APPENDIX A FORM OF AGREEMENT AND PLAN OF REORGANIZATION
APPENDIX
A
THIS
AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this
___ day of __________, 2009, by and among ▇.▇. ▇▇▇▇▇▇▇ & CO. GROWTH FUND,
INC., a Maryland corporation, with its principal place of business at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the “Acquired Fund”), INVESTMENT
MANAGERS SERIES TRUST, a Delaware statutory trust, with its principal
place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(“IMST”), with respect
to ▇.▇. ▇▇▇▇▇▇▇ & Co. Growth Fund, a series (“series”) thereof (the “Acquiring Fund” and, together
with the Acquired Fund, the “Funds”), and, solely for
purposes of paragraph 9.1, ▇.▇. ▇▇▇▇▇▇▇ & CO., INC., the investment manager
of the Acquiring Fund and the Acquired Fund (the “Manager”), and UMB Fund
Services, Inc., (“UMBFS”).
Each of
the Acquired Fund and IMST (each, an “Investment Company”) wishes to
effect a reorganization described in Section 368(a)(1)(F) of the United States
Internal Revenue Code of 1986, as amended (the “Code”), and intends this
Agreement to be, and adopts it as, a “plan of reorganization” within the meaning
of the regulations under the Code (the “Regulations”). The
reorganization will consist of (i) the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund (which is being established solely for the
purpose of acquiring those assets and continuing the Acquired Fund’s business)
in exchange solely for voting shares of beneficial interest, par value $0.01 per
share (“shares”), in the
Acquiring Fund (“Acquiring Fund
Shares”) and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund, (ii) the distribution of those shares
pro rata to the
stockholders of the Acquired Fund in exchange for their shares therein and in
complete liquidation thereof, and (iii) the dissolution of the Acquired
Fund as provided herein, all upon the terms and conditions set forth herein
(collectively, the “Reorganization”).
WHEREAS,
the Acquiring Fund is a series of IMST which is a registered open-end management
investment company, the Acquired Fund is also a registered open-end management
investment company, and the Acquired Fund owns securities that generally are
assets of the character in which the Acquiring Fund is permitted to
invest;
WHEREAS,
each Fund is authorized to issue its shares;
WHEREAS,
the Board of Directors of the Acquired Fund, and the Board of Trustees of IMST
(each, a “Board”), in
each case including a majority of its members who are not “interested persons”
(as that term is defined in the Investment Company Act of 1940, as amended (the
“1940 Act”)) (the “Independent Trustees”) of
either Investment Company, (1) has duly adopted and approved this Agreement
and the transactions contemplated hereby and (2) has determined that
participation in the Reorganization is in the best interests of its Fund and
that the interests of its Fund’s existing stockholders will not be diluted as a
result of the Reorganization; and
NOW,
THEREFORE, in consideration of the premises, covenants, and agreements
hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE
I
THE
REORGANIZATION
1.1 THE
EXCHANGE. Subject to requisite approval of the Acquired Fund’s
stockholders and the other terms and conditions contained herein and on the
basis of the representations and warranties contained herein, the Acquired Fund
agrees to sell, assign, convey, transfer, and deliver all of its assets
described in paragraph 1.2 (the “Assets”) to the Acquiring
Fund. The Acquiring Fund agrees to acquire all of the Assets and in
exchange therefor --
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(a)
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to
issue and deliver to the Acquired Fund the number of full and fractional
Acquiring Fund Shares equal to the number of full and fractional Acquired
Fund shares (the “Acquired Fund Shares”)
then outstanding (all references herein to “fractional” shares meaning
fractions rounded to the third decimal place), which Acquiring Fund Shares
shall (i): be duly authorized and validly issued and outstanding, fully
paid and non-assessable when issued and (ii) have an aggregate net asset
value, as of immediately following the Effective Time, equal to the net
asset value of the Acquired Fund, as of immediately prior to the Effective
Time, and
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(b)
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assume
all the Acquired Fund’s liabilities described in paragraph 1.3 (the “Liabilities”).
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Such
transactions shall take place at the Closing, on the Closing Date (both as defined
in paragraph 2.1).
1.2 ASSETS
TO BE ACQUIRED. The Assets shall consist of all assets and property
of every kind and nature, including all cash, cash equivalents, securities,
commodities, interests in futures, claims and rights of action (whether absolute
or contingent, known or unknown, accrued or unaccrued), dividends and interest
receivable, receivables for shares sold, books and records, rights to register
stock under applicable securities laws, and other rights that are owned by the
Acquired Fund as of the Effective Time (as defined in paragraph
2.1), and any deferred or prepaid expenses shown as an asset on the books of the
Acquired Fund as of that time. The Acquired Fund has provided IMST
with the Acquired Fund’s most recent audited financial statements, which contain
a list of all of the Acquired Fund’s assets required to be set forth on a
balance sheet as of the date of such statements prepared (except as may be
indicated in the notes thereto) in accordance with generally accepted accounting
principles consistently applied in the United States (“U.S. GAAP”).
1.3 LIABILITIES
TO BE ASSUMED. The Liabilities shall consist of all of the Acquired
Fund’s liabilities, debts, obligations, and duties of whatever kind or nature
existing as of the Effective Time (including, without limitation, all of the
Acquired Fund’s obligations to indemnify its directors and officers as provided
in its Articles of Incorporation and By-laws in connection with any directors’
or officers’ actions or events prior to the Effective Time, inclusive of actions
or events in connection with the Reorganization), whether absolute, accrued,
contingent, or otherwise, whether known or unknown, whether or not arising in
the ordinary course of business, whether or not determinable as of the Effective
Time, whether or not reflected in the Acquired Fund’s accounts or on its
financial statements, and whether or not specifically referred to in this
Agreement, excluding Reorganization Expenses (as
defined in paragraph 4.1(dd)) borne by the Manager or any other person pursuant
to paragraph 9.1. Notwithstanding the foregoing, the Acquired Fund
shall endeavor in good faith to discharge all of its known liabilities and
obligations to the extent possible prior to the Effective Time.
1.4 LIQUIDATION
AND DISTRIBUTION. On or as soon after the Closing Date as is
conveniently practicable, the Acquired Fund (a) will distribute the
Acquiring Fund Shares it receives pursuant to paragraph 1.1(a) to its
stockholders of record determined as of the Effective Time (each, an “Acquired Fund Stockholder”),
in proportion to their Acquired Fund Shares then held of record and in
constructive exchange for their Acquired Fund Shares, and (b) will
thereupon proceed to dissolve as set forth in paragraph 1.8. That
distribution will be accomplished by IMST’s transfer agent’s opening accounts on
its books in the Acquired Fund Stockholders’ names and transferring those
Acquiring Fund Shares thereto. Pursuant to that transfer, each
Acquired Fund Stockholder’s account will be credited with the number of full and
fractional Acquiring Fund Shares equal to the number of full and fractional
Acquired Fund Shares that such Acquired Fund Stockholder holds as of the
Effective Time. The aggregate net asset value of Acquiring Fund
Shares to be so credited to each Acquired Fund Stockholder’s account will, as of
immediately following the Effective Time, equal the aggregate net asset value of
the Acquired Fund Shares that such Acquired Fund Stockholder owns, as of
immediately prior to the Effective Time. All issued and outstanding
Acquired Fund Shares, including any represented by certificates, will,
simultaneously with the distribution described in clause (a) of the first
sentence of this paragraph, be canceled on the Acquired Fund’s share transfer
books. IMST shall not issue certificates representing the Acquiring
Fund Shares issued in connection with the Reorganization. Each
Acquired Fund Stockholder shall have the right to receive any unpaid dividends
or other distributions that were declared by the Acquired Fund before the
Effective Time with respect to Acquired Fund Shares that such Acquired Fund
Stockholder held of record as of the Effective Time.
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1.5 OWNERSHIP
OF SHARES. Ownership of Acquiring Fund Shares will be shown on the
books of the Acquiring Fund’s transfer agent. Acquiring Fund Shares
will be issued in the manner described in the Acquiring Fund’s then-current
Prospectus and Statement of Additional Information.
1.6 TRANSFER
TAXES. Any transfer taxes payable upon the issuance of Acquiring Fund
Shares in a name other than that of the registered holder on the Acquired Fund’s
share transfer books of the Acquired Fund Shares actually or constructively
exchanged therefor shall, as a condition of such issuance, be paid by the person
to whom such Acquiring Fund Shares are to be issued.
1.7 REPORTING
RESPONSIBILITY. Any reporting responsibility of the Acquired Fund,
including the responsibility for filing of regulatory reports, tax returns, and
other documents with the U.S. Securities and Exchange Commission (the “Commission”), any state
securities commission, any federal, state, and local tax authorities, and any
other relevant regulatory authority, is and shall remain the responsibility of
the Acquired Fund up to and including the date on which it is
dissolved. The Acquiring Fund shall reasonably cooperate with the
Acquired Fund in preparing any such filing to the extent it relates to periods
following the Effective Time.
1.8 TERMINATION
AND DISSOLUTION. As soon as reasonably practicable after the
distribution of the Acquiring Fund Shares pursuant to paragraph 1.4, the
Acquired Fund shall use commercially reasonable efforts to terminate its
registration under the 1940 Act and to completely dissolve under Maryland
law. After the Effective Time, the Acquired Fund shall not conduct
any business except in connection with its liquidation and dissolution and as
otherwise contemplated by this Agreement.
ARTICLE
II
CLOSING
AND EFFECTIVE TIME
2.1 The
closing of the Reorganization, including related acts necessary to consummate
the same (the “Closing”), shall be held at
the offices of ▇.▇. ▇▇▇▇▇▇▇ & Co., Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, as soon as possible, but in no event later than five business days
after the satisfaction of the conditions set forth in Articles VI, VII and VIII,
or at such other place and/or on such other date as to which the Investment
Companies may agree in writing (the “Closing Date”). All
acts taking place at the Closing shall be deemed to take place simultaneously
immediately after the close of business (i.e., 4:00 p.m., Eastern
time) on the Closing Date (“Effective Time”).
ARTICLE
III
CERTIFICATES
TO BE DELIVERED AT THE CLOSING
3.1 CUSTODIAN’S
CERTIFICATE. The portfolio securities of the Acquired Fund, as of
such time, shall be made available by the Acquired Fund to the Acquiring Fund’s
custodian, for examination, no later than five business days preceding the
Closing Date, and shall be transferred and delivered by the Acquired Fund as of
the Effective Time for the account of the Acquiring Fund duly endorsed in proper
form for transfer in such condition as to constitute good delivery thereof in
accordance with the custom of brokers. The Acquired Fund shall direct
State Street Bank and Trust Company (the “Custodian”), as custodian for
the Acquired Fund, to deliver as of the Effective Time by book entry, in
accordance with the customary practices of the Custodian and any securities
depository (as defined in Rule 17f-4 under the ▇▇▇▇ ▇▇▇) in which the Acquired
Fund’s assets are deposited, the Acquired Fund’s portfolio securities and
instruments deposited with such depositories. Any cash to be
transferred by the Acquired Fund shall be delivered by wire transfer of federal
funds on the Closing Date. The Acquired Fund shall use commercially
reasonable efforts to cause the Custodian to deliver within three business days
after the Closing, a certificate of an authorized officer stating that
(a) the Acquired Fund’s portfolio securities, cash, and any other assets
shall have been delivered in proper form to the Acquiring Fund on the Closing
Date and (b) all necessary taxes, including all applicable federal and
state stock transfer stamps, if any, shall have been paid, or provision for
payment shall have been made, in conjunction with the delivery of portfolio
securities by the Acquired Fund (the “Custodian
Certificate”).
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3.2 TRANSFER
AGENTS’ CERTIFICATES. The Acquired Fund shall use commercially
reasonable efforts to cause State Street Bank and Trust Company, as transfer
agent for the Acquired Fund as of the Closing Date, to deliver within three
business days after the Closing, a certificate of an authorized officer stating
that its records contain the names and addresses of the Acquired Fund
Stockholders and the number and percentage ownership of full and fractional
outstanding shares owned by each such stockholder as of the Effective Time (the
“Transfer Agent
Certificate”). IMST shall issue and deliver, or cause UMB Fund
Services, Inc., its transfer agent, to issue and deliver, at the Closing
(a) a confirmation evidencing that the Acquiring Fund Shares issued by the
Acquiring Fund in accordance with paragraph 1.1(a) have been credited at the
Effective Time to the Acquired Fund’s account on the books of the Acquiring Fund
and (b) a certificate as to the opening of accounts on those books in the
Acquired Fund Stockholders’ names. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts, and other documents, if any, as such other party
or its counsel may reasonably request.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
4.1 REPRESENTATIONS
OF THE ACQUIRED FUND. Except as has been disclosed to IMST in a
written instrument executed by an officer of the Acquired Fund, the Acquired
Fund represents and warrants to IMST and the Acquiring Fund as
follows:
(a) The
Acquired Fund 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 (the “Articles”) to own all of its
properties and assets and to carry on its business as it is now being
conducted.
(b) The
Acquired Fund 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 shares of the Acquired Fund for offer and sale under the
Securities Act of 1933, as amended (the “1933 Act”), is
effective.
(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 (other than the dissolution of the Acquired
Fund), except such as may be required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the “1934 Act”), or the 1940 Act
and such as may be required by state securities laws.
(d) The
current Prospectus and Statement of Additional Information of the Acquired Fund
and each Prospectus and Statement of Additional Information of the Acquired Fund
used during the two 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
thereunder, and do not, or did not at the time of their use, include any untrue
statement of a material fact or omit any material fact required to be stated or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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(e) At
the Effective Time, the Acquired Fund will have good and valid title to the
Assets and full right, power, and authority to sell, assign, transfer and
deliver the Assets hereunder free of any liens or other encumbrances, except
those liens and encumbrances arising in the ordinary course of business or as to
which the Acquiring Fund has received notice, and upon delivery and payment for
the Assets, the Acquiring Fund will acquire good and valid title thereto,
subject to no restrictions on the full transfer thereof, excluding such
restrictions as might arise under the 1933 Act or other applicable
law.
(f) The
Acquired Fund is not engaged currently, and the execution, delivery, and
performance of this Agreement (subject to stockholder approval) will not result,
in a violation (i) of the Articles or ▇.▇. ▇▇▇▇▇▇▇ & Co.’s By-Laws or (ii)
of any agreement, indenture, instrument, contract, lease, or other undertaking
to which the Acquired Fund is a party or by which it is bound, other than such
violations that would not a cause a Material Adverse Change with respect to the
Acquired Fund.
(g) The
execution, delivery and performance of this Agreement will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Acquired Fund is a party or by which it is bound that would materially and
adversely affect its ability to consummate the transactions contemplated by this
Agreement or that would cause a Material Adverse Change with respect to the
Acquired Fund.
(h) The
Acquired Fund has no material contracts or other commitments (other than this
Agreement) that if terminated will result in material liability to the Acquired
Fund or under which (whether or not terminated) any material payments for
periods subsequent to the Closing Date will be due from the Acquired
Fund.
(i) No
litigation, administrative proceeding, or investigation of or before any court
or governmental body is presently pending or, to its knowledge, threatened
against the Acquired Fund or any of its properties or assets that, if adversely
determined, would materially and adversely affect the Acquired Fund’s ability to
consummate the transactions contemplated by this Agreement or would cause a
Material Adverse Change with respect to the Acquired Fund. 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 that materially and
adversely affects the Acquired Fund’s business or its ability to consummate the
transactions contemplated herein.
(j) The
Statement of Assets and Liabilities, Statements of Operations and Changes in Net
Assets, and Schedule of Investments of the Acquired Fund at December 31, 2008
have been audited by___________________, an independent registered public
accounting firm, and such statements (copies of which have been furnished to
IMST) present fairly, in all material respects, the financial condition of the
Acquired Fund as of such date in accordance with U.S. GAAP (except as may be
indicated in the notes thereto), and there are no known contingent liabilities
of the Acquired Fund of a material amount required to be reflected on a balance
sheet (including the notes thereto) in accordance with U.S. GAAP as of such date
not disclosed therein.
(k) On
the closing date, IMST shall have been furnished with an unaudited statement of
assets, liabilities and capital and a schedule of investments of the Acquired
Fund, each as of ____________, 2009. These statements shall present
fairly, in all material respects, the financial position of the Acquired Fund as
of such date in accordance with U.S. GAAP (except as may be indicated in the
notes thereto), and there are no known contingent liabilities of the Acquired
Fund of a material amount required to be on a balance sheet in accordance with
U.S. GAAP as of such date not disclosed therein.
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(l) Since
_____________, 2009, there have been no Material Adverse Changes in the Acquired
Fund or any incurrence by the Acquired Fund of material indebtedness (except for
indebtedness incurred in the ordinary course of business). For
purposes of this Agreement, “Material Adverse Change”, with
respect to a Fund or an Investment Company, means a material adverse change in
such Fund’s or Investment Company’s financial condition, assets, liabilities or
business (other than changes occurring in the ordinary course of business);
provided that, (i) a distribution of net investment income and/or net realized
capital gains, (ii) a change in portfolio securities, (iii) a change in market
value of portfolio securities, (iv) a decline in the net asset value per share,
(v) the discharge of liabilities, (vi) the net redemption of shares, (vii)
changes or conditions affecting the asset management industry, stock markets or
the financial markets generally, (viii) changes in economic, regulatory or
political conditions generally, (ix) changes in the business of the Acquired
Fund after the date hereof that are attributable directly or indirectly to IMST
or its affiliates, and/or (x) changes resulting from this Agreement or the
transactions contemplated hereby, shall not constitute a Material Adverse
Change.
(m) 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 be 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 such returns and reports shall have been
paid, or provision shall have been made for the payment thereof; all of the
Acquired Fund’s tax liabilities, if any, will have been adequately provided for
on its books; and to the Acquired Fund’s knowledge, no such return is currently
under audit, and no assessment has been asserted with respect to such returns;
except in each case such matters that would not materially and adversely affect
the Acquired Fund’s ability to consummate the transactions contemplated hereby
or cause a Material Adverse Change with respect to the Acquired
Fund.
(n) There
are no material contracts outstanding to which the Acquired Fund is a party
other than those entered into in the ordinary conduct of its
business.
(o) The
Acquired Fund has elected under Section 851 of the Code to be, and has qualified
for treatment under Subchapter M of the Code as, a “regulated investment
company” under the Code (a “RIC”) as of and since its
first taxable period. The Acquired Fund is in compliance with
applicable regulations of the Internal Revenue Service pertaining to the
reporting of dividends and other distributions on and redemptions of its shares
of beneficial interest and to withholding in respect of dividends and other
distributions to stockholders, and is not liable for any penalties that could be
imposed thereunder; except in any such case such matter as would not cause a
Material Adverse Change with respect to the Acquired Fund.
(p) Upon
reasonable request with reasonable notice, the Acquired Fund will make available
its books and records (or copies thereof) to IMST for purposes of preparing any
tax returns required by law to be filed after the Closing Date.
(q) All
issued and outstanding shares of the Acquired Fund are, and at the Closing Date
will be, duly authorized and validly issued and outstanding, fully paid and
non-assessable and, except for matters that would not cause a Material Adverse
Change with respect to the Acquired Fund, have been offered and sold in
compliance in with all applicable registration or qualification requirements of
the 1933 Act and state securities laws. To the knowledge of the
Acquired Fund, all of the issued and outstanding shares of the Acquired Fund
will, at the time of the Closing, be held of record by the persons and in the
amounts set forth in the records of the Acquired Fund’s transfer agent as
provided in paragraph 3.2. The Acquired Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any Acquired
Fund Shares, and has no outstanding securities convertible into Acquired Fund
Shares.
(r) The
execution, delivery, and performance of this Agreement and the Reorganization
have been duly authorized and approved by all necessary action on the part of
the Board of the Acquired Fund (including in accordance with Rule 17a-8 under
the 1940 Act), and subject to approval by the Acquired Fund’s stockholders and
assuming the due authorization, execution and delivery of this Agreement by
IMST, the Manager and UMBFS, this Agreement constitutes a valid and binding
obligation 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 generally
and to general equity principles.
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(s) The
written information furnished by the Acquired Fund for use in no-action letters,
applications for orders, registration statements, proxy materials, and other
documents filed or to be filed with any federal, state or local regulatory
authority (including the Financial Industry Regulatory Authority (“FINRA”)) that are necessary in
connection with the transactions contemplated herein shall, when furnished, be
accurate and complete in all material respects and shall comply in all material
respects with federal securities laws and other laws and
regulations.
(t) Any
written information furnished by the Acquired Fund for use in the Registration Statement or
Proxy
Statement/Prospectus (each as defined in paragraph 5.6), or any other
materials provided to Acquired Fund Stockholders in connection with the
Reorganization, shall, when furnished, not contain any untrue statement of a
material fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under which such
statements were made, not materially misleading; if any such information ceases
to meet such standard to the knowledge of the Acquired Fund, the Acquired Fund
shall promptly inform IMST.
(u) The
Acquired Fund will distribute the Acquiring Fund Shares it receives in the
Reorganization in pursuance of this Agreement.
(v) The
Liabilities to be assumed by the Acquiring Fund (including the Liabilities, if
any, that are secured by the Assets) were incurred in the ordinary course of the
Acquired Fund’s business and are associated with the Assets or with the ordinary
course operation of the Acquired Fund’s business.
(w) No
Acquired Fund Stockholder will receive consideration from the Acquired Fund
other than Acquiring Fund Shares.
(x) The
Acquired Fund is not under the jurisdiction of a court in a “title 11 or similar
case” within the meaning of Section 368(a)(3)(A) of the Code.
(y) To
the knowledge of the Acquired Fund, the fair market value of the Assets equals
or exceeds the Liabilities.
(z) The
Acquired Fund has no material unamortized or unpaid organizational fees or
expenses that have not previously been disclosed to IMST.
(aa) The
Acquired Fund values, and will continue to value through the Closing Date, its
portfolio securities and other assets in accordance with applicable legal
requirements in all material respects.
(bb) The
Acquired Fund’s investment operations from inception to the date hereof have
been in compliance in all material respects with the investment policies and
investment restrictions set forth in the Acquired Fund’s Prospectus, except as
previously disclosed in writing to IMST.
(cc) The
Acquiring Fund Shares to be issued to the Acquired Fund pursuant to paragraph 1
will not be acquired for the purpose of making any distribution thereof other
than to the Acquired Fund Stockholders as provided in paragraph
1.4.
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(dd) The
Acquired Fund will not permit (to the extent reasonably within its control) the
Manager, the Acquiring Fund, or any third party to pay or assume any expenses
incurred by the Acquired Fund or on its behalf in connection with the
Reorganization unless those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set forth in Rev.
Rul. 73-54, 1973-1 C.B. 187) (“Reorganization Expenses”), and
the Acquired Fund will not transfer any cash or property other than Acquiring
Fund Shares to any of its stockholders with the intention that it be used to pay
any expenses (even Reorganization Expenses) thereof.
(ee) The
Acquired Fund will not pay the expenses (such as fees of personal investment or
tax advisers for advice regarding the Reorganization), if any, of Acquired Fund
Stockholders incurred in connection with the Reorganization.
4.2 REPRESENTATIONS
OF THE ACQUIRING FUND. Except as has been disclosed to ▇.▇. ▇▇▇▇▇▇▇
& Co. in a written instrument executed by an officer of IMST, IMST and the
Acquiring Fund represent and warrant to the Acquired Fund as
follows:
(a) The
Acquiring Fund will be duly organized, as of the Effective Time, as a series of
IMST, which is a statutory trust duly organized, validly existing and in good
standing under the laws of the State of Delaware, with power under IMST’s
Amended and Restated Agreement and Declaration of Trust (the “Declaration of Trust”) to own
all of its properties and assets and to carry on its business as it is now being
conducted.
(b) IMST
is a registered open-end management investment company, and its registration
with the Commission as an investment company under the 1940 Act is effective
(and so will be with respect to the Acquiring Fund at the Closing Date), and the
registration of shares of the Acquiring Fund under the 1933 Act is, or will be
on or before the Closing Date, 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 Acquiring Fund of the
transactions contemplated herein, except such as may be required under the 1933
Act, the 1934 Act or the 1940 Act and such as may be required by state
securities laws.
(d) The
Prospectus and Statement of Additional Information of the Acquiring Fund filed
pursuant to Rule 485(a)(2) of the 1933 Act in an amendment to IMST’s
registration statement on Form N-1A (the “IMST Registration Statement”),
which will be filed with the Commission, and become effective, prior to the
Closing Date, conforms and, as of its effective date, will conform in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations thereunder and do not and, as of its effective
date, will not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) No
consideration other than Acquiring Fund Shares (and the Acquiring Fund’s
assumption of the Liabilities) will be issued in exchange for the Assets in the
Reorganization.
(f) There
is no plan or intention for the Acquiring Fund to be dissolved or merged into
another statutory trust or a corporation or business trust or any “fund” thereof
(as defined in Section 851(g)(2) of the Code) following the
Reorganization.
(g) The
execution, delivery and performance of this Agreement will not result in a
violation of (i) the Declaration of Trust or IMST’s By-Laws or (ii) of any
agreement, indenture, instrument, contract, lease or other undertaking to which
IMST, on behalf of the Acquiring Fund, is a party or by which it is bound, other
than such violations that would not cause a Material Adverse Change with respect
to IMST or the Acquiring Fund.
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(h) The
execution, delivery and performance of this Agreement will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
IMST, on behalf of the Acquiring Fund, is a party or by which it is bound that
would materially and adversely affect its ability to consummate the
transactions contemplated by this Agreement that would cause a Material Adverse
Change with respect to IMST or the Acquiring Fund.
(i) No
litigation, administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to its knowledge, threatened against
IMST or the Acquiring Fund or any of its properties or assets that, if adversely
determined, would materially and adversely affect the Acquiring Fund’s ability
to consummate the transactions contemplated by this Agreement or would cause a
Material Adverse Change with respect to IMST or the Acquiring
Fund. IMST, 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 that materially and adversely affects the Acquiring Fund’s
business or its ability to consummate the transactions contemplated
herein.
(j) The
Acquiring Fund was formed for the purpose of effecting the Reorganization, and,
prior to the Closing, will have not commenced operations or carried on any
business activity, will have had no assets or liabilities, will never have had
an operating business, and will have no issued or outstanding shares other than
as contemplated by the payment received from an affiliate of UMBFS with respect
to the Initial Shares
(as defined in paragraph 6.4) issued to such affiliate of UMBFS pursuant to that
paragraph.
(k) Acquiring
Fund Shares to be issued and delivered to the Acquired Fund, for the account of
the Acquired Fund Stockholders, pursuant to the terms of this Agreement will be
on the Closing Date, duly authorized and validly issued and outstanding, fully
paid and non-assessable and will be offered and sold in compliance in all
material respects with applicable registration or qualification requirements of
the 1933 Act and state securities laws. The Acquiring Fund has no
outstanding options, warrants or other rights to subscribe for or purchase any
shares, including the Acquiring Fund Shares, of the Acquiring Fund and has no
outstanding securities convertible into any shares, including the Acquiring Fund
Shares, of the Acquiring Fund.
(l) The
execution, delivery and performance of this Agreement and the Reorganization
have been duly authorized and approved by all necessary action on the part of
the Board of IMST (including in accordance with Rule 17a-8 under the ▇▇▇▇ ▇▇▇)
on behalf of the Acquiring Fund, and subject to approval by the Acquired Fund’s
stockholders and assuming the due authorization, execution and delivery of this
Agreement by the Acquired Fund, the Manager and UMBFS this Agreement constitutes
a valid and binding obligation of IMST with respect to 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 generally and to general equity
principles.
(m) The
written information furnished by IMST for use in no-action letters, applications
for orders, registration statements, proxy materials and other documents filed
or to be filed with any federal, state or local regulatory authority (including
FINRA) that are necessary in connection with the transactions contemplated
herein shall, when furnished, be accurate and complete in all material respects
and shall comply in all material respects with federal securities laws and other
laws and regulations.
(n) From
the effective date of the
Registration Statement through the time of the meeting of the Acquired
Fund’s stockholders and on the Closing Date, the Registration Statement and the
Proxy
Statement/Prospectus and any other materials provided in connection with
the Reorganization (except for such portions thereof provided in writing by the
Acquired Fund), shall, (i) not contain any untrue statement of a material fact
or omit to state a material fact required to be stated or necessary to make the
statements, in light of the circumstances under which such statements were made,
not materially misleading and (ii) comply with applicable law in all material
respects.
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(o) The
Acquiring Fund has no unamortized or unpaid organizational fees or
expenses.
(p) The
Acquiring Fund will be a “fund” (as defined in Section 851(g)(2) of the Code),
will qualify for treatment under Subchapter M of the Code as a RIC as of the
Effective Time and in the future, and, from the date of this Agreement until the
Closing Date, shall not take any action inconsistent with such efforts to
qualify for treatment as a RIC in the future.
(q) The
Acquiring Fund has no plan or intention (i) to sell or dispose of any of the
Assets, except for dispositions made in the ordinary course of business or
dispositions necessary to maintain its status as a RIC, or (ii) to redeem or
reacquire any of the shares issued by it, except in the ordinary course of
business.
(r) The
fair market value of the Acquiring Fund Shares received by each Acquired Fund
Stockholder will be equal to the fair market value of the Acquired Fund Shares
actually or constructively surrendered in the exchange.
(s) The
Acquiring Fund Shares constitute voting stock for purposes of Sections
368(a)(1)(C) and 368(c) o the Code.
(t) No
expenses incurred by the Acquired Fund or on its behalf in connection with the
Reorganization will be paid or assumed by the Manager, the Acquiring Fund, or
any third party unless those expenses are Reorganization Expenses, and no cash
or property other than Acquiring Fund Shares will be transferred to the Acquired
Fund or any of its stockholders with the intention that it be used to pay any
expenses (even Reorganization Expenses) thereof.
(u) Immediately
following consummation of the Reorganization, (i) the Acquired Fund
Stockholders will own all the Acquiring Fund Shares and will own those shares
solely by reason of their ownership of the Acquired Fund Shares immediately
before the Reorganization and (ii) the Acquiring Fund will hold the same
assets -- except for assets (if any) used to pay the Funds’ expenses incurred in
connection with the Reorganization -- and be subject to the same liabilities
that the Acquired Fund held or was subject to immediately before the
Reorganization, plus any liabilities for those expenses; and those excepted
assets, together with the amount of all redemptions and distributions (other
than regular, normal dividends) the Acquired Fund makes immediately preceding
the Reorganization, will, in the aggregate, constitute less than 1% of its net
assets.
ARTICLE
V
COVENANTS
5.1 OPERATION
IN ORDINARY COURSE. The Acquired Fund will operate its business in
the ordinary course between the date of this Agreement and the Closing Date, it
being understood that such ordinary course of business will include the purchase
and sale of securities in connection with the management of the Acquired Fund’s
portfolio and payment of customary dividends and other distributions and
stockholder redemptions.
5.2 APPROVAL
OF STOCKHOLDERS. The Acquired Fund will call a special meeting of the
Acquired Fund’s stockholders to consider and act upon this
Agreement.
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5.3 ADDITIONAL
INFORMATION. The Acquired Fund will assist IMST in obtaining such
information as IMST reasonably requests concerning the beneficial ownership of
the Acquired Fund Shares, subject to applicable law.
5.4 FURTHER
ACTION. Subject to the provisions of this Agreement, each Investment
Company will take or cause to be taken, all reasonable 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, including
any actions required to be taken after the Closing Date (provided that if the
Acquired Fund Stockholders fail to approve the Reorganization at the
stockholders meeting called pursuant to paragraph 5.2, nothing herein shall be
construed to require the Acquired Fund to call another stockholders
meeting). Without limiting the generality of the foregoing, IMST
covenants to use its commercially reasonable efforts (i) to establish, prior to
the Closing Date, the Acquiring Fund as a series of IMST as contemplated by this
Agreement and (ii) to take such steps, and to make such arrangements, as are
necessary to permit the Acquiring Fund to operate following the Closing Date in
accordance with the 1933 Act, the 1934 Act, the 1940 Act and in the manner
described in the IMST Registration Statement, the Registration Statement and the
Proxy Statement/Prospectus.
5.5 STATEMENT
OF EARNINGS AND PROFITS. As promptly as practicable, but in any case
within sixty (60) days after the Closing Date, the Acquired Fund shall furnish
IMST, in such form as is reasonably satisfactory to IMST, a statement of the
earnings and profits of the Acquired Fund for federal income tax purposes that
will be carried over by the Acquiring Fund as a result of Section 381 of the
Code, and which will be reviewed by ____________________ (or such other
reputable independent registered public accounting firm as the Acquired Fund may
select) and certified by the Acquired Fund’s Treasurer.
5.6 PREPARATION
OF FORM N-14 REGISTRATION STATEMENT. IMST will prepare and file with
the Commission a registration statement on Form N-14 (the “Registration Statement”),
under the 1933 Act, relating to the Acquiring Fund Shares, which, without
limitation, shall include a proxy statement of the Acquired Fund and the
prospectus of the Acquiring Fund relating to the Reorganization (the “Proxy Statement/Prospectus”)
subject to approval of the Board of the Acquired Fund, which shall not be
unreasonably withheld. IMST covenants that the Registration Statement
(including the Proxy
Statement/Prospectus) shall be in compliance with the 1933 Act, the 1934
Act and the 1940 Act. The Acquired Fund will provide IMST with the
materials and information regarding the Acquired Fund necessary to prepare the
Proxy Statement/Prospectus for inclusion in the Registration Statement in
connection with the meeting of the Acquired Fund’s stockholders to consider and
act on this Agreement and the transactions contemplated herein. IMST
agrees to use all commercially reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act and any state blue sky or
securities laws reasonably necessary for the Acquiring Fund to operate after the
Closing Date.
5.7 LIQUIDATING
DISTRIBUTION. As soon as is reasonably practicable after the Closing,
the Acquired Fund will make a liquidating distribution to the Acquired Fund
Stockholders consisting of the Acquiring Fund Shares received at the Closing,
pursuant to paragraph 1.4 hereof.
5.8 FULFILLMENT
OF CONDITIONS. Each Investment Company shall use its commercially
reasonable efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.9 DELIVERY
OF INSTRUMENTS. Each Investment Company, on behalf of its Fund,
covenants that it will, from time to time, as and when reasonably requested by
the other Investment Company, 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 such other Investment Company, on behalf of its
Fund, may reasonably deem necessary or desirable in order to vest in and confirm
(a) the Acquired Fund’s title to and possession of the Acquiring Fund
Shares to be delivered hereunder, and (b) IMST’s, on behalf of the Acquiring
Fund’s, title to and possession of all the Assets and otherwise to carry out the
intent and purpose of this Agreement.
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5.10 REORGANIZATION
UNDER THE CODE. It is the intention of the parties that the
Reorganization will qualify as a reorganization within the meaning of Section
368(a) of the Code. Neither the Acquired Fund nor IMST shall take any
action or cause any action to be taken (including, without limitation, the
filing of any tax return) that is inconsistent with such treatment or results in
the failure of the Reorganization to qualify as such a
reorganization.
5.11 HOLDING
PERIOD. IMST covenants that, if the Reorganization is consummated,
each Acquired Fund Stockholder’s holding period for the Acquiring Fund Shares
the stockholder receives in the Reorganization will be deemed to include that
stockholder’s holding period for the Acquired Fund Shares it actually or
constructively exchanges for those Acquiring Fund Shares for purposes of
determining the application of any applicable contingent deferred sales charge,
redemption or exchange fees.
ARTICLE
VI
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 following
conditions:
6.1 All
representations, covenants, and warranties of IMST contained in this Agreement
shall be true and correct as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date with only such exceptions as would not
cause a Material Adverse Change with respect to IMST or the Acquiring
Fund. IMST shall have delivered to the Acquired Fund at the Closing a
certificate, executed in the Acquiring Fund’s name by IMST’s President or Vice
President and dated as of the Effective Time, to such effect.
6.2 The
Acquired Fund shall have received on the Closing Date an opinion from regular
counsel to the Acquiring Fund dated as of the Closing Date covering the
following points:
(a) The
Acquiring Fund is a series of shares of IMST duly established and designated by
the Declaration of Trust. IMST is a statutory trust validly existing
and in good standing under the Delaware Statutory Trust Act. The
Declaration of Trust provides IMST with the statutory trust power necessary for
it to own its properties and assets and conduct its business as described in the
Registration Statement. IMST has the trust power on behalf of the
Acquiring Fund and has taken all action required to authorize it, to execute,
deliver and perform its obligations under this Agreement in accordance with the
applicable provisions of the Declaration of Trust and its By-Laws.
(b) IMST
is registered with the Commission as an investment company under the 1940
Act. Based solely on telephonic advice by staff of the Commission,
the Registration Statement has been declared effective by the Commission under
the 1933 Act. To the knowledge of such counsel (which shall not
require investigation beyond a telephone conversation with staff of the
Commission), such counsel is not aware of any stop order suspending the
effectiveness of the Registration Statement, and, to the knowledge of such
counsel, no stop order proceedings for such purpose are pending by the
Commission.
(c) The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary statutory trust action by IMST on behalf of the Acquiring Fund,
this Agreement has been duly executed and delivered by IMST on behalf of the
Acquiring Fund, this Agreement constitutes a valid and binding obligation of
IMST and the Acquiring Fund, enforceable against IMST and the Acquiring Fund in
accordance with its terms.
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(d) The
Acquiring Fund Shares to be delivered pursuant to this Agreement are duly
authorized and, when issued in accordance with this Agreement, will be validly
issued, fully paid and non-assessable.
(e) To
the knowledge of such counsel (which shall not require investigation beyond
federal or Delaware law), no consent, approval, authorization or order of or
filing with any court or governmental authority is required for IMST’s
execution, delivery and performance of this Agreement, and the receipt of the
Assets and the assumption of the Liabilities by the Acquiring Fund in accordance
with this Agreement, other than (a) those that have been obtained under the 1933
Act, the 1934 Act or the 1940 Act, and (b) those that may be required
under state securities laws (as to which such counsel need express no
opinion).
(f) The
execution and delivery of this Agreement did not, and the receipt of the Assets
and the assumption of the Liabilities by the Acquiring Fund in accordance with
this Agreement will not, violate the Declaration of Trust or IMST’s
By-laws.
(g) To
the knowledge of such counsel, there is no action, suit or proceeding at law or
in equity, or by or before any federal or Delaware state court or governmental
or regulatory body or agency or arbitration board or panel pending or overtly
threatened against IMST or the Acquiring Fund or any of their assets that
challenges or seeks to prohibit, restrain or enjoin the
Reorganization.
6.3 The
post-effective amendment to the IMST Registration Statement filed by IMST with
the Commission to create the Acquiring Fund has been declared effective by the
Commission.
6.4 Prior
to the Closing Date, IMST shall have authorized the issuance of and shall have
issued an Acquiring Fund Share in each class (the “Initial Shares”) to an affiliate of UMBFS
in consideration of the payment of a reasonable offering price of such Initial
Shares, as determined by IMST’s Board, for the purpose of enabling such
affiliate of UMBFS to vote to (a) approve the investment management agreement
between IMST, on behalf of the Acquiring Fund, and the Manager, (b) approve any
plan adopted by the Acquiring Fund pursuant to Rule 12b-1 under the 1940 Act,
and (c) take such other steps related to the inception, establishment and
organization of the Acquiring Fund as deemed necessary or appropriate by the
Boards in order to conform the Acquiring Fund to the description of the
Acquiring Fund included in the Proxy Statement/Prospectus. At or
before the Effective Time, each Initial Share shall be redeemed by the Acquiring
Fund for the price at which it is issued.
6.5 IMST,
on behalf of the Acquiring Fund, shall have performed in all material respects
all of its obligations hereunder required to be performed by it on or before the
Closing Date.
ARTICLE
VII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF IMST
The
obligations of IMST to consummate the transactions provided for herein shall be
subject, at its election, to the following conditions:
7.1 All
representations, covenants, and warranties of the Acquired Fund contained in
this Agreement shall be true and correct as of the Closing Date, with the same
force and effect as if made on and as of such Closing Date with only such
exceptions as would not cause a Material Adverse Change with respect to the
Acquired Fund. The Acquired Fund shall have delivered to IMST at the
Closing a certificate executed in the Acquired Fund’s name by its President or
Vice President, dated as of the Effective Time, to such effect.
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7.2 IMST
shall have received on the Closing Date an opinion from regular counsel to the
Acquired Fund, dated as of the Closing Date covering the following
points:
(a) The
Acquired Fund is a corporation validly existing and in good standing under the
laws of the State of Maryland and has power as a corporation to own all of its
properties and assets and to carry on its business as described in its
registration statement on Form N-1A, as amended.
(b) The
Acquired Fund has the corporate power to execute, deliver, and perform its
obligations under this Agreement in accordance with the applicable provisions of
the Articles and its By-laws and has taken all action required by those
documents to authorize the execution, delivery, and performance of this
Agreement; and this Agreement has been duly authorized, executed, and delivered
by the Acquired Fund.
(c) The
execution and delivery of this Agreement did not, and the performance by the
Acquired Fund of its obligations under this Agreement will not, violate the
Articles or its By-laws.
(d) To
the knowledge of such counsel (which shall not require investigation beyond
federal and Maryland law), 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 by this Agreement (other than the
dissolution of the Acquired Fund and the termination of its registration under
the 1940 Act), other than (a) those that have been obtained under the 1933 Act,
the 1934 Act or the 1940 Act, and (b) those that may be required under state
securities laws (as to which such counsel need not express an
opinion).
(e) The
Acquired Fund is registered with the Commission as an investment company under
the 1940 Act.
7.3 The
Acquired Fund shall have delivered to IMST a statement of the Acquired Fund’s
assets and liabilities, together with a list of the Acquired Fund’s portfolio
securities showing the tax costs of such securities by lot and the holding
periods of such securities, as of the Closing Date, certified by the Treasurer
of the Acquired Fund.
7.4 The
Acquired Fund shall have furnished to IMST a certificate, signed by the
President or Vice-President and the Treasurer or any Assistant Treasurer of the
Acquired Fund, as to the adjusted tax basis in the hands of the Acquired Fund of
the securities delivered to the Acquiring Fund pursuant to this
Agreement.
7.5 The
Acquired Fund shall have performed in all material respects all of its
obligations hereunder required to be performed by it on or before the Closing
Date.
ARTICLE
VIII
FURTHER
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INVESTMENT COMPANIES
If any of
the conditions set forth below does not exist on or before the Closing Date with
respect to either Investment Company, the other Investment Company shall, at its
option, not be required 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 1940 Act, Maryland law and the provisions of the Articles
and the Acquired Fund’s By-Laws. Certified copies of the resolutions
evidencing such approval shall have been delivered to
IMST. Notwithstanding anything herein to the contrary, neither
Investment Company may waive the conditions set forth in this paragraph 8.1
(except with respect to the delivery of certified resolutions).
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8.2 On
the Closing Date, the Commission shall not have issued an unfavorable report
under Section 25(b) of the 1940 Act, or instituted any proceeding seeking to
enjoin the consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act. Furthermore, no action, suit or other
proceeding brought by a governmental agency shall be threatened in writing or
pending before any court or governmental agency in which it is sought to
restrain or prohibit this Agreement or the transactions contemplated
herein.
8.3 (a). All
consents, orders, and permits of federal authorities under the 1933 Act, 1934
Act and 1940 Act that are necessary to permit consummation of the Reorganization
(other than the dissolution of the Acquired Fund and the termination of its
registration under the 1940 Act) shall have been obtained, except where failure
to obtain any such consent, order, or permit would not cause a Material Adverse
Change with respect to the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
(b). All consents of other
parties and all other consents, orders, and permits of state and local
regulatory authorities that, in any such case, are (i) necessary to permit
consummation of the Reorganization (other than the dissolution of the Acquired
Fund and the termination of its registration under the ▇▇▇▇ ▇▇▇) and (ii)
specifically listed on Schedule 8.3(b) hereof, shall have been obtained, except
where failure to obtain any such consent, order, or permit would not cause a
Material Adverse Change with respect to the Acquiring Fund or the Acquired Fund,
provided that either party hereto may waive any such conditions for
itself.
8.4 The
amendment to the IMST Registration Statement with respect to the Acquiring Fund
referred to in paragraph 4.2(d) shall have become effective under the 1933 Act
and no stop orders suspending the effectiveness thereof shall have been
issued. To the knowledge of the Investment Companies, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the ▇▇▇▇ ▇▇▇.
8.5 The
parties shall have received an opinion from regular counsel to the Acquiring
Fund dated as of the Closing Date and addressed to the Investment Companies to
the effect that for federal income tax purposes:
(a) The
transfer of all of the Assets in exchange solely for Acquiring Fund Shares and
the assumption by the Acquiring Fund of the Liabilities (followed by the
distribution of those Acquiring Fund Shares to the Acquired Fund Stockholders
and the termination of the Acquired Fund) will constitute a “reorganization”
within the meaning of Section 368(a)(1)(F) of the Code, and each Fund will be a
“party to a reorganization” within the meaning of Section 368(b) of the
Code.
(b) No
gain or loss will be recognized by the Acquiring Fund upon the receipt of the
Assets solely in exchange for Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Liabilities.
(c) No
gain or loss will be recognized by the Acquired Fund upon the transfer of the
Assets to the Acquiring Fund in exchange for Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Liabilities or upon the distribution of
those Acquiring Fund Shares to the Acquired Fund Stockholders in exchange
(whether actual or constructive) for such stockholders’ Acquired Fund
Shares.
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(d) No
gain or loss will be recognized by the Acquired Fund Stockholders upon the
exchange (whether actual or constructive) of their Acquired Fund shares for
Acquiring Fund Shares in the Reorganization.
(e) The
aggregate tax basis for Acquiring Fund Shares received by an Acquired Fund
Stockholder pursuant to the Reorganization will be the same as the aggregate tax
basis of the Acquired Fund Shares exchanged (whether actual or constructive)
therefor by such stockholder. The holding period of Acquiring Fund
Shares received by an Acquired Fund Stockholder will include the period during
which the Acquired Fund Shares exchanged (whether actual or constructive)
therefor were held by such stockholder, provided the Acquired Fund Shares are
held as capital assets at the Effective Time.
(f) The
Acquiring Fund’s tax basis of each Asset will be the same as the tax basis of
such Asset to the Acquired Fund immediately prior to the
Reorganization. The holding period of each Asset in the hands of the
Acquiring Fund will include the period during which that Asset was held by the
Acquired Fund.
(g) For
purposes of Section 381 of the Code, the Acquiring Fund will be treated just as
the Acquired Fund would have been treated if there had been no
Reorganization. Accordingly, the Reorganization will not result in
the termination of the Acquired Fund’s taxable year and the part of the Acquired
Fund’s taxable year before the Reorganization will be included in the Acquiring
Fund’s taxable year after the Reorganization. The Acquiring Fund will
succeed to and take into account the items of the Acquired Fund described in
Section 381(c) of the Code, subject to any applicable conditions and limitations
specified in Sections 381, 382, 383 and 384 of the Code and the regulations
thereunder.
Such
opinion shall be based on customary assumptions and such representations as
regular counsel to the Acquiring Fund may reasonably request, and each
Investment Company will cooperate to make and certify the accuracy of its
representations. Notwithstanding anything herein to the contrary,
neither Investment Company may waive the condition set forth in this paragraph
8.5.
8.6 Prior
to the Closing, IMST's Board shall have approved an investment management
agreement between IMST, on behalf of the Acquiring Fund, and the Manager
(provided that IMST and the Manager shall have negotiated in good faith to agree
to such investment management agreement).
ARTICLE
IX
EXPENSES
9.1 Except
as otherwise provided for herein and subject to complying with the
representations contained in paragraphs 4.1(dd) and 4.2(t), the Manager, or an
affiliate thereof, and UMBFS, or on affiliate thereof, shall together (and as
apportioned between themselves as they may agree) bear all expenses of the
transactions contemplated by this Agreement. Such expenses include
(a) expenses associated with the preparation and filing of the Registration
Statement (including the Proxy Statement/Prospectus), (b) postage,
(c) printing, (d) accounting fees, (e) audit and legal fees,
including reasonable fees for this transaction of the Acquired Fund’s counsel
and counsel of the Acquired Fund’s Independent Directors, and (f) costs of
soliciting proxies. Such persons shall remain liable for expenses,
regardless of whether the transactions contemplated by this Agreement occur, and
this paragraph 9.1 shall survive the Closing and any termination of this
Agreement, pursuant to paragraph 11.1. Notwithstanding the foregoing,
expenses shall be paid by the party directly incurring them if and to the extent
that the payment thereof by another person would result in that party’s
disqualification as a RIC or would prevent the Reorganization from qualifying as
a tax-free reorganization.
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ARTICLE
X
ENTIRE
AGREEMENT; SURVIVAL; CONFIDENTIALITY
10.1 IMST,
on behalf of the Acquiring Fund, and the Acquired Fund agree that neither has
made to the other any representation, warranty and/or covenant not set forth
herein and that this Agreement constitutes the entire agreement among the
parties.
10.2 The
representations and warranties and the covenants to be performed on or prior to
the Closing Date contained in this Agreement, or in any document delivered
pursuant to or in connection with this Agreement, shall not survive the
consummation of the transactions contemplated hereunder and shall terminate upon
the Closing. The covenants to be performed after the Closing Date,
and the obligations of IMST, on behalf of the Acquiring Fund, shall continue in
effect beyond the consummation of the transactions contemplated
hereunder.
10.3 Each
Investment Company agrees to treat confidentially and as proprietary information
of the other Investment Company all records and other information, including any
information relating to portfolio holdings, of its Fund and not to use such
records and information for any purpose other than the performance of its duties
under this Agreement; provided, however, that after prior notification of and
written approval by the Investment Company (which approval shall not be withheld
if the other Investment Company would be exposed to civil or criminal contempt
proceedings for failure to comply when requested to divulge such information by
duly constituted authorities having proper jurisdiction, and which approval
shall not be withheld unreasonably in any other circumstance), an Investment
Company may disclose such records and/or information as so
approved.
ARTICLE
XI
TERMINATION
11.1 This
Agreement may be terminated by the mutual agreement of IMST and the Acquired
Fund In addition, either IMST or the Acquired Fund may at its option
terminate this Agreement, by written notice to the other, at or prior to the
Closing Date due to:
(a) a
breach by the other of any representation, warranty, or agreement contained
herein to be performed on or prior to the Closing Date that would cause the
conditions to closing in paragraphs 6.1 and 6.5 (in the case of termination by
the Acquired Fund) or 7.1 and 7.5 (in the case of termination by the Acquiring
Fund) not to be satisfied, which breach has not been cured within 30 days of
written notice thereof; or
(b) it
has become reasonably and objectively certain that a condition herein expressed
to be precedent to the obligations of the terminating party will not or cannot
be met; provided that any such failure to satisfy the applicable condition
precedent has not been primarily caused by the terminating party’s failure to
fulfill, or cause to be fulfilled, any obligation under this
Agreement.
11.2 In
the event of any such termination, in the absence of willful default, there
shall be no liability for damages on the part of any of the Acquiring Fund, the
Acquired Fund, IMST, or the respective Directors or Trustees or officers to the
other party or its Trustees or officers, but paragraph 9.1 shall continue to
apply.
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ARTICLE
XII
AMENDMENTS
AND NOTICES
12.1 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 Investment
Companies; provided, however, that following the meeting of the Acquired Fund’s
stockholders pursuant to paragraph 5.2, no such amendment may have the effect of
changing the provisions hereof to the detriment of such stockholders without
their further approval.
12.2 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, personal
service or prepaid or certified mail addressed:
In the
case of the Acquired Fund, to:
▇.▇.
▇▇▇▇▇▇▇ & CO. GROWTH FUND, INC.
c/o ▇.▇.
▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
Director of Fund Administration
In the
case of IMST, to:
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
President.
ARTICLE
XIII
PUBLIC
ANNOUNCEMENTS
13.1 No
party hereto shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated
hereby or communicate with any news media without the consent of the other party
hereto unless otherwise in the good faith judgment of such party such
announcement or communication is required by law or applicable stock exchange
regulation, and the parties hereto shall cooperate as to the timing and contents
of any such press release, public announcement or communication.
ARTICLE
XIV
HEADINGS;
COUNTERPARTS; SEVERABILITY; GOVERNING LAW; WAIVER OF JURY TRIAL; ASSIGNMENT;
LIMITATION OF LIABILITY
14.1 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.
14.2 This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original.
14.3 If
any provision of this Agreement is invalid, illegal or incapable of being
enforced, all other provisions of this Agreement shall nevertheless remain in
full force and effect for so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to either party hereto. Upon such determination that any
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
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14.4 This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to the conflicts of laws provisions
thereof; provided that, in the case of any conflict between those laws and the
federal securities laws, the latter shall govern.
14.5 Each
of the parties hereto hereby waives to the fullest extent permitted by
applicable law any right it may have to a trial by jury with respect to any
litigation brought by a party hereto directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated by
this Agreement. Each of the parties hereto hereby (a) certifies that
no representative, agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
has been induced to enter into this Agreement and the transactions contemplated
by this Agreement, as applicable, by, among other things, the mutual waivers and
certifications in this paragraph.
14.6 This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but, except as provided in this paragraph, no
assignment or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm, or corporation, other than
the parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
14.7 It
is expressly agreed that the obligations of IMST hereunder shall not be binding
upon any of the Trustees, stockholders, officers, agents, or employees of IMST
personally, but shall bind only the trust property of the Acquiring Fund, as
provided in the Declaration of Trust. The execution and delivery of
this Agreement have been authorized by the Trustees of IMST on behalf of the
Acquiring Fund and signed by authorized officers of IMST, acting as
such. Such authorization by such Trustees and such execution and
delivery by such officers shall not 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 as provided in the
Declaration of Trust.
14.8 It
is expressly agreed that the obligations of the Acquired Fund hereunder shall
not be binding upon any of the Directors, stockholders, officers, agents, or
employees of the Acquired Fund personally, but shall bind only the Acquired
Fund. The execution and delivery of this Agreement have been
authorized by the Directors of the Acquired Fund and signed by authorized
officers of the Acquired Fund, acting as such. Such authorization by
such Directors and such execution and delivery by such officers shall not 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 property of the Acquired Fund
as provided in the Articles.
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the
date first written above.
on
behalf of the Acquiring Fund
By:
________________________________
Name:
______________________________
Title: President
▇.▇.
▇▇▇▇▇▇▇ & CO. GROWTH FUND, INC.
By:
________________________________
Name:
______________________________
Title: President
▇.▇.
▇▇▇▇▇▇▇ & CO., INC. with respect to
Paragraph
9.1 only
By:
________________________________
Name:
______________________________
Title: President
UMB
Fund Services, Inc. with respect to
Paragraph
9.1 only
By:
________________________________
Name:
______________________________
Title:
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