AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made as
of this 10th day of December, 1999, between Pioneer High Yield Fund (the
"ACQUIRING FUND"), a business trust organized under the laws of the State of
Delaware with its principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and THIRD AVENUE TRUST, a business trust organized under
the laws of the State of Delaware with its principal place of business at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "TRUST"), on behalf of Third
Avenue High Yield Fund (the "ACQUIRED FUND"), a series of the Trust.
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "CODE"). The reorganization (the
"REORGANIZATION") will consist of (a) the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange for (i) the issuance of Class A
shares of beneficial interest of the Acquiring Fund (collectively, the
"ACQUIRING FUND SHARES" and each, an "ACQUIRING FUND SHARE") to the Acquired
Fund, and (ii) the assumption by the Acquiring Fund of (I) the liabilities of
the Acquired Fund that are included in the calculation of net asset value
("NAV") on the closing date set forth below (the "CLOSING DATE") and (II) the
liabilities of the Acquired Fund with respect to its investment operations that
are not required by generally accepted accounting principles ("GAAP") to be
included in the calculation of NAV consistent with liabilities incurred by
registered management investment companies in the ordinary course of their
businesses (i.e., not including any extraordinary obligations, including, but
not limited to legal proceedings, shareholder claims and distribution payments)
(the "ASSUMED LIABILITIES"), and (b) the distribution by the Acquired Fund, on
the Closing Date, or as soon thereafter as practicable, of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in liquidation of the Acquired
Fund and the termination of the Acquired Fund, all upon the terms and conditions
hereinafter set forth in this Agreement.
WHEREAS, Acquiring Fund and the Trust are each registered investment
companies classified as management companies of the open-end type, and the
Acquired Fund owns securities that generally are assets of the character in
which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest;
WHEREAS, the Board of Trustees of the Acquiring Fund has determined
that the exchange of all of the assets of the Acquired Fund for Acquiring Fund
Shares and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquiring Fund shareholders;
WHEREAS, the Board of Trustees of the Trust has determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares and
the assumption of the Assumed Liabilities of the Acquired Fund by the Acquiring
Fund are in the best interests of the Acquired Fund shareholders.
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 ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES AND LIQUIDATION
AND TERMINATION OF THE ACQUIRED FUND.
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
agrees to transfer its assets as set forth in paragraph
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1.2 to the Acquiring Fund free and clear of all liens and encumbrances
(other than those arising under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), liens for taxes not yet due and contractual restrictions on
the transfer of the acquired assets), and the Acquiring Fund agrees in exchange
therefor: (a) to issue to the Acquired Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined (to at least two decimal
places) by dividing the value of the Acquired Fund's net assets transferred to
the Acquiring Fund, computed in the manner and as of the time and date set forth
in paragraph 2.1, by the NAV of one Acquiring Fund Share, computed in the manner
and as of the time and date set forth in paragraph 2.2; and (b) to assume the
Assumed Liabilities, as set forth in paragraph 1.3. Such transactions shall take
place at the closing provided for in paragraph 3.1 (the "CLOSING").
1.2. (a) The assets of the Acquired Fund to be acquired by the
Acquiring Fund shall consist of all of its property, including, without
limitation, all goodwill, all contractual rights of the Acquired Fund or the
Trust in respect of the Acquired Fund, all other intangible property owned by
the Acquired Fund and originals or copies of all books and records of the
Acquired Fund but shall not include any interest in the name "Third Avenue."
(b) The Acquired Fund has provided the Acquiring Fund with a
list of all of the Acquired Fund's securities and other assets as of the date of
this Agreement. The Acquired Fund reserves the right to sell any of these
securities but will not, without the prior approval of the Acquiring Fund,
acquire any additional securities other than securities of the type in which the
Acquiring Fund is permitted to invest and shall not acquire, without the consent
of the Acquiring Fund, any securities that are valued at "fair value" under the
valuation procedures of either the Acquired Fund or the Acquiring Fund.
1.3. The Acquired Fund will endeavor to discharge all the Acquired
Fund's known liabilities and obligations that are or will become due prior to
the Closing Date. The Acquired Fund shall prepare an unaudited statement of
assets and liabilities (the "CLOSING STATEMENT"), as of the Valuation Date (as
defined in paragraph 2.1), in accordance with GAAP consistently applied from the
prior audited period, including a calculation of the net assets of the Acquired
Fund as of the close of business on the Closing Date. The Acquiring Fund shall
assume the Assumed Liabilities.
1.4. On the Closing Date or as soon thereafter as is conveniently
practicable, the Trust shall liquidate the Acquired Fund and distribute pro rata
to the Acquired Fund's shareholders of record determined as of the close of
business on the Closing Date (the "ACQUIRED FUND SHAREHOLDERS") the Acquiring
Fund Shares it receives pursuant to paragraph 1.1. Such liquidation and
distribution will be accomplished by the Trust instructing the Acquiring Fund to
transfer the 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 (as provided
to the Acquiring Fund by the Trust) and representing the respective pro rata
number of the Acquiring Fund Shares due such shareholders. The Trust shall
promptly provide the Acquiring Fund with evidence of such liquidation and
distribution. All issued and outstanding shares of the Acquired Fund will
simultaneously be cancelled on the books of the Acquired Fund, although share
certificates representing interests in the Acquired Fund will represent a number
of Acquiring Fund Shares after the Closing Date as determined in accordance with
paragraph 1.1. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent for its Class A shares. Acquiring Fund
Shares will be issued in the manner described in the Acquiring Fund's
Registration Statement on Form N-14 in the form attached to this Agreement as
Annex A.
1.6. Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquired Fund shares on
the books of the Acquired Fund as of the time
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of issuance shall, as a condition of such issuance and transfer, be paid by
the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.7. Any reporting responsibility of the Trust with respect to the
Acquired Fund is and shall remain the responsibility of the Trust up to and
including the Closing Date and such later date on which the Acquired Fund is
terminated.
1.8. The Acquired Fund shall, following the Closing Date and the making
of all distributions pursuant to paragraph 1.4, be terminated as a series of the
Trust under the laws of the State of Delaware and in accordance with the Trust
Instrument and By-Laws of the Trust.
2. VALUATION
2.1. The value of the assets of the Acquired Fund 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, Inc. on the Closing
Date (such time and date being hereinafter called the "VALUATION DATE"), using
the valuation procedures set forth in the prospectus or statement of additional
information of the Acquired Fund as in effect on the date hereof.
2.2. The NAV of the Acquiring Fund Class A shares shall be calculated
in accordance with the valuation procedures described in paragraph 2.1.
2.3. All computations of value shall be made by PNC Financial
Processing Corporation, Inc. in accordance with its regular practice as pricing
agent for the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be February 25, 2000, or such later date as
the parties may agree to in writing. All acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00
p.m. (Eastern time) at the offices of ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, or at such other time and/or place as the parties may
agree.
3.2. Portfolio securities shall be presented by the Acquired Fund to
▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co. ("BBH") as custodian for the Acquiring Fund for
examination no later than three business days preceding the Valuation Date. The
Acquiring Fund may, in its sole discretion, reject any securities if it
reasonably believes that the ownership of such securities by the Acquired Fund
or the acquisition of such securities by the Acquiring Fund would violate the
investment policies and restrictions of the Acquired Fund and the Acquiring
Fund. The portfolio securities, cash and due bills shall be delivered by the
Acquired Fund to BBH as custodian for the Acquiring Fund for the account of the
Acquiring Fund at the Closing duly endorsed in proper form for transfer in such
condition as to constitute good delivery thereof in accordance with the custom
of brokers. The cash shall be delivered by wire in federal funds to an account
of the Acquiring Fund specified by the Acquiring Fund.
3.3. Custodial Trust Company, custodian for the Acquired Fund, shall
deliver at the Closing a certificate of an authorized officer stating that: (a)
the Acquired Fund's assets have been delivered in proper form to the Acquiring
Fund on the Closing Date and (b) all necessary transfer taxes including all
applicable federal and state stock transfer stamps, if any, have been paid, or
provision for payment shall have been made, in conjunction with the delivery of
portfolio securities.
3.4. In the event that on the Valuation Date (a) the primary trading
market for portfolio securities of the Acquired Fund shall be closed to trading
or trading thereon shall be restricted or (b) trading or the reporting of
trading on such market shall be disrupted so that accurate calculation based
upon available market prices of the value of the net assets of the parties
hereto is impracticable, the Closing Date shall be postponed until the first
business day after the day when trading shall have been fully resumed and
reporting shall have been restored, provided that unless the parties otherwise
agree, if
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the transactions contemplated by this Agreement shall not have occurred on
or prior to April 15, 2000, each party's obligations under this Agreement shall
terminate without liability to the other party, except for any liability that
may arise out of a party's breach of its obligations under this Agreement prior
to such termination.
3.5. The Acquired Fund shall deliver to the Acquiring Fund at the
Closing (or, if not reasonably available at the Closing, as soon as practicable
thereafter) a list of the names, addresses, taxpayer identification numbers and
backup withholding and nonresident alien withholding status of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding shares owned
by each such shareholder immediately prior to the Closing, certified by the
President or a Vice President of the Trust on behalf of the Acquired Fund as
being an accurate record of the information (i) provided by Acquired Fund
Shareholders or (ii) derived from the Trust's records by such officers or one of
the Trust's service providers.
3.6. The Acquiring Fund shall issue and deliver a confirmation
evidencing the Acquiring Fund Shares to be credited to the Acquired Fund's
account on the Closing Date to the Secretary of the Trust on behalf of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request.
4. LIQUIDATION AND DISSOLUTION OF ACQUIRED FUND
4.1. As soon as practicable after the Closing, the Trust shall
liquidate the Acquired Fund and distribute pro rata to the Acquired Fund
Shareholders the Acquiring Fund Shares received pursuant to paragraph 1.1. Such
liquidation and distribution will be accomplished by the transfer of the
Acquiring Fund Shares credited to the account of the Acquired Fund to open
accounts on the share records in the names of Acquired Fund Shareholders as
delivered to the Acquiring Fund prior to the Closing Date in accordance with
paragraph 3.5 and representing the respective pro rata entitlement of each
Acquired Fund Shareholder in the Acquiring Fund Shares.
4.2. In connection with such liquidating distributions, (a) the
Acquiring Fund shall not deliver certificates representing its shares and (b)
the share transfer books of the Acquired Fund shall be permanently closed as of
the Closing Date and arrangements satisfactory to the Acquiring Fund, acting
reasonably, shall be made to restrict the further transfer of the Acquired
Fund's shares.
4.3. As soon as practicable after the liquidation of the Acquired
Fund, the Trust shall terminate the Acquired Fund as a series of the Trust
under the laws of the State of Delaware and in accordance with the Trust
Instrument and By-Laws of the Trust.
5. REPRESENTATIONS AND WARRANTIES
5.1. The Trust, on behalf of the Acquired Fund, represents and
warrants to the Acquiring Fund, which representations and warranties will be
true and correct on the date hereof and on the Closing Date as though made on
and as of the Closing Date, as follows:
(a) The Acquired Fund is a series of the Trust. The Trust is a
business trust validly existing and in good standing under the laws of the
State of Delaware and has the power to own all of its properties and assets
and, subject to approval by the Acquired Fund Shareholders, to perform its
obligations under this Agreement. The Acquired Fund is not required to qualify
to do business in any jurisdiction in which it is not so qualified or where
failure to qualify would not subject it to any material liability or
disability. Each of the Acquired Fund and the Trust has all necessary federal,
state and local authorizations to own all of the properties and assets
attributable to the Acquired Fund and to carry on the business of the Acquired
Fund as now being conducted;
4
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "COMMISSION") under the Investment
Company Act of 1940 (the "INVESTMENT COMPANY ACT") is in full force and effect;
(c) The Trust is not, and the execution, delivery and performance of
this Agreement in respect of the Acquired Fund will not result, in a material
violation of its Trust Instrument or By-Laws or of any material agreement,
indenture, instrument, contract, lease or other undertaking with respect to the
Acquired Fund to which the Trust is a party or by which the Acquired Fund or
its assets are bound;
(d) Except as specifically disclosed on Schedule 5.1(d) or included in
the calculation of NAV on the Valuation Date, the Trust has no material
contracts or other commitments (other than this Agreement) with respect to the
Acquired Fund which will be terminated with liability to either the Trust or to
the Acquired Fund on or prior to the Closing Date;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its knowledge
threatened against the Trust with respect to the Acquired Fund or any of the
Acquired Fund's properties or assets, except as previously disclosed in writing
to, and acknowledged in writing by, the Acquiring Fund. Neither the Trust nor
the Acquired Fund is 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 Fund's business or the Trust's ability to
consummate the transactions herein contemplated;
(f) The statement of assets and liabilities of the Acquired Fund as of October
31, 1998 has been, and the statement of assets and liabilities of the Acquired
Fund as of October 31, 1999 to be delivered to the Acquiring Fund pursuant to
paragraph 8.4 will be, audited by PricewaterhouseCoopers LLP, independent
certified public accountants, and is or will be in accordance with GAAP
consistently applied and fairly reflects, or will fairly reflect, the financial
condition of the Acquired Fund as of such dates; except for the Assumed
Liabilities, the Acquired Fund will not have any known or contingent liabilities
on the Closing Date;
(g) Since October 31, 1998, except as disclosed on a schedule to this Agreement
or specifically disclosed in the Acquired Fund's prospectus or statement of
additional information as in effect on the date of this Agreement, there has not
been any material adverse change in the Acquired Fund's financial condition,
assets, liabilities, business or prospects, or any incurrence by the Acquired
Fund of indebtedness, except for normal contractual obligations incurred in the
ordinary course of business or in connection with the settlement of purchases
and sales of portfolio securities. For the purposes of this subparagraph (g), a
decline in NAV per share of the Acquired Fund arising out of its normal
investment operations or a decline in net assets of the Acquired Fund as a
result of redemptions shall not constitute a material adverse change;
(h) For each taxable year of its operation, the Acquired Fund has met
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and has elected to be treated as such and will
qualify as such as of the Closing Date. The Acquired Fund has not taken any
action which has caused or will cause the Acquired Fund to fail to qualify as a
regulated investment company under the Code. The Acquired Fund has not been
notified that any tax return or other filing of the Acquired Fund has been
reviewed or audited by any federal, state, local or foreign taxing authority.
Except as set forth on Schedule 5.1:
(A) Within the times and in the manner prescribed by law, the
Acquired Fund has filed all federal, state and local tax returns,
including all information returns and payee statements, and all tax
returns for foreign countries, provinces and other governing bodies
that have jurisdiction to levy taxes upon it and which are required to
be filed;
5
(B) The Acquired Fund has paid all taxes, interest, penalties,
assessments and deficiencies which have become due or which
have been claimed to be due;
(C) All tax returns filed by the Acquired Fund constitute
complete and accurate reports of the respective tax liabilities of the
Acquired Fund or, in the case of information returns and payee
statements, the amounts required to be reported accurately set
forth all items required to be included or reflected in such
returns except for such instances of misreporting with respect
to which, individually or in the aggregate, the Acquired Fund
is not required to notify any shareholder;
(D) The Acquired Fund has not waived or extended any applicable
statute of limitations relating to the assessment of federal,
state, local or foreign taxes; and
(E) The Acquired Fund has not been notified that any examinations
of the federal, state, local or foreign tax returns of the
Acquired Fund are currently in progress or threatened and no
deficiencies have been asserted or assessed against the
Acquired Fund as a result of any audit by the Internal Revenue
Service or any state, local or foreign taxing authority, and no
such deficiency has been proposed or threatened;
(i) All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. To the Trust's knowledge, all of the issued and outstanding
shares of the Acquired Fund will, at the time of Closing, be held of record by
the persons and in the amounts set forth in the records of the transfer agent
as provided in paragraph 3.5. The Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any shares of
the Acquired Fund, nor is there outstanding any security convertible into any
shares of the Acquired Fund;
(j) At the Closing Date, the Trust in respect of the Acquired Fund
will have good and marketable title to the assets to be transferred to the
Acquiring Fund pursuant to paragraph 1.1 and full right, power and authority to
sell, assign, transfer and deliver such assets hereunder, and, upon delivery
and payment for such assets, the Acquiring Fund will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof, except such restrictions as might arise under the Securities Act,
other than as disclosed in writing to, and acknowledged in writing by, the
Acquiring Fund;
(k) The Trust on behalf of the Acquired Fund has the trust power and
authority to enter into and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary action on the part of the Trust's Board of Trustees on behalf
of the Acquired Fund, and, subject to the approval of the Acquired Fund
Shareholders, assuming due authorization, execution and delivery by the
Acquiring Fund, this Agreement will constitute a valid and binding obligation
of the Trust in respect of the Acquired Fund, enforceable in accordance with
its terms, subject as to enforcement, bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(l) Any information furnished by EQSF Advisers, Inc. or the Trust on
behalf of the Acquired Fund for use in registration statements, proxy materials
and any information necessary to compute the yield and total return of the
Acquired Fund 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 or the requirements of any form for which its
use is intended;
(m) The proxy statement to be included in the Acquiring Fund's
Registration Statement on Form N-14 attached hereto as Annex A (other than
information therein that relates to Pioneer Investment
6
Management, Inc., the Acquiring Fund or their affiliates) will, on the
effective date of that Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(n) Except as set forth on Schedule 5.1 and as will be obtained on or
prior to the Closing Date, no consent, approval, authorization or order of any
court or governmental authority is required for the consummation by the Trust
or the Acquired Fund of the transactions contemplated by this Agreement;
(o) To the Trust's knowledge, all of the issued and outstanding shares
of beneficial interest of the Acquired Fund have been offered for sale and sold
in conformity with all applicable federal and state securities laws, except as
may have been previously disclosed in writing to the Acquiring Fund;
(p) The Acquired Fund currently complies in all material respects with
and since its organization has complied in all material respects with the
requirements of, and the rules and regulations under, the Investment Company
Act, the Securities Act, the Securities Exchange Act of 1934 (the "EXCHANGE
ACT"), state "Blue Sky" laws and all other applicable federal and state laws or
regulations. The Acquired Fund currently complies in all material respects with,
and since its organization has complied in all material respects with, all
investment objectives, policies, guidelines and restrictions and any compliance
procedures established by the Trust with respect to the Acquired Fund. All
advertising and sales material used by the Acquired Fund complies in all
material respects with and has complied in all material respects with the
applicable requirements of the Securities Act, the rules and regulations of the
Commission, and, to the extent applicable, the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD") and any applicable state
regulatory authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the Commission, the
NASD or any state securities authorities by the Acquired Fund have been duly
filed and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration statements,
prospectuses, reports, proxy materials and other filings under the Securities
Act, the Exchange Act and the Investment Company Act (i) are or were in
compliance in all material respects with the requirements of all applicable
statutes and the rules and regulations thereunder and (ii) do not or did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not false or misleading;
(q) The Acquired Fund has previously provided to the Acquiring Fund
(and will at the Closing provide an update through the Closing Date of such
information) with data which supports a calculation of the Acquired Fund's total
return and yield for all periods since the organization of the Acquired Fund.
Such data has been prepared in accordance in all material respects with the
requirements of the Investment Company Act and the regulations thereunder and
the rules of the NASD; and
(r) The prospectus of the Acquired Fund dated February 28, 1999, and
any amendments or supplements thereto, previously furnished to the Acquiring
Fund, did not as of their dates or the dates of their distribution to the
public contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not misleading.
5.2. The Acquiring Fund represents and warrants to the Trust, which
representations and warranties will be true and correct on the date hereof and
on the Closing Date as though made on and as of the Closing Date, as follows:
(a) The Acquiring Fund is a business trust, validly existing and in
good standing under the laws of the State of Delaware and has the power to own
all of its properties and assets and to perform its obligations under this
Agreement. The Acquiring Fund is not required to qualify to do business in any
7
jurisdiction in which it is not so qualified or where failure to qualify would
not subject it to any material liability or disability. The Acquiring Fund has
all necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now being conducted;
(b) The Acquiring Fund is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in full
force and effect;
(c) The prospectus and statement of additional information of the
Acquiring Fund included in the Acquiring Fund's registration statement that
will be in effect on the Closing Date will conform in all material respects
with the applicable requirements of the Securities Act and the Investment
Company Act and the rules and regulations of the Commission thereunder and did
not as of its date and will not as of the Closing Date contain 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 in which they were made, not misleading;
(d) The Acquiring Fund is not, and its execution, delivery and
performance of this Agreement will not result, in a violation of its Agreement
and Declaration of Trust or By-Laws or a material violation of any agreement,
indenture, instrument, contract, lease or other undertaking with respect to the
Acquiring Fund to which it is a party or by which it is bound;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or threatened
against the Acquiring Fund or any of the Acquiring Fund's properties or assets,
except as previously disclosed in writing to, and acknowledged in writing by,
the Acquired Fund. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings, 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 which materially and adversely affects the Acquiring
Fund's business or its ability to consummate the transactions contemplated
herein;
(f) The Acquiring Fund has the trust power and authority to enter into
and perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary action,
if any, on the part of the Acquiring Fund's Board of Trustees, and, assuming
due authorization, execution and delivery by the Acquired Fund, this Agreement
will constitute a valid and binding obligation 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;
(g) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares and will be fully paid and non-assessable; 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 of the Acquiring Fund Shares;
(h) The information to be furnished by the Acquiring Fund or Pioneer Investment
Management, Inc. for use in proxy materials and other documents 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 or the requirements of any form for which its use is intended;
(i) The Acquiring Fund is a qualified institutional buyer as defined in Rule
144A under the Securities Act;
(j) Neither the Acquiring Fund nor, to the knowledge of the Acquiring Fund, any
"affiliated person" of the Acquiring Fund has been convicted of any felony or
misdemeanor, described in Section
8
9(a)(1) of the Investment Company Act, nor, to the knowledge of the
Acquiring Fund, has any affiliated person of the Acquiring Fund been the
subject, or presently is the subject, of any proceeding or investigation with
respect to any disqualification that would be a basis for denial, suspension or
revocation of registration as an investment adviser under Section 203(e) of the
Investment Advisers Act of 1940 or Rule 206(4)-4(b) thereunder or of a
broker-dealer under Section 15 of the Exchange Act, or for disqualification as
an investment adviser, employee, officer or director of an investment company
under Section 9 of the Investment Company Act;
(k) The Acquiring Fund intends to elect to qualify as a regulated investment
company under Section 851 of the Code. Immediately prior to the Closing, the
Acquiring Fund will be in compliance in all material respects with all
applicable laws, rules and regulations, including, without limitation, the
Investment Company Act, the Securities Act, the Exchange Act and all applicable
state securities laws. Immediately prior to the Closing, the Acquiring Fund will
be in compliance in all material respects with the applicable investment
policies and restrictions set forth in its registration statement currently in
effect and will have calculated its NAV in accordance with the Acquiring Fund's
registration statement;
(l) The Acquiring Fund Shares to be issued pursuant to this Agreement shall on
the Closing Date be duly registered under the Securities Act by a Registration
Statement on Form N-14 of the Acquiring Fund then in effect and qualified for
sale under the applicable state securities laws; and
(m) The Acquiring Fund Shares to be issued pursuant to this Agreement are duly
authorized and on the Closing Date will be validly issued and fully paid and
non-assessable and will conform in all material respects to the description
thereof contained in the Acquiring Fund's Registration Statement on Form N-14.
On the Closing Date, the Acquiring Fund shall not, except as provided herein,
have outstanding any warrants, options, convertible securities or any other type
of right pursuant to which any person could acquire Acquiring Fund Shares.
6. COVENANTS OF EACH OF THE PARTIES
6.1. The Trust, on behalf of the Acquired Fund, will operate the
Acquired Fund's business in the ordinary course between the date hereof and the
Closing Date. It is understood that such ordinary course of business will
include the declaration and payment of customary dividends and distributions
and any other dividends and distributions necessary or advisable (except to the
extent distributions that are not customary may be limited by representations
made in connection with the issuance of the tax opinion described in paragraph
9.5 hereof), in each case payable either in cash or in additional shares.
6.2. The Trust will call a meeting of the Acquired Fund Shareholders
to consider and act upon the matters set forth in the proxy statement. Each of
the Trust, on behalf of the Acquired Fund, and the Acquiring Fund will use
reasonable efforts to promptly prepare and file with the Commission a
Registration Statement on Form N-14 relating to the transactions contemplated
by this Agreement.
6.3. The Trust, on behalf of the Acquired Fund, covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.
6.4. The Acquired Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests concerning the
beneficial ownership of the Acquired Fund's shares.
6.5. Subject to the provisions of this Agreement each of the Trust, on
behalf of the Acquired Fund, and the Acquiring Fund will take, or cause to be
taken, all actions, 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.
6.6. The Acquired Fund shall furnish to the Acquiring Fund on the
Closing Date the Closing Statement, which statement shall be prepared in
accordance with GAAP consistently applied and shall be
9
certified by the Trust's Treasurer or Assistant Treasurer. As promptly as
practicable, but in any case within 90 days after the Closing Date, the Trust
shall furnish to the Acquiring Fund, in such form as is reasonably satisfactory
to the Acquiring Fund, a statement of the earnings and profits of the Acquired
Fund for federal income tax purposes, and of any capital loss carryovers and
other items that will be carried over to the Acquiring Fund as a result of
Section 381 of the Code, and which statement will be certified by the Treasurer
of the Trust.
6.7. The Trust will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus, which will include the
proxy statement, referred to in paragraph 5.1(m), all to be included in the
Acquiring Fund's Registration Statement on Form N-14, in compliance with the
Securities Act, the Exchange Act and the Investment Company Act in connection
with the meeting of the Acquired Fund Shareholders to consider approval of this
Agreement and the transactions contemplated herein.
6.8. The Trust shall maintain errors and omissions insurance covering
management of the Acquired Fund prior to and including the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by
the Acquiring Fund of all of the obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquired Fund in writing:
7.1. All representations and warranties made in this Agreement by the
Acquiring Fund 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; and
7.2. The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance reasonably satisfactory
to the Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties made in this Agreement by or on behalf of the
Acquiring Fund are true and correct in all material respects at and as of the
Closing Date, except as they may be affected by the transactions contemplated
by this Agreement.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by
the Trust and Acquired Fund of all of the obligations to be performed by them
hereunder on or before the Closing Date and, in addition thereto, the following
further conditions:
8.1. All representations and warranties made in this Agreement by or
on behalf of the Trust and the Acquired Fund 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;
8.2. The Trust shall have delivered to the Acquiring Fund a statement
of the Acquired Fund's assets and liabilities showing the federal tax bases and
holding periods as of the Closing Date, certified by the Trust's Treasurer or
Assistant Treasurer on behalf of the Trust;
8.3. The Trust, on behalf of the Acquired Fund, shall have delivered
to the Acquiring Fund on the Closing Date a certificate executed in its name by
its President or Vice President and Treasurer or Assistant Treasurer, in form
and substance reasonably satisfactory to the Acquiring Fund and dated as of the
Closing Date, to the effect that the representations and warranties made in
this Agreement are true
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and correct in all material respects at and as of the
Closing Date, except as they may be affected by the transactions contemplated
by this Agreement; and
8.4. The Trust shall have delivered to the Acquiring Fund at least 30
days prior to the Closing Date financial statements of the Acquired Fund as of
October 31, 1999 audited by PricewaterhouseCoopers LLP. With the consent of
PricewaterhouseCoopers LLP (which the Trust agrees to use its reasonable
efforts to obtain), the Trust consents to the inclusion of such financial
statements, and any financial statement of the Acquired Fund for a prior
period, in the Acquiring Fund's registration statements under the Securities
Act and the Investment Company Act.
9. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE PARTIES
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
9.1. 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 each of the Trust's Trust
Instrument and By-Laws, and certified copies of the votes evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither party hereto may waive the conditions
set forth in this paragraph 9.1;
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 herein;
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 Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto 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
either party hereto, provided that either party may for itself waive any of such
conditions;
9.4. The Acquiring Fund's Registration Statement on Form N-14 shall
have become effective under the Securities 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, threatened or contemplated under the Securities Act;
9.5. The parties shall have received a favorable opinion of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), addressed to the Acquiring Fund and the
Trust in respect of the Acquired Fund and satisfactory to the Acquiring Fund and
the Trust, substantially to the effect that for federal income tax purposes, on
the basis of the facts, representations and assumptions set forth in such
opinion, the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Shares to
the Acquired Fund and the assumption of all of the Assumed Liabilities by the
Acquiring Fund, followed by the distribution by the Acquired Fund, in
liquidation of the Acquired Fund, of Acquiring Fund Shares to the Acquired Fund
Shareholders in exchange for their Acquired Fund shares of beneficial interest
and the termination of the Acquired Fund, will constitute a reorganization
within the meaning of Section 368(a) of the Code, and the Acquired Fund and the
Acquiring Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code.
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9.6. Each of the Acquiring Fund and the Acquired Fund agrees to make,
to the extent that it is able to accurately do so, and provide representations
with respect to itself that are reasonably necessary to enable Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) to deliver an opinion substantially as set
forth in paragraph 9.5.
10. BROKERAGE FEES AND EXPENSES
10.1. Each party hereto represents and warrants to the other party
hereto that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
10.2. The parties have been informed by Pioneer Investment Management,
Inc. that it will pay all expenses incurred in connection with the
Reorganization (including, but not limited to, the preparation of the proxy
statement and solicitation expenses), except that the Acquired Fund shall be
liable for its fees and expenses incurred in connection with its liquidation and
termination; provided, however, that any fees and expenses of counsel to the
Trust in excess of $15,000 shall be paid by EQSF Advisers, Inc.; and provided
further that in the event that the transactions contemplated by this Agreement
are not approved by the shareholders of the Acquired Fund or the transactions
contemplated hereby are not otherwise completed otherwise than as a result of a
breach of this Agreement, each of Pioneer Investment Management, Inc. and EQSF
Advisers, Inc. shall pay 50% of the costs incurred by each of the Acquiring Fund
and the Acquired Fund in connection with the transactions contemplated by this
Agreement; provided finally EQSF Advisers, Inc. shall not be liable for more
than $20,000 pursuant to the preceding clause. EQSF Advisers, Inc. shall also be
solely liable for any expenses incurred in connection with obtaining the
approval of the Trustees of the Trust of the transactions contemplated by this
Agreement.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The parties hereto agree that no party has made any
representation, warranty or covenant not set forth herein or referred to in
paragraph 9.6 hereof 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 survive the consummation of the transactions contemplated hereunder.
12. TERMINATION
12.1. This Agreement may be terminated at any time prior to the Closing
Date by: (a) the mutual agreement of the Trust, on behalf of the Acquired Fund,
and the Acquiring Fund; (b) any party in the event that the other party hereto
shall breach any material representation, warranty or agreement contained herein
to be performed at or prior to the Closing Date and has not cured such breach
within 10 days of notice thereof; or (c) 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.
12.2. In the event of any such termination, there shall be no liability
for damages on the part of any party hereto or their respective Trustees or
officers to the other party, but, except as provided in Section 10, each shall
bear the expenses incurred by it incidental to the preparation and carrying out
of this Agreement.
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
Trust on behalf of the Acquired Fund and the Acquiring Fund; provided, however,
that following the meeting of the Acquired Fund Shareholders called by the Trust
pursuant to paragraph 6.2 of this Agreement, no such amendment may have the
effect of
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changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement
to the detriment of the Acquired Fund Shareholders without their further
approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Trust on behalf of the
Acquired Fund at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and the
Acquiring Fund at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
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 laws of The Commonwealth of Massachusetts.
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
either party without the written consent of the other party hereto. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm, corporation or other entity, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
15.5 It is expressly agreed that the obligations of the Acquiring Fund
and the Trust, on behalf of the Acquired Fund, shall not be binding upon any of
their respective Trustees, shareholders, nominees, officers, agents or employees
personally, but bind only the trust property of the Acquiring Fund or the
Acquired Fund, as the case may be, as provided in the trust instruments of the
Acquiring Fund and the Trust, respectively. The execution and delivery of this
Agreement have been authorized by the Trustees of each of the Acquiring Fund and
the Trust, on behalf of the Acquired Fund, and this Agreement has been executed
by authorized officers of the Acquiring Fund and the Trust, on behalf of the
Acquired Fund, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officers shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Acquiring Fund and the
Acquired Fund, as the case may be, as provided in the trust instruments of the
Acquiring Fund and the Trust, respectively.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and attested by its
Secretary or Assistant Secretary.
Attest: THIRD AVENUE TRUST ON BEHALF OF
THIRD AVENUE HIGH YIELD FUND
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Secretary Title: President
Attest: PIONEER HIGH YIELD FUND
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Secretary Title: Chairman and President
14