satisfactory to the Acquiring Fund and dated as of
the Closing Date, to the effect that the representations and
warranties of the Target Fund made in this Agreement are true
and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and
that the Target Fund has complied with all the covenants and
agreements and satisfied all of the conditions on its part to be
performed or satisfied under this Agreement at or prior to the
Closing Date;
8.2. The Acquiring Fund shall have received a favorable opinion of
special counsel to the Target Fund dated as of the Closing Date
and in a form satisfactory to the Acquiring Fund, to the
following effect:
(a) The Target Company is duly formed and validly existing
under the laws of its state of organization and has power
to own all of its properties and assets and to carry on its
business as currently conducted, and the Target Fund is a
separate series thereof duly constituted in accordance with
the applicable provisions of the 1940 Act and the
Organizational Documents of the Target Company;
(b) This Agreement has been duly authorized, executed and
delivered on behalf of the Target Fund and, assuming the
Registration Statement and Prospectus/Proxy Statement
referred to in paragraph 6.3, if any, comply with
applicable federal securities laws and assuming the due
authorization, execution and delivery of this Agreement by
the Acquiring Fund, is the valid and binding obligation of
the Target Fund enforceable against the Target Fund 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;
(c) The Target Fund has the power to sell, assign, transfer and
deliver the assets to be transferred by it hereunder, and,
upon consummation of the transactions contemplated hereby,
the Target Fund will have duly transferred such assets to
the Acquiring Fund; and
(d) The execution and delivery of this Agreement did not, and
the performance by the Target Fund of its obligations
hereunder will not, violate the Target Fund's
Organizational Documents.
8.3. On or prior to the Closing Date, the Target Fund shall have
declared a dividend or dividends which, together with all
previous dividends, shall have the effect of distributing to
Target Fund shareholders (i) all of the excess of (a) the Target
Fund's interest income excludable from gross income under
Section 103(a) of the Code over (b) the Target Fund's deductions
disallowed under Sections 265 or 171(a)(2) of the Code, (ii) all
of the Target Fund's investment company taxable income as
defined in Section 852 of the Code (in the case of both (i) and
(ii) computed without regard to any deduction for dividends
paid), and (iii) all of the Target Fund's net capital gain
realized (after reduction for any capital loss carryover); the
amounts in (i), (ii) and (iii) shall in each case include
amounts for both (x) the Target Fund's taxable year ending on
the Closing Date, and (y) any prior taxable year of the Target
Fund, to the extent such dividend or dividends are eligible to
be treated as paid during such prior year under Section 855(a)
of the Code.
8.4. The Target Fund shall have furnished to the Acquiring Fund (i)
a certificate as to the adjusted tax basis in the hands of the
Target Fund of the securities delivered to the Acquiring Fund
pursuant to this Agreement; (ii) the amount of capital loss
carryforwards of the Target Fund for federal income tax purposes
as of the Closing Date and (iii) a copy of the tax books and
records of the Target Fund necessary for purposes of preparing
any tax returns required to be filed after the Closing Date.
9. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND AND THE
ACQUIRING FUND.
The obligations of each of the Target Fund and the Acquiring Fund
hereunder are subject to the further conditions that on or before the
Closing Date:
9.1. This Agreement and the transactions contemplated herein shall
have received all necessary shareholder approvals at the meeting
of shareholders of the Target Fund referred to in paragraph 6.2,
if any.
9.2. On the Closing Date, no action, suit or other proceeding shall
be 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 hereby.
9.3. All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities
(including those of the Securities and Exchange Commission and
of state "Blue Sky" and securities authorities) deemed necessary
by the Target Fund or the Acquiring Fund to permit consummation,
in all material respects, of the transactions contemplated
hereby shall have been obtained, except when 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
Target Fund or the Acquiring Fund.
9.4. The Registration Statement, if any, shall have become effective
under the 1933 Act and no stop order suspending the
effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
9.5. The Target Fund and the Acquiring Fund shall have received a
favorable opinion of Ropes & ▇▇▇▇ LLP satisfactory to each of
them (which opinion may be subject to certain qualifications),
substantially to the effect that, on the basis of existing
provisions of the Code, U.S. Treasury regulations promulgated
thereunder, current administrative rules, pronouncements and
court decisions, generally for U.S. federal income tax purposes:
(a) The transaction contemplated by this Agreement will
constitute a reorganization within the meaning of Section
368(a)(1) of the Code, and the Target Fund and the
Acquiring Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(b) Under Sections 361 and 357 of the Code, no gain or loss
will be recognized by the Target Fund upon (i) the transfer
of all its assets to the Acquiring Fund in exchange for
Acquisition Shares and the assumption by the Acquiring Fund
of all the Obligations of the Target Fund or (ii) the
distribution of the Acquisition Shares by the Target Fund
to its shareholders in liquidation, except for (x) any
gain or loss that may be recognized on "section 1256
contracts" as defined in Section 1256(b) of the Code as a
result of the closing of the taxable year of the Target
Fund, (y) any gain that may be recognized on the transfer
of stock in a "passive foreign investment company" as
defined in Section 1297(a) of the Code, and (z) any other
gain or loss that may be required to be recognized (A) as a
result of the closing of the taxable year of the Target
Fund, (B) upon the termination of a position, or (C) upon
the transfer of an asset regardless of whether such a
transfer would otherwise be a nontaxable transaction;
(c) Under Section 1032 of the Code, no gain or loss will be
recognized by the Acquiring Fund upon receipt of the assets
of the Target Fund in exchange for the Acquisition Shares
and the assumption by the Acquiring Fund of all the
Obligations of the Target Fund;
(d) Under Section 362(b) of the Code, the Acquiring Fund's tax
basis in the assets of the Target Fund transferred to the
Acquiring Fund pursuant to this Agreement will be the same
as the Target Fund's tax basis in such assets immediately
prior to the transfer, adjusted for any gain or loss
required to be recognized as described in (b) above;
(e) Under Section 1223(2) of the Code, the Acquiring Fund's
holding periods for the assets received from the Target
Fund pursuant to this Agreement, other than certain assets
with respect to which gain or loss is required to be
recognized in (b) above, will include the periods during
which such assets were held or treated for federal income
tax purposes as held by the Target Fund;
(f) Under Section 354 of the Code, no gain or loss will be
recognized by the Target Fund's shareholders upon the
exchange of all of their shares of the Target Fund for the
Acquisition Shares;
(g) Under Section 358 of the Code, the aggregate tax basis of
Acquisition Shares received by a shareholder of the Target
Fund pursuant to this Agreement will be the same as the
aggregate tax basis of the Target Fund's shares exchanged
therefor;
(h) Under Section 1223(1) of the Code, a Target Fund
shareholder's holding period for the Acquisition Shares
received pursuant to this Agreement will be determined by
including the period during which such shareholder held or
is treated for federal income tax purposes as having held
the Target Fund shares exchanged therefor, provided that
such shareholder held such Target Fund shares as capital
assets; and
(i) The Acquiring Fund will succeed to and take into account
the items of the Target Fund described in Section 381(c) of
the Code, subject to the conditions and limitations
specified in Sections 381, 382, 383 and 384 of the Code and
the Treasury regulations thereunder.
The opinion will be based on certain factual certifications made
by officers of the Target Fund and the Acquiring Fund, and will
also be based on customary assumptions. The opinion is not a
guarantee that the tax consequences of the reorganizations will
be as described above. There is no assurance that the Internal
Revenue Service or a court would agree with the opinion.
9.6 At any time prior to the Closing, any of the foregoing conditions
of this Agreement may be waived jointly by the board of trustees
of each of the Target Fund and the Acquiring Fund, if, in their
judgment, such waiver will not have a material adverse effect on
the interests of the shareholders of the Target Fund or the
Acquiring Fund.
10. BROKERAGE FEES AND EXPENSES.
10.1. The Target Fund and the Acquiring Fund each represents and
warrants to the other that there are no brokers or finders
entitled to receive any payments in connection with the
transactions provided for herein.
10.2. All fees paid to governmental authorities for the registration
or qualification of the Acquisition Shares and all transfer
agency costs related to the Acquisition Shares shall be
allocated to the Acquiring Fund. All fees and expenses related
to printing and mailing communications to Target Fund
shareholders shall be allocated to the Target Fund. All of the
other expenses of the transactions, including without
limitation, accounting, legal and custodial expenses,
contemplated by this Agreement shall be allocated pro rata based
on the pre-reorganization value of the assets of each of the
Target Fund and the Acquiring Fund. The expenses detailed above
shall be borne by the Fund to which they are allocated; except
that PCA shall bear such expenses to the extent such expenses
exceed the anticipated reduction in expenses borne by the Fund's
shareholders over the three (3) years following the
reorganization. In the event the Closing does not occur, PCA
shall bear all such expenses. Notwithstanding the foregoing,
costs and expenses will in any event be paid by the party
directly incurring them if and to the extent that the payment by
another party of such costs and expenses would result in
disqualification of such party as a "regulated investment
company" under Section 851 of the Code.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.
11.1. The Target Fund and the Acquiring Fund agree that neither
party has made any representation, warranty or covenant not set
forth herein and that this Agreement constitutes the entire
agreement between the parties.
11.2. The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or
in connection herewith shall not survive the consummation of the
transactions contemplated hereunder except paragraphs 2.1, 2.2,
2.3, 2.5, 6.4, 6.6, 10, 11, 14 and 15.
12. TERMINATION.
12.1. This Agreement may be terminated by the mutual agreement of
the Target Fund and the Acquiring Fund. In addition, either the
Target Fund or the Acquiring Fund may at its option terminate
this Agreement at or prior to the Closing Date because:
(a) of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be
performed by the other party at or prior to the Closing
Date;
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and
it reasonably appears that it will not or cannot be met; or
(c) any governmental authority of competent jurisdiction shall
have issued any judgment, injunction, order, ruling or
decree or taken any other action restraining, enjoining or
otherwise prohibiting this Agreement or the consummation of
any of the transactions contemplated herein and such
judgment, injunction, order, ruling, decree or other action
becomes final and non-appealable; provided that the party
seeking to terminate this Agreement pursuant to this
paragraph 12.1(c) shall have used its reasonable best
efforts to have such judgment, injunction, order, ruling,
decree or other action lifted, vacated or denied.
If any transaction contemplated by this Agreement has not been
substantially completed by the first anniversary of this
Agreement, this Agreement shall automatically terminate on that
date with respect to that transaction, unless a later date is
agreed to by both the Target Fund and the Acquiring Fund.
12.2. If for any reason any transaction contemplated by this
Agreement is not consummated, no party shall be liable to any
other party for any damages resulting therefrom, including
without limitation consequential damages.
13. AMENDMENTS.
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 Target Fund and the Acquiring Fund; provided, however,
that no amendment that under applicable law requires approval by
shareholders of the Target Fund or the Acquiring Fund, as applicable,
shall be effective without such approval having been obtained.
14. NOTICES.
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
prepaid telecopy, electronic mail or certified mail addressed to the
Target Fund or the Acquiring Fund, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Secretary.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; NON- RECOURSE.
15.1. 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.
15.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
15.3. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of
Delaware, without giving effect to any choice or conflicts of
law rule or provision that would result in the application of
the domestic substantive laws of any other jurisdiction.
15.4. This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but
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.
[THE REST OF THIS PAGE IS INTENTIONALLY BLANK.]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as set forth below.
PNC ADVANTAGE FUNDS
On behalf of PNC Advantage Institutional Government Money Market Fund
Attested by:
Name: By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
PNC FUNDS
On behalf of PNC Government Money Market Fund
Attested by:
Name: By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Solely for purposes of Paragraph 10.2 of the Agreement
PNC CAPITAL ADVISORS, LLC
Attested by:
Name: By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & CIO
EXHIBIT A
Share Class Mapping
Target Fund Share Class Acquiring Fund Share Class
Institutional Class Class I
Advisor Class Advisor Class
Class A*
* Class A shares of the Acquiring Fund will not participate in the
transactions contemplated by this Agreement.
