▇▇▇▇ ▇▇▇▇▇ Partners Strategic Bond Fund
77-M Merger
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION
(Agreement) is made as of this 28th day of
December, 2006, by and among ▇▇▇▇ ▇▇▇▇▇ Partners
Income Funds, a Massachusetts business trust (the
Acquiring Entity), with its principal place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, on behalf of its series ▇▇▇▇ ▇▇▇▇▇ Partners
Diversified Strategic Income Fund (the Acquiring
Fund), ▇▇▇▇ ▇▇▇▇▇ Partners Series Funds, Inc, a
Maryland corporation (the Acquired Entity), with
its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on behalf of its series
▇▇▇▇ ▇▇▇▇▇ Partners Strategic Bond Fund (the
Acquired Fund), and, solely for purposes of
paragraph 10.2 hereof, ▇▇▇▇ ▇▇▇▇▇ Partners Fund
Advisor, LLC.
WHEREAS, each of the Acquired Fund and the
Acquiring Fund is a series of an open-end management
investment company registered pursuant to the
Investment Company Act of 1940, as amended (the 1940
Act);
WHEREAS, it is intended that, for United States
federal income tax purposes (i) the transactions
contemplated by this Agreement shall qualify as a
reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the
Code) and (ii) this Agreement shall constitute a
plan of reorganization within the meaning of Treasury
Regulation Section 1.368-2(g);
WHEREAS, the reorganization will consist of
(1) the sale, assignment, conveyance, transfer and
delivery of all of the property and assets of the
Acquired Fund to the Acquiring Fund in exchange
solely for classes of shares of beneficial interest
of the Acquiring Fund (the Acquiring Fund Shares)
corresponding to the classes of outstanding shares of
common stock of the Acquired Fund (the Acquired Fund
Shares), as described herein, (2) the assumption by
the Acquiring Fund of all liabilities of the Acquired
Fund, and (3) the subsequent distribution of the
Acquiring Fund Shares and any of the remaining
properties and assets to the shareholders of the
Acquired Fund and the termination of the Acquired
Fund, as provided herein (the Reorganization), all
upon the terms and conditions hereinafter set forth
in this Agreement;
WHEREAS, the Acquired Fund currently owns
securities that are generally assets of the character
in which the Acquiring Fund is permitted to invest;
WHEREAS, the Board of Trustees of the Acquiring
Entity (the Acquiring Entity Board) has determined,
with respect to the Acquiring Fund, that the sale,
assignment, conveyance, transfer and delivery of all
of the property and assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all
liabilities of the Acquired Fund by the Acquiring
Fund is in the best interests of the Acquiring Fund
and its shareholders and that the interests of the
existing shareholders of the Acquiring Fund will not
be diluted as a result of this transaction;
WHEREAS, the Board of Directors of the Acquired
Entity (the Acquired Entity Board) has determined,
with respect to the Acquired Fund, that the sale,
assignment, conveyance, transfer and delivery of all
of the property and assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all
liabilities of the Acquired Fund by the Acquiring
Fund is in the best interests of the Acquired Fund
and its shareholders and that the interests of the
existing shareholders of the Acquired Fund will not
be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises
and of the covenants and agreements hereinafter set
forth, the parties hereto covenant and agree as
follows:
1.
TRANSFER OF THE ASSETS OF THE ACQUIRED FUND TO THE
ACQUIRING FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND
LIABILITIES, THE SUBSEQUENT DISTRIBUTION OF
ACQUIRING FUND SHARES AND THE TERMINATION OF THE
ACQUIRED FUND
1.1 Subject to requisite approvals and the other
terms and conditions herein set forth and on the
basis of the representations and warranties contained
herein, the Acquired Entity, on behalf of the
Acquired Fund, agrees to sell, assign, convey,
transfer and deliver all of its property and assets,
as set forth in paragraph 1.2, to the Acquiring Fund,
and the Acquiring Entity, on behalf of the Acquiring
Fund, agrees in exchange therefor: (a) to deliver to
the Acquired Fund the number of full and fractional
Acquiring Fund Shares corresponding to each class of
the Acquired Fund Shares as of the time and date set
forth in paragraph 3.1, determined by dividing the
value of the Acquired Funds net assets with respect
to each class of the Acquired Fund (computed in the
manner and as of the time and date set forth in
paragraph 2.1) by the net asset value of one share of
the corresponding class of Acquiring Fund Shares
(computed in the manner and as of the time and date
set forth in paragraph 2.2); and (b) to assume all
liabilities of the Acquired Fund. Such transactions
shall take place on a closing date as provided for in
paragraph 3.1 (the Closing Date). For purposes of
this Agreement, the Class A, Class B, Class C, Class
O and Class I shares of the Acquired Fund correspond
to the Class A, Class B, Class C, Class I and Class I
shares of the Acquiring Fund, respectively, and the
term Acquiring Fund Shares should be read to
include each such class of shares of the Acquiring
Fund.
1.2 The property and assets of the Acquired
Entity, attributable to the Acquired Fund, to be
sold, assigned, conveyed, transferred and delivered
to and acquired by the Acquiring Entity, on behalf of
the Acquiring Fund, shall consist of all assets and
property of every kind and nature of the Acquired
Fund, including, without limitation, all rights,
receivables (including dividend, interest and other
receivables), cash, cash equivalents, claims (whether
absolute or contingent, known or unknown),
securities, commodities and futures interests, good
will and other intangible property, any deferred or
prepaid expenses and all interests, rights,
privileges and powers, the Acquired Fund owns at the
Valuation Date (as defined in paragraph 2.1)
(collectively, Assets). The Acquiring Entity, on
behalf of the Acquiring Fund, shall assume all of the
liabilities and obligations of the Acquired Fund,
including, without limitation, all indemnification
obligations of the Acquired Fund with respect to the
current and former members of the Acquired Entity
Board and officers of the Acquired Entity, whether
accrued or contingent, known or unknown, existing at
the Valuation Date (collectively, Liabilities). The
Acquired Fund will sell, assign, convey, transfer and
deliver to the Acquiring Entity, on behalf of the
Acquiring Fund, any rights, stock dividends, or other
securities received by the Acquired Fund after the
Closing Date as stock dividends or other
distributions on or with respect to the property and
assets transferred, which rights, stock dividends,
and other securities shall be deemed included in the
property and assets transferred to the Acquiring
Entity, on behalf of the Acquiring Fund, at the
Closing Date and shall not be separately valued, in
which case any such distribution that remains unpaid
as of the Closing Date shall be included in the
determination of the value of the assets of the
Acquired Fund acquired by the Acquiring Entity on
behalf of the Acquiring Fund.
1.3 The Acquired Fund will make reasonable
efforts to discharge all of its known Liabilities
prior to the Valuation Date.
1.4 On or as soon as practicable prior to the
Closing Date, the Acquired Fund will declare and pay
to its shareholders of record one or more dividends
and/or other distributions so that it will have
distributed substantially all of its investment
company taxable income as defined in the Code
(computed without regard to any deduction for
dividends paid) and realized net capital gain as
defined in the Code (after deduction for any
available capital loss carryover), if any, for all
tax periods ending on or before the Closing Date (and
treating the current taxable year as ending on the
Closing Date) such that the Acquired Fund will have
no tax liability under Section 852 or Section 4982
for the current and any prior tax periods.
1.5 Immediately following the actions
contemplated by paragraph 1.1, the Acquired Entity
shall (a) distribute to the latters shareholders of
record with respect to each class of Acquired Fund
Shares as of the Closing Date (Acquired Fund
Shareholders), on a pro rata basis within that
class, the Acquiring Fund Shares of the corresponding
class received by the Acquired Entity, on behalf of
the Acquired Fund, pursuant to paragraph 1.1,
(b) thereafter, redeem or cancel, as the case may be,
shares of the Acquired Fund in accordance with
Maryland law and (c) terminate the Acquired Fund.
Such distribution shall be accomplished, with respect
to each class of Acquired Fund Shares, by the
transfer of the corresponding Acquiring Fund Shares
then credited to the account of the Acquired Fund on
the books of the Acquiring Fund to open accounts on
the share records of the Acquiring Fund in the names
of the Acquired Fund Shareholders. The aggregate net
asset value of each class of Acquiring Fund Shares to
be so credited to each corresponding class of
Acquired Fund Shareholders shall, with respect to
each class, be equal to the aggregate net asset value
of the Acquired Fund Shares of each corresponding
class owned by Acquired Fund Shareholders on the
Closing Date. The Acquiring Fund shall not issue
certificates representing any class of Acquiring Fund
Shares in connection with such exchange.
1.6 Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Funds transfer
agent.
1.7 Any reporting responsibility of the Acquired
Fund, including, but not limited to, the
responsibility for filing regulatory reports, tax
returns, or other documents with the Securities and
Exchange Commission (Commission), any state
securities commission, and any federal, state or
local tax authorities or any other relevant
regulatory authority, is and shall remain the
responsibility of the Acquired Entity, on behalf of
the Acquired Fund. The Acquiring Entity shall fully
cooperate to the extent necessary or desirable for
these responsibilities to be discharged.
2. VALUATION
2.1 The value of the Assets and the amount of the
Liabilities shall be determined as of the time for
calculation of net asset value as set forth in the
then-current prospectus for the Acquired Fund, and
after the declaration of any dividends by the
Acquired Fund, on the Closing Date (such time and
date being hereinafter called the Valuation Date),
computed using the valuation procedures established
by the Acquired Entity Board. All computations of
value and amounts shall be made by (a) State Street
Bank and Trust Company, in its capacity as accounting
agent for the Acquired Fund, or (b) in the case of
securities subject to fair valuation, in accordance
with the valuation procedures of the Acquired Entity
adopted in good faith by the Acquired Entity Board.
All computations of value and amounts pursuant to
this paragraph 2.1 shall be subject to confirmation
by the Acquiring Funds independent registered public
accounting firm.
2.2. The net asset value per share of each class
of Acquiring Fund Shares shall be determined to the
nearest full cent on the Valuation Date, using the
valuation procedures established by the Acquiring
Entity Board. All computations of value shall be made
by (a) State Street Bank and Trust Company, in its
capacity as accounting agent for the Acquiring Fund,
or (b) in the case of securities subject to fair
valuation, in accordance with the valuation
procedures of the Acquiring Entity adopted in good
faith by the Acquiring Entity Board. All computations
of value pursuant to this paragraph 2.2 shall be
subject to confirmation by the Acquired Funds
independent registered public accounting firm.
2.3 The number of Acquiring Fund Shares of each
class to be issued in exchange for the Assets shall
be determined with respect to each such class by
dividing the value of the net assets with respect to
each class of Acquired Fund Shares, determined using
the same valuation procedures referred to in
paragraph 2.1, by the net asset value of an Acquiring
Fund Share of the corresponding class, determined
using the same valuation procedures referred to in
paragraph 2.2.
3. CLOSING AND CLOSING DATE
3.1 Subject to the terms and conditions set forth
herein, the Closing Date shall be March 2, 2007, or
such other date as the parties may agree. All acts
taking place at the closing of the transactions
provided for in this Agreement (Closing) shall be
deemed to take place simultaneously as of the close
of business on the Closing Date unless otherwise
agreed to by the parties. The close of business on
the Closing Date shall be as of 4:00 p.m., Eastern
Time or such later time on that date as the Acquired
Funds net asset value and/or the net asset value per
share of each class of shares of the Acquiring Fund
is calculated in accordance with paragraph 2.2 and
after the declaration of any dividends. The Closing
shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP or at such other time and/or place as
the parties may agree.
3.2 The Acquired Entity shall direct State Street
Bank and Trust Company (the Custodian) to transfer
ownership of the Assets from the accounts of the
Acquired Fund that the Custodian maintains as
custodian for the Acquired Fund to the accounts of
the Acquiring Fund that the Custodian maintains as
custodian for the Acquiring Fund and to deliver to
the Acquiring Entity, at the Closing, a certificate
of an authorized officer stating that (i) the Assets
of the Acquired Fund have been so transferred as of
the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets of the
Acquired Fund, including all applicable federal and
state stock transfer stamps, if any, have been paid
or provision for payment has been made.
3.3 The Acquired Entity shall direct PFPC Inc.,
in its capacity as transfer agent for the Acquired
Fund (Transfer Agent), to deliver to the Acquiring
Entity at the Closing a certificate of an authorized
officer stating that its records contain the name and
address of each Acquired Fund Shareholder and the
number and percentage ownership of each outstanding
class of Acquired Fund Shares owned by each such
shareholder immediately prior to the Closing. The
Acquiring Fund shall deliver to the Secretary of the
Acquired Fund a confirmation evidencing that (a) the
appropriate number of Acquiring Fund Shares have been
credited to the Acquired Funds account on the books
of the Acquiring Fund pursuant to paragraph 1.1 prior
to the actions contemplated by paragraph 1.4 and
(b) the appropriate number of Acquiring Fund Shares
have been credited to the accounts of the Acquired
Fund Shareholders on the books of the Acquiring Fund
pursuant to paragraph 1.4. At the Closing, each party
shall deliver to the other party such bills of sale,
checks, assignments, share certificates, if any,
receipts or other documents as the other party or its
counsel may reasonably request.
3.4 In the event that on the Valuation Date
(a) the New York Stock Exchange or another primary
trading market for portfolio securities of the
Acquiring Fund or the Acquired Fund (each, an
Exchange) shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the
reporting of trading on such Exchange or elsewhere
shall be disrupted so that accurate appraisal of the
value of the net assets of the Acquired Fund or the
Acquiring Fund is impracticable (in the judgment of
the Acquiring Entity Board with respect to the
Acquiring Fund and the Acquired Entity Board with
respect to the Acquired Fund), the Closing Date shall
be postponed until the first Friday (that is also a
business day) after the day when trading shall have
been fully resumed and reporting shall have been
restored.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as has been fully disclosed to the
Acquiring Entity in Schedule 4.1 of this Agreement,
the Acquired Entity, on behalf of the Acquired Fund,
represents and warrants to the Acquiring Entity and
the Acquiring Fund as follows:
(a) The Acquired Fund is duly established as
a series of the Acquired Entity, which is a
corporation duly organized, validly existing and
in good standing under the laws of the State of
Maryland, with power under its Articles of
Incorporation, as amended and/or supplemented
(the Acquired Entity Charter), to own all of
its assets and to carry on its business as it is
being conducted as of the date hereof. The
Acquired Entity is duly qualified to do business
as a foreign corporation in each jurisdiction in
which the conduct of its business makes such
qualification necessary except where the failure
to so qualify would not have a material adverse
effect on the condition (financial or otherwise),
business, properties, net assets or results of
operations of the Acquired Entity. The Acquired
Entity has all necessary federal, state and local
authorization to carry on its business as now
being conducted and to fulfill the terms of this
Agreement, except as set forth in paragraph
4.1(c).
(b) The Acquired Entity is a registered open-
end management investment company, and its
registration with the Commission as an investment
company under the 1940 Act, and the registration
of each class of Acquired Fund Shares under the
Securities Act of 1933, as amended (1933 Act),
is in full force and effect.
(c) No consent, approval, authorization, or
order of any court or governmental authority is
required for the consummation by the Acquired
Fund of the transactions contemplated herein,
except such as may be required under the 1933
Act, the Securities Exchange Act of 1934 (1934
Act), the ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ securities laws and
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(d) The current prospectus and statement of
additional information of the Acquired Fund (true
and correct copies of which have been delivered
to the Acquiring Entity) and each prospectus and
statement of additional information of the
Acquired Fund used during the three (3) years
prior to the date of this Agreement conforms or
conformed at the time of its use in all material
respects to the applicable requirements of the
1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and does
not or did not at the time of its use 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 materially misleading.
(e) On the Closing Date, the Acquired Entity,
on behalf of the Acquired Fund, will have good
and marketable title to the Assets and full
right, power and authority to sell, assign,
convey, transfer and deliver such Assets
hereunder free of any liens or other
encumbrances, and upon delivery and payment for
the Assets, the Acquiring Entity, on behalf of
the Acquiring Fund, will acquire good and
marketable title thereto, subject to no
restrictions on the full transfer thereof,
excluding such restrictions as might arise under
the 1933 Act.
(f) The Acquired Fund is not engaged
currently, and the execution, delivery and
performance of this Agreement by the Acquired
Entity, on behalf of the Acquired Fund, will not
result, in a material violation of Maryland law
or of the Acquired Entity Charter or the by-laws
of the Acquired Entity, or of any agreement,
indenture, instrument, contract, lease or other
undertaking to which the Acquired Entity, on
behalf of the Acquired Fund, is a party or by
which it is bound, and the execution, delivery
and performance of this Agreement by the Acquired
Entity, on behalf of the Acquired Fund, will not
result in the acceleration of any material
obligation, or the imposition of any material
penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree
to which the Acquired Entity, on behalf of the
Acquired Fund, is a party or by which it is
bound.
(g) All material contracts or other
commitments of the Acquired Fund (other than this
Agreement, certain investment contracts,
including options, futures, swaps and forward
contracts, the indemnification agreements of the
current and former members of the Acquired Entity
Board, and those contracts listed in Schedule
4.1) will terminate without liability to the
Acquired Fund on or prior to the Closing Date.
Each contract listed in Schedule 4.1 is a valid,
binding and enforceable obligation of the
Acquired Fund and, to the Acquired Funds
knowledge, the other parties thereto (assuming
due authorization, execution and delivery by the
other parties thereto) and the assignment by the
Acquired Fund to the Acquiring Fund of each such
contract will not result in the termination of
such contract, any breach or default thereunder
by the Acquired Fund or the imposition of any
penalty thereunder.
(h) No litigation or administrative
proceeding or investigation of or before any
court or governmental body is presently pending
or, to the Acquired Entitys knowledge,
threatened against the Acquired Entity, with
respect to the Acquired Fund or any of its
properties or assets, that, if adversely
determined, would materially and adversely affect
its financial condition or the conduct of the
Acquired Funds business. The Acquired Entity, on
behalf of the Acquired Fund, is not a party to or
subject to the provisions of any order, decree or
judgment of any court or governmental body which
materially and adversely affects the Acquired
Funds business or the Acquired Entitys ability
to consummate the transactions herein
contemplated on behalf of the Acquired Fund.
(i) The Statement of Assets and Liabilities,
Statements of Operations and Changes in Net
Assets and Schedule of Investments of the
Acquired Fund as at the last day of and for the
most recently completed fiscal year of the
Acquired Fund prior to the date of this
Agreement, have been audited by KPMG LLP, an
independent registered public accounting firm,
and are in accordance with accounting principles
generally accepted in the United States of
America (GAAP) consistently applied, and such
statements (true and correct copies of which have
been furnished to the Acquiring Entity) present
fairly, in all material respects, the financial
condition of the Acquired Fund as of such date
and for such period in accordance with GAAP, and
there are no known contingent, accrued or other
liabilities of the Acquired Fund required to be
reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date
that are not disclosed therein.
(j) Since the last day of the most recently
completed fiscal year of the Acquired Fund prior
to the date of this Agreement, there has not been
any material adverse change in the Acquired
Funds financial condition, assets, liabilities
or business, other than changes occurring in the
ordinary course of business, or any incurrence by
the Acquired Fund of indebtedness for money
borrowed maturing more than one year from the
date such indebtedness was incurred. For the
purposes of this subparagraph (j), a decline in
net asset value per share of Acquired Fund Shares
due to declines in market values of securities
held by the Acquired Fund, the discharge of
Acquired Fund liabilities, or the redemption of
Acquired Fund Shares by shareholders of the
Acquired Fund shall not constitute a material
adverse change.
(k) On the Closing Date, all federal and
other tax returns, dividend reporting forms and
other tax-related reports of the Acquired Fund
required by law to have been filed by such date
(including any extensions) shall have been filed
and are or will be correct in all material
respects, and all federal and other taxes shown
as due or required to be shown as due on said
returns and reports shall have been paid or
provision shall have been made for the payment
thereof and, to the best of the Acquired Entitys
knowledge, no such return is currently under
audit and no assessment has been asserted with
respect to such returns.
(l) For each taxable year of its operation
(including the current taxable year, assuming
such year ends on the Closing Date), the Acquired
Fund has met (or will meet) the requirements of
Subchapter M of Chapter 1 of the Code for
qualification and treatment as a regulated
investment company, has elected to be treated as
such, and has been (or will be) eligible to
compute and has computed (or will compute) its
federal income tax under Section 852 of the Code,
and on or before the Closing Date, will have
distributed or will have declared dividends
intended to be sufficient to distribute
substantially all of (i) the excess of (x) its
investment income excludible from gross income
under Section 103 of the Code over (y) its
deductions disallowed under Sections 265 and 171
of the Code (net tax-exempt income), (ii) its
investment company taxable income (as defined in
the Code) (computed without regard to any
deduction for dividends paid) and (iii) any net
capital gain (after reduction for any allowable
capital loss carryover) (as defined in the Code)
that has accrued or been recognized,
respectively, through the Closing Date such that
for all tax periods ending on or before the
Closing Date (and treating the current tax year
as ending on the Closing Date) the Acquired Fund
will not have any tax liability under Section 852
or Section 4982.
(m) All issued and outstanding Acquired Fund
Shares are, and on the Closing Date will be, duly
authorized and validly and legally issued and
outstanding, fully paid and non-assessable by the
Acquired Entity and have been offered and sold in
any state, territory or the District of Columbia
in compliance in all material respects with
applicable registration requirements of all
applicable federal and state securities laws. All
of the issued and outstanding Acquired Fund
Shares will, at the time of Closing, be held by
the persons and in the amounts set forth in the
records of the Transfer Agent, on behalf of the
Acquired Fund, as provided in paragraph 3.3. The
Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe
for or purchase any of the Acquired Fund Shares,
nor is there outstanding any security convertible
into any of the Acquired Fund Shares.
(n) The Acquired Fund will review its assets
to ensure that at any time after its shareholders
have approved this Agreement and prior to the
Closing Date its assets do not include any assets
that the Acquiring Fund is not permitted, or
reasonably believes to be unsuitable for it, to
acquire, including without limitation any
security that, prior to its acquisition by the
Acquired Fund, is unsuitable for the Acquiring
Fund to acquire.
(o) The execution, delivery and performance
of this Agreement, and the transactions
contemplated herein, have been duly authorized by
all necessary action on the part of the Acquired
Entity Board, on behalf of the Acquired Fund, and
this Agreement constitutes a valid and binding
obligation of the Acquired Entity, on behalf of
the Acquired Fund, enforceable in accordance with
its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or
affecting creditors rights and to general equity
principles.
(p) The combined proxy statement and
prospectus (Proxy Statement) to be included in
the Registration Statement (as defined in
paragraph 5.6), insofar as it relates to the
Acquired Fund, from the effective date of the
Registration Statement through the date of the
meeting of shareholders of the Acquired Fund
contemplated therein and on the Closing Date,
will (i) not contain any statement which, at the
time and in light of the circumstances under
which it is made, is false or misleading with
respect to any material fact, or which omits to
state any material fact necessary in order to
make the statements therein not false or
misleading (provided that this representation and
warranty shall not apply to statements in or
omissions from the Proxy Statement made in
reliance upon and in conformity with information
that was furnished by the Acquiring Entity for
use therein) and (ii) comply in all material
respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and the rules and
regulations thereunder. The information to be
furnished by the Acquired Fund for use in
registration statements and other documents filed
or to be filed with any federal, state or local
regulatory authority, which may be necessary in
connection with the transactions contemplated
hereby, shall be accurate and complete in all
material respects and shall comply in all
material respects with federal securities and
other laws and regulations thereunder applicable
thereto.
4.2 Except as has been fully disclosed to the
Acquired Entity in Schedule 4.2 to this Agreement,
the Acquiring Entity, on behalf of the Acquiring
Fund, represents and warrants to the Acquired Entity
and the Acquired Fund as follows:
(a) The Acquiring Fund is duly established as
a series of the Acquiring Entity, which is a
business trust duly organized, validly existing
and in good standing under the laws of the
Commonwealth of Massachusetts, with the power
under its Declaration of Trust, as amended and/or
supplemented (the Acquiring Entity
Declaration), to own all of its assets and to
carry on its business as it is being conducted as
of the date hereof. The Acquiring Entity is duly
qualified to do business as a foreign trust in
each jurisdiction in which the conduct of its
business makes such qualification necessary
except where the failure to so qualify would not
have a material adverse effect on the condition
(financial or otherwise), business, properties,
net assets or results of operations of the
Acquiring Entity. The Acquiring Entity has all
necessary federal, state and local authorization
to carry on its business as now being conducted
and to fulfill the terms of this Agreement except
as described in paragraph 4.2(c).
(b) The Acquiring Entity is a registered
open-end management investment company, and its
registration with the Commission as an investment
company under the 1940 Act, and the registration
of each class of Acquiring Fund Shares under the
1933 Act, is in full force and effect or will be
in full force and effect as of the Closing Date.
(c) No consent, approval, authorization, or
order of any court or governmental authority is
required for the consummation by the Acquiring
Fund of the transactions contemplated herein,
except such as may be required under the 1933
Act, the 1934 Act, the 1940 Act, state securities
laws and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(d) The current prospectus and statement of
additional information of the Acquiring Fund
(true and correct copies of which have been
delivered to the Acquired Entity) and each
prospectus and statement of additional
information of the Acquiring Fund used during the
three (3) years prior to the date of this
Agreement conforms or conformed at the time of
its use in all material respects to the
applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the
Commission thereunder and does not or did not at
the time of its use 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
materially misleading.
(e) The Acquiring Fund is not engaged
currently, and the execution, delivery and
performance of this Agreement by the Acquiring
Entity, on behalf of the Acquiring Fund, will not
result, in a material violation of Massachusetts
law or of the Acquiring Entity Declaration or the
by-laws of the Acquiring Entity, or of any
agreement, indenture, instrument, contract, lease
or other undertaking to which the Acquiring
Entity, on behalf of the Acquiring Fund, is a
party or by which it is bound, and the execution,
delivery and performance of this Agreement by the
Acquiring Entity, on behalf of the Acquiring
Fund, will not result in the acceleration of any
material obligation, or the imposition of any
material penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree
to which the Acquiring Entity, on behalf of the
Acquiring Fund, is a party or by which it is
bound.
(f) No litigation or administrative
proceeding or investigation of or before any
court or governmental body is presently pending
or, to the Acquiring Entitys knowledge,
threatened against the Acquiring Entity, with
respect to the Acquiring Fund, or any of its
properties or assets, that, if adversely
determined, would materially and adversely affect
its financial condition or the conduct of such
Acquiring Funds business. The Acquiring Entity,
on behalf of 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 which materially and adversely affects the
Acquiring Funds business or the Acquiring
Entitys ability to consummate the transactions
herein contemplated on behalf of the Acquiring
Fund.
(g) The Statement of Assets and Liabilities,
Statements of Operations and Changes in Net
Assets and Schedule of Investments of the
Acquiring Fund as at the last day of and for the
most recently completed fiscal year of the
Acquiring Fund prior to the date of this
Agreement, have been audited by KPMG LLP, an
independent registered public accounting firm,
and are in accordance with GAAP consistently
applied, and such statements (true and correct
copies of which have been furnished to the
Acquired Entity) present fairly, in all material
respects, the financial condition of the
Acquiring Fund as of such date and for such
period in accordance with GAAP, and there are no
known contingent, accrued or other liabilities of
the Acquiring Fund required to be reflected on a
balance sheet (including the notes thereto) in
accordance with GAAP as of such date that are not
disclosed therein.
(h) Since the last day of the most recently
completed fiscal year of the Acquiring Fund prior
to the date of this Agreement, there has not been
any material adverse change in the Acquiring
Funds 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 for money
borrowed maturing more than one year from the
date such indebtedness was incurred. For the
purposes of this subparagraph (h), a decline in
net asset value per share of Acquiring Fund
Shares due to declines in market values of
securities held by the Acquiring Fund, the
discharge of Acquiring Fund liabilities, or the
redemption of Acquiring Fund Shares by
shareholders of the Acquiring Fund shall not
constitute a material adverse change.
(i) On the Closing Date, all federal and
other tax returns, dividend reporting forms and
other tax-related reports of the Acquiring Fund
required by law to have been filed by such date
(including any extensions) shall have been filed
and are or will be correct in all material
respects, and all federal and other taxes shown
as due or required to be shown as due on said
returns and reports shall have been paid or
provision shall have been made for the payment
thereof and, to the best of the Acquiring
Entitys knowledge, no such return is currently
under audit and no assessment has been asserted
with respect to such returns.
(j) For each taxable year of its operation
(including the taxable year that includes the
Closing Date), the Acquiring Fund has met (or
will meet) the requirements of Subchapter M of
Chapter 1 of the Code for qualification and
treatment as a regulated investment company,
has elected to be treated as such, and has been
(or will be) eligible to compute and has computed
(or will compute) its federal income tax under
Section 852 of the Code, and will have
distributed (or will distribute pursuant to the
provisions of Section 855 of the Code)
substantially all of (i) its net tax-exempt
income, (ii) its investment company taxable
income (computed without regard to any deduction
for dividends paid) (as defined in the Code) and
(iii) any net capital gain (after reduction for
any capital loss carryover) (as defined in the
Code) for taxable years ending prior to the
Closing Date such that for all those years the
Acquiring Fund will have no tax liability under
Section 852 or Section 4982.
(k) All issued and outstanding Acquiring Fund
Shares are, and on the Closing Date will be, duly
authorized and validly and legally issued and
outstanding, fully paid and non-assessable by the
Acquiring Entity and will have been offered and
sold in any state, territory or the District of
Columbia in compliance in all material respects
with applicable registration requirements of all
applicable federal and state securities laws. The
Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe
for or purchase any Acquiring Fund Shares, nor is
there outstanding any security convertible into
any Acquiring Fund Shares. All of the Acquiring
Fund Shares to be issued and delivered to the
Acquired Entity, for the account of the Acquired
Fund Shareholders, pursuant to this Agreement,
will on the Closing Date have been duly
authorized and, when so issued and delivered,
will be duly and validly and legally issued
Acquiring Fund Shares and be fully paid and non-
assessable by the Acquiring Entity.
(l) The execution, delivery and performance
of this Agreement, and the transactions
contemplated herein, have been duly authorized by
all necessary action on the part of the Acquiring
Entity Board, on behalf of the Acquiring Fund,
and this Agreement constitutes a valid and
binding obligation of the Acquiring Entity, on
behalf of the Acquiring Fund, enforceable in
accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws
relating to or affecting creditors rights and to
general equity principles.
(m) The Proxy Statement to be included in the
Registration Statement, insofar as it relates to
the Acquiring Fund and the Acquiring Fund Shares,
from the effective date of the Registration
Statement through the date of the meeting of
shareholders of the Acquired Fund contemplated
therein and on the Closing Date, will (i) not
contain any statement which, at the time and in
the light of the circumstances under which it is
made, is false or misleading with respect to any
material fact, or which omits to state any
material fact necessary to make the statements
therein not false or misleading (provided that
this representation and warranty shall not apply
to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity
with information that was furnished by the
Acquired Entity for use therein) and (ii) comply
in all material respects with the provisions of
the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations thereunder. The
information to be furnished by the Acquiring Fund
for use in registration statements and other
documents filed or to be filed with any federal,
state or local regulatory authority, which may be
necessary in connection with the transactions
contemplated hereby, shall be accurate and
complete in all material respects and shall
comply in all material respects with federal
securities and other laws and regulations
applicable thereto.
5. COVENANTS
The Acquired Entity, on behalf of the Acquired
Fund, and the Acquiring Entity, on behalf of the
Acquiring Fund, respectively, hereby further covenant
as follows:
5.1 The Acquired Fund and the Acquiring Fund each
will operate its business in the ordinary course and
shall comply in all material respects with all
applicable laws, rules and regulations between the
date hereof and the Closing Date, it being understood
that such ordinary course of business will include
the declaration and payment of customary dividends
and other distributions, and any other distribution
that may be advisable.
5.2 The Acquired Entity will call and hold a
meeting of the shareholders of the Acquired Fund to
consider and act upon this Agreement and to take all
other action necessary to obtain approval of the
transactions contemplated herein.
5.3 The Acquiring Fund Shares to be acquired by
the Acquired Fund hereunder are not being acquired
for the purpose of making any distribution thereof,
other than in accordance with the terms of this
Agreement.
5.4 The Acquired Entity, on behalf of the
Acquired Fund, will assist the Acquiring Entity in
obtaining such information as the Acquiring Entity
reasonably requests concerning the beneficial
ownership of the Acquired Fund Shares.
5.5 Subject to the provisions of this Agreement,
the Acquiring Entity, on behalf of the Acquiring
Fund, and the Acquired Entity, on behalf of the
Acquired Fund, each will take, or cause to be taken,
all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to
consummate and make effective the transactions
contemplated by this Agreement.
5.6 The Acquiring Entity, on behalf of the
Acquiring Fund, shall prepare and file a Registration
Statement on Form N-14 in compliance with the 1933
Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder with respect to the
Reorganization (the Registration Statement). The
Acquired Entity, on behalf of the Acquired Fund, will
provide to the Acquiring Entity such information
regarding the Acquired Fund as may be reasonably
necessary for the preparation of the Registration
Statement.
5.7 The Acquiring Entity, on behalf of the
Acquiring Fund, and the Acquired Entity, on behalf of
the Acquired Fund, each will use its reasonable best
efforts to fulfill or obtain the fulfillment of the
conditions precedent to effect the transactions
contemplated by this Agreement as promptly as
practicable.
5.8 The Acquired Entity, on behalf of the
Acquired Fund, will, from time to time, as and when
reasonably requested by the Acquiring Entity, execute
and deliver or cause to be executed and delivered all
such assignments and other instruments and will take
or cause to be taken such further action as the
Acquiring Entity, on behalf of the Acquiring Fund,
may reasonably deem necessary or desirable in order
to vest in and confirm (a) the Acquired Entitys
title to and possession of the Acquiring Fund Shares
to be delivered hereunder and (b) the Acquiring
Entitys title to and possession of all the Assets
and to otherwise to carry out the intent and purpose
of this Agreement.
5.9 The Acquiring Entity, on behalf of 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 blue
sky or securities laws as may be necessary in order
to continue its operations after the Closing Date.
5.10 The Acquiring Entity shall not change the
Acquiring Entity Declaration, prospectus or statement
of additional information so as to restrict permitted
investments for the Acquiring Fund, except as
required by the Commission prior to the Closing.
5.11 Prior to the Valuation Date, the Acquired
Entity Board shall adopt the valuation procedures of
the Acquiring Entity with respect to the Acquired
Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED
ENTITY
The obligations of the Acquired Entity, on behalf
of the Acquired Fund, to consummate the transactions
provided for herein shall be subject, at the Acquired
Entitys election, to the following conditions:
6.1 All representations and warranties of the
Acquiring Entity, on behalf of the Acquiring Fund,
contained in this Agreement shall be true and correct
in all material respects as of the date hereof and,
except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing
Date, with the same force and effect as if made on
and as of the Closing Date.
6.2 The Acquiring Entity, on behalf of the
Acquiring Fund, shall have performed all of the
covenants and complied with all of the provisions
required by this Agreement to be performed or
complied with by the Acquiring Entity, on behalf of
the Acquiring Fund, on or before the Closing Date.
6.3 The Acquiring Entity, on behalf of the
Acquiring Fund, shall have executed and delivered an
assumption of the Liabilities and all such other
agreements and instruments as the Acquired Entity may
reasonably deem necessary or desirable in order to
vest in and confirm (a) the Acquired Funds title to
and possession of the Acquiring Fund Shares to be
delivered hereunder and (b) the Acquiring Entitys
assumption of all of the Liabilities and to otherwise
to carry out the intent and purpose of this
Agreement.
6.4 The Acquiring Entity, on behalf of the
Acquiring Fund, shall have delivered to the Acquired
Fund a certificate executed in the name of the
Acquiring Entity on behalf of the Acquiring Fund, by
the Acquiring Entitys President or Vice President
and its Treasurer or Assistant Treasurer, in a form
reasonably satisfactory to the Acquired Entity and
dated as of the Closing Date, as to the matters set
forth in paragraphs 6.1 and 6.2 and as to such other
matters as the Acquired Entity shall reasonably
request.
6.5 The Acquiring Entity, on behalf of the
Acquiring Fund, and the Acquired Entity, on behalf of
the Acquired Fund, shall have agreed on the number of
full and fractional Acquiring Fund Shares to be
issued in connection with the Reorganization after
such number has been calculated in accordance with
paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING
ENTITY
The obligations of the Acquiring Entity, on
behalf of the Acquiring Fund, to consummate the
transactions provided for herein shall be subject, at
the Acquiring Entitys election, to the following
conditions:
7.1 All representations and warranties of the
Acquired Entity, on behalf of the Acquired Fund,
contained in this Agreement shall be true and correct
in all material respects as of the date hereof and,
except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing
Date, with the same force and effect as if made on
and as of the Closing Date.
7.2 The Acquired Entity, on behalf of the
Acquired Fund, shall have performed all of the
covenants and complied with all of the provisions
required by this Agreement to be performed or
complied with by the Acquired Entity, on behalf of
the Acquired Fund, on or before the Closing Date.
7.3 The Acquired Entity shall have delivered to
the Acquiring Entity, on behalf of the Acquiring
Fund, a Statement of Assets and Liabilities of the
Acquired Fund as of the Closing Date, including a
schedule of investments, certified by the Treasurer
of the Acquired Entity on behalf of the Acquired
Fund. The Acquired Entity, on behalf of the Acquired
Fund, shall have executed and delivered all such
assignments and other instruments of transfer as the
Acquiring Entity may reasonably deem necessary or
desirable in order to vest in and confirm (a) the
Acquired Funds title to and possession of the
Acquiring Fund Shares to be delivered hereunder and
(b) the Acquiring Funds title to and possession of
all the Assets and to otherwise to carry out the
intent and purpose of this Agreement.
7.4 The Acquired Entity, on behalf of the
Acquired Fund, shall have delivered to the Acquiring
Entity a certificate executed in the name of the
Acquired Entity, on behalf of the Acquired Fund, by
the Acquired Entitys President or Vice President and
its Treasurer or Assistant Treasurer, in a form
reasonably satisfactory to the Acquiring Entity and
dated as of the Closing Date, as to the matters set
forth in paragraphs 7.1 and 7.2 and as to such other
matters as the Acquiring Entity shall reasonably
request.
7.5 The Acquired Entity, on behalf of the
Acquired Fund, and the Acquiring Entity, on behalf of
the Acquiring Fund, shall have agreed on the number
of full and fractional Acquiring Fund Shares to be
issued in connection with the Reorganization after
such number has been calculated in accordance with
paragraph 1.1.
8.
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUIRING ENTITY AND ACQUIRED ENTITY
If any of the conditions set forth below have not
been satisfied on or before the Closing Date with
respect to the Acquired Entity, on behalf of the
Acquired Fund, or the Acquiring Entity, on behalf of
the Acquiring Fund, the other party to this Agreement
shall be entitled on behalf of the Acquired Fund or
Acquiring Fund, as applicable, at its option, to
refuse to consummate the transactions contemplated by
this Agreement:
8.1 This Agreement and the transactions
contemplated herein shall have been approved by the
requisite vote of the holders of the outstanding
shares of the Acquired Fund, in accordance with the
provisions of the Acquired Entity Charter, the by-
laws of the Acquired Entity, and Maryland law, and
certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring
Entity. Notwithstanding anything herein to the
contrary, neither the Acquiring Entity nor the
Acquired Entity may waive the condition set forth in
this paragraph 8.1.
8.2 On the Closing Date, no court or governmental
agency of competent jurisdiction shall have issued
any order that remains in effect and that restrains
or enjoins the Acquired Entity, with respect to the
Acquired Fund, or the Acquiring Entity, with respect
to the Acquiring Fund, from completing the
transactions contemplated by this Agreement.
8.3 All consents of other parties and all other
consents, orders and permits of federal, state and
local regulatory authorities deemed necessary by the
Acquiring Entity or the Acquired Entity to permit
consummation, in all material respects, of the
transactions contemplated hereby shall have been
obtained, except where failure to obtain any such
consent, order or permit would not involve a risk of
a material adverse effect on the assets or properties
of the Acquiring Fund or the Acquired Fund, provided
that either party hereto may for itself waive any of
such conditions.
8.4 The Registration Statement shall have become
effective under the 1933 Act and no stop orders
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.
8.5 The parties shall have received the opinion
of Dechert LLP, dated the Closing Date, substantially
to the effect that, based upon certain facts,
assumptions and representations made by the Acquired
Entity, on behalf of the Acquired Fund, the Acquiring
Entity, on behalf of the Acquiring Fund, and their
respective authorized officers, (i) the transactions
contemplated by this Agreement will constitute a
reorganization within the meaning of Section 368(a)
of the Code; (ii) no gain or loss will be recognized
by the Acquiring Fund upon receipt of the Assets in
exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Acquired Fund
Liabilities; (iii) the basis in the hands of the
Acquiring Fund in the Assets will be the same as the
basis of the Acquired Fund in the Assets immediately
prior to the transfer thereof; (iv) the holding
periods of the Assets in the hands of the Acquiring
Fund will include the periods during which the Assets
were held by the Acquired Fund (except where
investment activities of the Acquiring Fund have the
effect of reducing or eliminating the holding period
with respect to an asset); (v) no gain or loss will
be recognized by the Acquired Fund upon the transfer
of the Assets to the Acquiring Fund in exchange for
the Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Acquired Fund Liabilities, or
upon the distribution of the Acquiring Fund Shares by
the Acquired Fund to its shareholders except for gain
or loss that may be recognized with respect to
contracts subject to Section 1256 of the Code and/or
stock in a passive foreign investment company as
defined in Section 1297(a) of the Code; (vi) no gain
or loss will be recognized by the Acquired Fund
shareholders upon the exchange of their Acquired Fund
Shares for the Acquiring Fund Shares; (vii) the
aggregate basis of the Acquiring Fund Shares that
each Acquired Fund shareholder receives in connection
with the transaction will be the same as the
aggregate basis of his or her Acquired Fund Shares
exchanged therefor; and (viii) an Acquired Fund
shareholders holding period for his or her Acquiring
Fund Shares will be determined by including the
period for which he or she held the Acquired Fund
Shares exchanged therefor, provided that he or she
held the Acquired Fund Shares as capital assets. The
delivery of such opinion is conditioned upon the
receipt by Dechert LLP of representations it shall
request of the Acquiring Entity and the Acquired
Entity. Notwithstanding anything herein to the
contrary, neither the Acquiring Entity nor the
Acquired Entity may waive the condition set forth in
this paragraph 8.5.
8.6 The Acquiring Entity, on behalf of the
Acquiring Fund, shall have received on the Closing
Date an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, in
a form reasonably satisfactory to the Acquiring
Entity, and dated as of the Closing Date,
substantially to the effect that, based upon certain
facts and certifications made by the Acquired Entity,
on behalf of the Acquired Fund, and its authorized
officers: (a) the Acquired Entity is a corporation
existing under the laws of the State of Maryland;
(b) the Acquired Entity, with respect to the Acquired
Fund, has the corporate power to carry on its
business as an open-end investment company registered
under the 1940 Act; (c) this Agreement has been duly
authorized, executed and, so far as known to such
counsel, delivered by the Acquired Entity, on behalf
of the Acquired Fund, and assuming due authorization,
execution and delivery of this Agreement by the
Acquiring Entity, on behalf of the Acquiring Fund,
constitutes a valid and legally binding obligation of
the Acquired Entity, on behalf of the Acquired Fund,
enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and laws of
general applicability relating to or affecting
creditors rights and to general equity principles
(whether in a proceeding under equity or at law);
provided that such counsel shall be entitled to state
that it expresses no opinion with respect to the
validity, binding effect or enforceability of any
contractual provisions purporting to provide
indemnification of any person for any claims,
damages, liabilities or expenses which may be limited
by any applicable federal or state securities laws or
as a matter of public policy; (d) the execution and
delivery of this Agreement did not, and the transfer
of the Assets for Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Liabilities
pursuant to this Agreement will not, violate the
Acquired Entity Charter or the by-laws of the
Acquired Entity or any contracts or other documents
known to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP which can
affect the rights or obligations of the Acquired
Entity; (e) to the knowledge of such counsel, all
regulatory or court consents, authorizations,
approvals, orders or filings required to be obtained
or made by the Acquired Entity, on behalf of the
Acquired Fund, under the federal laws of the United
States or the laws of the State of Maryland for the
transfer of the Assets for Acquiring Fund Shares and
the assumption by the Acquiring Fund of the
Liabilities pursuant to this Agreement have been
obtained or made, except such as may be required
under state securities or blue sky laws as to which
such counsel need express no opinion; and (f) to the
knowledge of such counsel, and without any
independent investigation, other than as disclosed on
the schedule provided by the Acquired Entity pursuant
to paragraph 4.1 of this Agreement, the Acquired Fund
is not subject to any litigation or administrative
proceeding that could reasonably be expected to have
a materially adverse effect on the operations of the
Acquired Fund. Such opinion may state that it is
solely for the benefit of the Acquiring Entity and
the Acquiring Entity Board. Such opinion may contain
such assumptions and limitations as shall be in the
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP appropriate
to render the opinions expressed therein. Such
opinion also shall include such other matters
incident to the transactions contemplated hereby as
the Acquiring Entity, on behalf of the Acquiring
Fund, may reasonably request. With respect to all
matters of Maryland law, such counsel shall be
entitled to state that, with the approval of the
Acquiring Entity, they have relied on the opinion of
▇▇▇▇▇▇▇ LLP and that their opinion is subject to the
same assumptions, qualifications and limitations with
respect to such matters as are contained in the
opinion of ▇▇▇▇▇▇▇ LLP.
8.7 The Acquired Entity, on behalf of the
Acquired Fund, shall have received on the Closing
Date an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, in a
form reasonably satisfactory to the Acquired Entity,
and dated as of the Closing Date, substantially to
the effect that, based upon certain facts and
certifications made by the Acquiring Entity, on
behalf of the Acquiring Fund and its authorized
officers: (a) the Acquiring Entity is a business
trust existing under the laws of the Commonwealth of
Massachusetts; (b) the Acquiring Entity, with respect
to the Acquiring Fund, has the power as a business
trust to carry on its business as an open-end
investment company registered under the 1940 Act;
(c) this Agreement has been duly authorized, executed
and, so far as is known to such counsel, delivered by
the Acquiring Entity, on behalf of the Acquiring
Fund, and assuming due authorization, execution and
delivery of this Agreement by the Acquired Entity, on
behalf of the Acquired Fund, constitutes a valid and
legally binding obligation of the Acquiring Entity,
on behalf of the Acquiring Fund, enforceable in
accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and laws of general
applicability relating to or affecting creditors
rights and to general equity principles (whether in a
proceeding under equity or at law); provided that
such counsel shall be entitled to state that it
expresses no opinion with respect to the validity,
binding effect or enforceability of any contractual
provisions purporting to provide indemnification of
any person for any claims, damages, liabilities or
expenses which may be limited by any applicable
federal or state securities laws or as a matter of
public policy; (d) the execution and delivery of this
Agreement did not, and the issuance of the Acquiring
Fund Shares and the assumption of the Liabilities in
exchange for the transfer of the Assets pursuant to
this Agreement will not, violate the Acquiring Entity
Declaration or the by-laws of the Acquiring Entity or
any contracts or other documents known to ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP which can affect the rights and
obligations of the Acquiring Entity; (e) to the
knowledge of such counsel, all regulatory or court
consents, authorizations, approvals, orders or
filings required to be obtained or made by the
Acquiring Entity, on behalf of the Acquiring Fund,
under the federal laws of the United States or the
laws of the Commonwealth of Massachusetts with
respect to the issuance of the Acquiring Fund Shares
and the assumption of the Liabilities in exchange for
the transfer of the Assets pursuant to this Agreement
have been obtained or made, except such as may be
required under state securities or blue sky laws, as
to which such counsel need express no opinion; and
(f) to the knowledge of such counsel, and without any
independent investigation, other than as disclosed on
the schedule provided by the Acquiring Entity
pursuant to paragraph 4.2 of this Agreement, the
Acquiring Fund is not subject to any litigation or
administrative proceeding that could reasonably be
expected to have a materially adverse effect on the
operations of the Acquiring Fund. Such opinion may
state that it is solely for the benefit of the
Acquired Entity and the Acquired Entity Board. Such
opinion may contain such assumptions and limitations
as shall be in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP appropriate to render the opinions
expressed therein. Such opinion also shall include
such other matters incident to the transactions
contemplated hereby as the Acquired Entity, on behalf
of the Acquired Fund, may reasonably request. With
respect to all matters of Massachusetts law, such
counsel shall be entitled to state that, with the
approval of the Acquired Entity, they have relied on
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP and that their
opinion is subject to the same assumptions,
qualifications and limitations with respect to such
matters as are contained in the opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP.
8.8 The Assets will include no assets which the
Acquiring Fund, by reason of limitations contained in
the Acquiring Entity Declaration or in investment
restrictions in effect on the Closing Date, may not
properly acquire.
9. INDEMNIFICATION
9.1 The Acquiring Entity, out of the Acquiring
Funds assets and property (including any amounts
paid to the Acquiring Fund pursuant to any applicable
liability insurance policies or indemnification
agreements) agrees to indemnify and hold harmless the
Acquired Entity and the members of the Acquired
Entity Board and its officers from and against any
and all losses, claims, damages, liabilities or
expenses (including, without limitation, the payment
of reasonable legal fees and reasonable costs of
investigation) to which the Acquired Entity and those
board members and officers may become subject,
insofar as such loss, claim, damage, liability or
expense (or actions with respect thereto) arises out
of or is based on (a) any breach by the Acquiring
Entity, on behalf of the Acquiring Fund, of any of
its representations, warranties, covenants or
agreements set forth in this Agreement or (b) any
act, error, omission, neglect, misstatement,
materially misleading statement, breach of duty or
other act wrongfully done or attempted to be
committed by the Acquiring Entity or the members of
the Acquiring Entity Board or its officers prior to
the Closing Date, provided that such indemnification
by the Acquiring Entity is not (i) in violation of
any applicable law or (ii) otherwise prohibited as a
result of any applicable order or decree issued by
any governing regulatory authority or court of
competent jurisdiction.
9.2 The Acquired Entity, out of the Acquired
Funds assets and property (including any amounts
paid to the Acquired Fund pursuant to any applicable
liability insurance policies or indemnification
agreements) agrees to indemnify and hold harmless the
Acquiring Entity and the members of the Acquiring
Entity Board and its officers from and against any
and all losses, claims, damages, liabilities or
expenses (including, without limitation, the payment
of reasonable legal fees and reasonable costs of
investigation) to which the Acquiring Entity and
those board members and officers may become subject,
insofar as such loss, claim, damage, liability or
expense (or actions with respect thereto) arises out
of or is based on (a) any breach by the Acquired
Entity, on behalf of the Acquired Fund, of any of its
representations, warranties, covenants or agreements
set forth in this Agreement or (b) any act, error,
omission, neglect, misstatement, materially
misleading statement, breach of duty or other act
wrongfully done or attempted to be committed by the
Acquired Entity or the members of the Acquired Entity
Board or its officers prior to the Closing Date,
provided that such indemnification by the Acquired
Entity is not (i) in violation of any applicable law
or (ii) otherwise prohibited as a result of any
applicable order or decree issued by any governing
regulatory authority or court of competent
jurisdiction.
10. BROKER FEES AND EXPENSES
10.1 The Acquiring Entity, on behalf of the
Acquiring Fund, and the Acquired Entity, on behalf of
the Acquired Fund, represent and warrant to each
other that there are no brokers or finders entitled
to receive any payments in connection with the
transactions provided for herein.
10.2 ▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC will
pay the printing, proxy solicitation, mailing and
postage costs of the Reorganization. Additional
costs, including expenses related to the preparation
and filing of the Registration Statement, legal fees
and auditor fees, shall be divided equally between
▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC, on the one
hand, and the Acquiring Entity and the Acquired
Entity, on the other hand. Notwithstanding any of the
foregoing, expenses will in any event be paid by the
party directly incurring such expenses if and to the
extent that the payment by another person of such
expenses would result in the disqualification of such
party as a regulated investment company within the
meaning of Section 851 of the Code or would prevent
the Reorganization from qualifying as a tax-free
reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The Acquiring Entity and the Acquired Entity
agree that neither party has made any representation,
warranty or covenant, on behalf of either the
Acquiring Fund or the Acquired Fund, respectively,
not set forth herein and that this Agreement
constitutes the entire agreement between the parties.
11.2 The covenants to be performed after the
Closing by both the Acquiring Entity and the Acquired
Entity, and the obligations of the Acquiring Entity,
on behalf of the Acquiring Fund, in Article 9, shall
survive the Closing. All other 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 and shall terminate on the Closing.
12. TERMINATION
This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at
any time prior to the Closing Date by resolution of
either the Acquiring Entity Board or the Acquired
Entity Board, if circumstances should develop that,
in the opinion of that Board, make proceeding with
the Agreement inadvisable with respect to the
Acquiring Fund or the Acquired Fund, respectively.
Any such termination resolution to be effective shall
be promptly communicated to the other party and, in
any event, prior to the Closing Date.
13. AMENDMENTS
This Agreement may be amended, modified or
supplemented in such manner as may be deemed
necessary or advisable by the authorized officers of
the Acquired Entity and the Acquiring Entity;
provided, however, that following the meeting of the
Acquired Fund shareholders called by the Acquired
Fund pursuant to paragraph 5.2 of this Agreement, no
such amendment may have the effect of changing the
provisions for determining the number of Acquiring
Fund Shares to be issued to Acquired Fund
shareholders under this Agreement to the detriment of
such shareholders without their further approval.
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 facsimile,
electronic delivery (i.e., e-mail), personal service
or prepaid or certified mail addressed to the
Acquiring Entity or the Acquired Entity, at its
address set forth in the preamble to this Agreement,
in each case to the attention of its President.
15.
HEADINGS; COUNTERPARTS; GOVERNING LAW;
SEVERABILITY; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article 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 and interpreted in accordance with the
internal laws of the State of New York.
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 parties. 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.
15.5 The Acquiring Entity Declaration is on file
with the Secretary of State of the Commonwealth of
Massachusetts. Consistent with the Acquiring Entity
Declaration, the obligations of the Acquiring Entity
with respect to the Acquiring Fund entered into in
the name or on behalf of the Acquiring Entity by any
of its Trustees, officers, employees or agents are
made not individually, but in such capacities, and
are not binding upon any of the Trustees, officers,
employees, agents or shareholders of the Acquiring
Entity, personally, but bind only the assets of the
Acquiring Entity belonging to the Acquiring Fund, and
all persons dealing with any series or funds of the
Acquiring Entity must look solely to the assets of
the Acquiring Entity belonging to such series or fund
for the enforcement of any claims against the
Acquiring Entity.
IN WITNESS WHEREOF, each of the parties hereto
has caused this Agreement to be executed by its duly
authorized officer.
▇▇▇▇ ▇▇▇▇▇ PARTNERS INCOME FUNDS, on
behalf of its series ▇▇▇▇ ▇▇▇▇▇
PARTNERS DIVERSIFIED STRATEGIC INCOME
FUND
▇▇▇▇ ▇▇▇▇▇ PARTNERS SERIES FUNDS, INC,
on behalf of its series ▇▇▇▇ ▇▇▇▇▇
PARTNERS STRATEGIC BOND FUND
By:
_________________________________
By:
_________________________________
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Solely for purposes of paragraph 10.2 of this
Agreement:
▇▇▇▇ ▇▇▇▇▇ PARTNERS FUND ADVISOR, LLC
By:
__________________________________________
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
SCHEDULE 4.1
NONE
SCHEDULE 4.2
NONE
- 33 -
