Exhibit (h)(33)
AGREEMENT AND PLAN OF
REORGANIZATION
BY AND BETWEEN
THE GALAXY FUND
AND
THE PILLAR FUNDS
DATED AS OF MARCH 9, 2001
TABLE OF CONTENTS
PAGE
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1. Certain Definitions.....................................................................................4
2. The Reorganization......................................................................................5
3. Calculations............................................................................................7
4. Valuation of Assets.....................................................................................8
5. Valuation Times........................................................................................11
6. Effective Time of the Reorganization...................................................................11
7. Termination of Pillar..................................................................................13
8. Certain Representations, Warranties, Covenants and Agreements of Pillar................................13
9. Certain Representations, Warranties, Covenants and Agreements of Galaxy................................20
10. Shareholder Action on Behalf of the Pillar Funds.......................................................24
11. N-14 Registration Statement............................................................................25
12. Galaxy Conditions......................................................................................26
13. Pillar Conditions......................................................................................29
14. Tax Opinion............................................................................................33
15. Tax Documents..........................................................................................35
16. Further Assurances.....................................................................................35
17. Termination and Survival of Representations and Warranties.............................................36
18. Termination of Agreement...............................................................................36
19. Amendment and Waiver...................................................................................37
20. Governing Law..........................................................................................37
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21. Successors and Assigns.................................................................................37
22. Beneficiaries..........................................................................................37
23. Notices................................................................................................37
24. Expenses and Waivers...................................................................................38
25. Entire Agreement.......................................................................................39
26. Counterparts...........................................................................................39
27. Failure of One Fund to Consummate the Transactions.....................................................39
28. No Brokers or Finders..................................................................................39
29. Validity...............................................................................................39
30. Effect of Facsimile Signature..........................................................................40
31. Headings...............................................................................................40
32. Galaxy Liability.......................................................................................40
33. Pillar Liability.......................................................................................41
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AGREEMENT AND PLAN OF REORGANIZATION
This
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") made as of
the 9th day of March, 2001 by The Galaxy Fund ("Galaxy"), a
Massachusetts
business trust organized under the laws of the Commonwealth of
Massachusetts on
March 31, 1986, and The Pillar Funds ("Pillar"), a
Massachusetts business trust
organized under the laws of the Commonwealth of
Massachusetts on September 9,
1991.
BACKGROUND
WHEREAS, each of the parties hereto is an open-end management
investment company registered with the Securities and Exchange Commission (the
"SEC") under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Pillar offers, among others, the following investment
portfolios: (1) Pillar Institutional Select Money Market Fund, (2) Pillar U.S.
Treasury Securities Plus Money Market Fund, (3) Pillar U.S. Treasury Securities
Money Market Fund, (4) Pillar Tax-Exempt Money Market Fund, (5) Pillar Prime
Obligation Money Market Fund, (6) Pillar Intermediate-Term Government Securities
Fund, (7) Pillar Fixed Income Fund, (8) Pillar New Jersey Municipal Securities
Fund, (9) Pillar Balanced Fund, (10) Pillar Equity Income Fund, (11) Pillar Mid
Cap Fund and (12) Pillar International Equity (each a "Reorganizing Pillar
Fund," and collectively, the "Reorganizing Pillar Funds");
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WHEREAS, Pillar also offers the following investment portfolios: (1)
Pillar Pennsylvania Municipal Securities Fund, (2) Pillar Equity Value Fund and
(3) Pillar Equity Growth Fund (each a "Continuing Pillar Fund" and collectively,
the "Continuing Pillar Funds" and together with the "Reorganizing Pillar Funds,"
each a "Pillar Fund" and collectively, the "Pillar Funds");
WHEREAS, Galaxy currently offers, among others, the following
investment portfolios: (1) Galaxy Institutional Money Market Fund, (2) Galaxy
Institutional Treasury Money Market Fund, (3) Galaxy U.S. Treasury Money Market
Fund, (4) Galaxy Tax-Exempt Money Market Fund, (5) Galaxy Money Market Fund, (6)
Galaxy Intermediate Government Income Fund, (7) Galaxy High Quality Bond Fund,
(8) Galaxy New Jersey Municipal Bond Fund, (9) Galaxy Asset Allocation Fund,
(10) Galaxy Equity Income Fund, (10) Galaxy Growth Fund II and (12) Galaxy
International Equity Fund (each an "Existing Galaxy Fund" and collectively, the
"Existing Galaxy Funds");
WHEREAS, Galaxy has recently organized, or will soon organize, the
following additional investment portfolios: (1) Galaxy Pennsylvania Municipal
Bond Fund, (2) Galaxy Large Cap Value Fund and (3) Galaxy Large Cap Equity Fund
(each a "Shell Galaxy Fund" and collectively, the "Shell Galaxy Funds," and,
together with the Existing Galaxy Funds, each a "Galaxy Fund" and collectively,
the "Galaxy Funds");
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WHEREAS, each of the parties hereto desires, upon the terms and subject
to the conditions set forth herein, to enter into and perform the reorganization
described herein (the "Reorganization"), pursuant to which, among other things,
at the respective times hereinafter set forth, (1) each Pillar Fund shall
transfer substantially all of its respective Assets (as hereinafter defined),
subject, in each case, to substantially all of its respective Liabilities (as
hereinafter defined), to its Corresponding Galaxy Fund (as hereinafter defined),
in exchange for Retail A, Retail B, Trust or Class I Shares issued by such
Corresponding Galaxy Fund (the shares issued to a Pillar Fund by its
Corresponding Galaxy Fund in exchange for substantially all of the Assets
subject to substantially all of the Liabilities of such Pillar Fund in
connection with the Reorganization, collectively, "Galaxy Fund Shares"), and (2)
each Pillar Fund shall then distribute to its shareholders of record, the Galaxy
Fund Shares received by or on behalf of such Pillar Fund;
WHEREAS, each of the parties intend that the Shell Galaxy Funds will
have nominal assets and liabilities before the Reorganization and will continue
the investment operations of the Continuing Pillar Funds; and
WHEREAS, the parties intend that in connection with the Reorganization,
Pillar shall be deregistered and terminated as described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, and for other good and
valuable consideration,
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the receipt and legal sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. CERTAIN DEFINITIONS. As used herein,
(a) The term "Corresponding Galaxy Fund" shall mean with respect to any
Pillar Fund, the particular Galaxy Fund, the name of which is set forth directly
opposite the name of such Pillar Fund on Schedule A hereto.
(b) The term "Corresponding Pillar Fund" shall mean with respect to any
Galaxy Fund, the particular Pillar Fund, the name of which is set forth directly
opposite the name of such Galaxy Fund on Schedule A hereto.
(c) The term "Assets" shall mean all property and assets of every
description and of any nature whatsoever including, without limitation, cash,
cash equivalents, securities, claims (whether absolute or contingent, known or
unknown, accrued or unaccrued), receivables (including dividend and interest
receivables), deferred or prepaid expenses, good will and other intangible
property, books and records, and all interests, rights, privileges and powers,
other than with respect to Pillar and each Pillar Fund, cash in an amount
necessary to pay any unpaid dividends and distributions as provided in Section
2(c) hereof.
(d) The term "Liabilities" shall mean all existing and future
liabilities and obligations of any nature, whether accrued, absolute, contingent
or otherwise including, with respect to Pillar and each Pillar Fund.
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2. THE REORGANIZATION.
(a) At the Applicable Effective Time of the Reorganization (as
hereinafter defined), (i) each Pillar Fund shall transfer, assign and convey to
its Corresponding Galaxy Fund substantially all of the Assets, subject to
substantially all of the Liabilities, of such Pillar Fund, and (ii) each such
Corresponding Galaxy Fund shall accept all such Assets and assume all such
Liabilities, such that at and after the Applicable Effective Time of the
Reorganization (as hereinafter defined): (A) substantially all of the Assets of
each particular Pillar Fund shall become and be Assets of its Corresponding
Galaxy Fund, (B) substantially all of the Liabilities of each particular Pillar
Fund shall become and be liabilities of, and shall attach to, its Corresponding
Galaxy Fund, and (C) such Liabilities of each particular Pillar Fund may
thenceforth be enforced only against its Corresponding Galaxy Fund to the same
extent as if such Liabilities had been incurred by such Corresponding Galaxy
Fund, subject to any defense and/or set off that Pillar or such Pillar Fund was
entitled to assert immediately prior to the Applicable Effective Time of the
Reorganization (as hereinafter defined) with respect to any such Liability, and
subject to any defense and/or set off that Galaxy or such Corresponding Galaxy
Fund may from time to time be entitled to assert against the creditor thereof.
(b) In exchange for the transfer of substantially all of the Assets of
each Pillar Fund to its Corresponding Galaxy Fund as provided in paragraph (a)
above, each Galaxy Fund shall assume substantially all of the Liabilities of its
Corresponding Pillar Fund as provided in paragraph (a) above and shall also
simultaneously issue, at the Applicable Effective Time of the Reorganization (as
hereinafter defined), to its Corresponding Pillar Fund, the number of full and
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fractional (to the third decimal place) of Galaxy Fund Shares, determined and
adjusted as provided in Section 3 hereof.
(c) Immediately upon receipt of the Galaxy Fund Shares of such Galaxy
Fund in accordance with paragraph (b) above each Pillar Fund shall distribute,
in complete liquidation, pro rata to the shareholders of record of such Pillar
Fund at the Applicable Effective Time of the Reorganization (as hereinafter
defined) (such shareholders of record of such Pillar Fund as of such time,
collectively, the "Recordholders"), the respective Galaxy Fund Shares that have
been so received as follows:
(1) With respect to Pillar's Prime Obligation, Fixed Income, Balanced,
Equity Income, Equity Value, Equity Growth and International Equity Funds,
Recordholders of Class A, Class B and Class I Shares of such Pillar Funds shall
be credited with full and fractional Retail A, Retail B and Trust Shares,
respectively, of their Corresponding Galaxy Fund;
(2) With respect to Pillar's U.S. Treasury Securities Money Market,
Tax-Exempt Money Market, Intermediate Term-Government Securities, Pennsylvania
Municipal Securities, and New Jersey Municipal Securities Funds, Recordholders
of Class A and Class I Shares of such Pillar Funds shall be credited with full
and fractional Retail A and Trust Shares, respectively, of their Corresponding
Galaxy Fund;
(3) With respect to Pillar's Institutional Select Money Market and U.S.
Treasury Securities Plus Money Market Funds, Recordholders of shares of such
Pillar Funds ("Institutional Shares") shall be credited with full and fractional
Class I Shares of their Corresponding Galaxy Fund; and
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(4) With respect to Pillar's Mid Cap Fund, Recordholders of Class I
Shares of such Pillar Fund shall be credited with full and fractional Trust
Shares of the Corresponding Galaxy Fund.
(5) In addition, each Recordholder of a Pillar Fund shall have the
right to receive any unpaid dividends or other distributions which were declared
with respect to his/her or its shares of such Pillar Fund before the Applicable
Effective Time of the Reorganization.
(d) In accordance with instructions Galaxy receives from Pillar, Galaxy
shall record on its books the ownership, by the Recordholders, of the number and
type of the Galaxy Fund Shares distributed to such Recordholders
(e) Pillar shall promptly cancel on its books all of the shares
(including, without limitation, any treasury shares) of each Pillar Fund that
has so liquidated, and any such shares issued and outstanding prior to such
cancellation shall thereafter represent only the right to receive the Galaxy
Fund Shares issued to such Pillar Fund in accordance with paragraph (b) above.
(f) The transfer books of Pillar with respect to each Pillar Fund shall
be permanently closed.
3. CALCULATIONS.
(a) The number of Retail A, Retail B, Trust and/or Class I Shares of
each Existing and Shell Galaxy Fund issued to its Corresponding Pillar Fund
pursuant to Section 2(b) hereof will be determined as follows: the value of each
Pillar Fund's Assets that are so conveyed
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less the Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to either
Class A Shares, Class B Shares, Class I Shares or Institutional Shares of such
Pillar Fund shall be divided by the net asset value of one Retail A Share,
Retail B Share, Trust Share or Class I Share, respectively, of its Corresponding
Galaxy Fund that is to be delivered with respect thereto; and
(b) The net asset value of each class of Galaxy Fund Shares shall be
computed at the Applicable Valuation Time (as hereinafter defined) in the manner
set forth in such Galaxy Fund's then current prospectus under the Securities Act
of 1933, as amended (the "1933 Act"). The net asset value of each class of a
Pillar Fund shall be computed at the Applicable Valuation Time (as hereinafter
defined) in the manner set forth in such Pillar Fund's then current prospectus
under the 1933 Act.
4. VALUATION OF ASSETS.
(a) With respect to each Pillar Fund, the value of its Assets shall
be the value of such Assets computed as of the time at which its net asset value
is calculated at the Applicable Valuation Time (as hereinafter defined). The net
asset value of the Pillar Fund Assets to be transferred to the Galaxy Funds
shall be computed by Pillar and shall be subject to adjustment by the amount, if
any, agreed to by Galaxy, its board of trustees, and the respective Galaxy Funds
and Pillar, its board of trustees, and the respective Pillar Funds. In
determining the value of the securities transferred by a Pillar Fund to its
Corresponding Galaxy Fund, each security shall be priced in accordance with the
pricing policies and procedures of such Pillar Fund as described in its then
current prospectus(es) and statement of additional information. For such
purposes, price
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quotations and the security characteristics relating to establishing such
quotations shall be determined by Pillar, provided that such determination shall
be subject to the approval of Galaxy. Galaxy and Pillar agree to use all
commercially reasonable efforts to resolve, prior to the Applicable Valuation
Time (as hereinafter defined), any material pricing differences between the
prices of portfolio securities determined in accordance with the pricing
policies and procedures of a Galaxy Fund and those determined in accordance with
the pricing policies and procedures of its Corresponding Pillar Fund.
(b) It is understood and agreed that the net asset value of the
Pillar Fund Assets of those Pillar Funds that are money market funds shall be
based on the amortized cost valuation procedures that have been adopted by the
Board of Trustees of Pillar Funds; provided that, if the difference between the
per share net asset values of such Pillar Funds and the Corresponding Galaxy
Funds equals or exceeds $0.0010 on the Applicable Valuation Time (as hereinafter
defined), as computed by using market values in accordance with the policies and
procedures established by Pillar, either party shall have the right to postpone
the Applicable Valuation Time (as hereinafter defined) and Applicable Effective
Time of the Reorganization (as hereinafter defined) with respect to each such
Fund until such time as the per share difference is less than $0.0010.
(c) At least fifteen (15) business days prior to the Applicable
Effective Time of the Reorganization (as hereinafter defined), each Pillar Fund
will provide its Corresponding Galaxy Fund with a schedule of its securities and
other Assets and Liabilities of which it is aware, and such Galaxy Fund will
provide the Pillar Fund with a copy of the current investment
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objective and policies applicable to such Galaxy Fund. Each Pillar Fund reserves
the right to sell any of the securities or other Assets shown on the list of the
Fund's Assets prior to the Applicable Effective Time of the Reorganization (as
hereinafter defined) but will not, without the prior approval of Galaxy, acquire
any additional securities other than securities which the Corresponding Galaxy
Fund is permitted to purchase in accordance with its stated investment objective
and policies. At least ten (10) business days prior to the Applicable Effective
Time of the Reorganization (as hereinafter defined), each Galaxy Fund will
advise its Corresponding Pillar Fund of any investments of such Pillar Fund
shown on such schedule which the Galaxy Fund would not be permitted to hold,
pursuant to its stated investment objective and policies or otherwise. In the
event that the Pillar Fund holds any investments that its Corresponding Galaxy
Fund would not be permitted to hold under its stated investment objective or
policies, the Pillar Fund, if requested by the Galaxy Fund and, to the extent
permissible and consistent with the Pillar Fund's own investment objective and
policies, will dispose of such securities prior to the Applicable Effective Time
of the Reorganization (as hereinafter defined). In addition, if it is determined
that the portfolios of the Pillar Fund and the Galaxy Fund, when aggregated,
would contain investments exceeding certain percentage limitations to which the
Galaxy Fund is or will be subject with respect to such investments, the Pillar
Fund, if requested by the Galaxy Fund and, to the extent permissible and
consistent with the Pillar Fund's own investment objective and policies, will
dispose of and/or reinvest a sufficient amount of such investments as may be
necessary to avoid violating such limitations as of the Applicable Effective
Time of the Reorganization (as hereinafter defined).
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5. VALUATION TIMES. Subject to Section 4(b) hereof, the valuation time
with respect to the Existing Galaxy Funds and the Reorganizing Pillar Funds
shall be 4:00 p.m., Eastern time, on August 10, 2001, or such earlier or later
date and time as may be mutually agreed in writing by an authorized officer of
each of the parties (the "First Valuation Time"). Subject to Section 4(b)
hereof, the Valuation Time with respect to the Shell Galaxy Funds and the
Continuing Pillar Funds shall be 4:00 p.m., Eastern time, on August 17, 2001, or
such earlier or later date and time as may be mutually agreed in writing by an
authorized officer of each of the parties (the "Second Valuation Time" and
together with the First Valuation Time, each an "Applicable Valuation Time"),
provided that the Second Valuation Time shall be no less than one week following
the First Valuation Time, unless otherwise agreed in writing by the parties
hereto. Notwithstanding anything herein to the contrary, in the event that at an
Applicable Valuation Time, (a) the New York Stock Exchange shall be closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or elsewhere shall be disrupted so that, in the
judgment of Galaxy or Pillar, accurate appraisal of the value of the net assets
of a Galaxy Fund or a Pillar Fund is impracticable, such Valuation Time shall be
postponed until the first business day after the day when trading shall have
been fully resumed without restriction or disruption, reporting shall have been
restored and accurate appraisal of the value of the net assets of the Galaxy
Funds and the Pillar Funds is practicable in the judgment of Galaxy and Pillar.
6. EFFECTIVE TIME OF THE REORGANIZATION.
(a) Delivery by each Reorganizing Pillar Fund of its respective
Assets to its Corresponding Galaxy Fund, delivery by such Corresponding Galaxy
Fund of its respective
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Galaxy Fund Shares to such Reorganizing Pillar Fund, and liquidation of each
such Reorganizing Pillar Fund, in each case, pursuant to Section 2 hereof,
shall occur at the opening of business on the next business day following the
First Valuation Time (or on such other date, following the First Valuation Time
as is agreed to in writing by an authorized officer of each of the parties).
The date and time at which the above-described actions are taken shall be the
"Applicable Effective Time of the Reorganization" with respect to the Existing
Galaxy Funds and the Reorganizing Pillar Funds. To the extent any Assets of any
Reorganizing Pillar Fund are, for any reason, not transferred to its
Corresponding Galaxy Fund at the Applicable Effective Time of the Reorganization
with respect to such funds, Pillar shall cause such Assets to be transferred in
accordance with this Agreement at the earliest practicable date thereafter.
(b) Delivery by each Continuing Pillar Fund of its respective Assets
to its Corresponding Galaxy Fund, delivery by each such Corresponding Galaxy
Fund of its respective Galaxy Fund Shares to such Continuing Pillar Fund, and
the liquidation of each such Continuing Pillar Fund, in each case, pursuant to
Section 2 hereof, shall occur at the opening of business on the next business
day following the Second Valuation Time (or on such other date following the
Second Valuation Time as is agreed to in writing by an authorized officer of
each of the parties). The date and time at which the above-described actions are
taken shall be the "Applicable Effective Time of the Reorganization" with
respect to the Galaxy Shell Funds and the Continuing Pillar Funds. To the extent
any Assets of any Continuing Pillar Fund are, for any reason, not transferred at
the Applicable Effective Time of the Reorganization with respect to such funds,
Pillar shall cause such Assets to be transferred in accordance with this
Agreement at the earliest practicable date thereafter.
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7. TERMINATION OF PILLAR. Promptly following the Applicable Effective
Time of the Reorganization with respect to the Galaxy Shell Funds and their
Corresponding Pillar Funds, Pillar shall file an application pursuant to Section
8(f) of the 1940 Act for an order declaring that Pillar has ceased to be an
investment company; provided that, until such order is granted, Pillar shall
continue to comply with all of its obligations as a registered investment
company under the 1940 Act and under any and all other applicable state and
federal securities laws (including, in the case of each of the foregoing, the
rules and regulations thereunder). Pillar shall, promptly after the Applicable
Effective Time of the Reorganization with respect to the Galaxy Shell Funds and
their Corresponding Pillar Funds, file any final regulatory reports, including,
but not limited to, any Form N-SAR and Rule 24f-2 Notice, with respect to such
Pillar Fund(s). All reporting and other obligations of Pillar shall remain the
exclusive responsibility of Pillar up to and including the date on which such
Pillar Fund is deregistered and terminated. In addition, promptly following the
Applicable Effective Time of the Reorganization with respect to the Galaxy Shell
Funds and their Corresponding Pillar Funds, Pillar shall be terminated pursuant
to Article __, Section __ of its Agreement and Declaration of Trust and shall
take all other steps necessary and proper to effect its complete termination.
Without limiting the generality of the foregoing, (a) the affairs of Pillar
shall be immediately wound up, its contracts discharged and its business
liquidated; and (b) the Trustees of Pillar shall execute and Galaxy shall lodge
among the records of Pillar an instrument in writing setting forth the fact of
such termination.
8. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
PILLAR. Pillar, on behalf of itself and each of the Pillar Funds, represents,
warrants, covenants and agrees as follows:
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(a) Pillar is a
Massachusetts business trust duly created pursuant to
its Declaration of Trust for the purpose of acting as a management investment
company under the 1940 Act and is validly existing under the laws of, and duly
authorized to transact business in, the Commonwealth of
Massachusetts.
(b) Pillar is duly and appropriately registered with the SEC as an
open-end, management investment company under the 1940 Act and its registration
with the SEC as such an investment company is in full force and effect as of the
date hereof.
(c) Pillar currently has the power (i) to own all of its Assets, and
(ii) subject to the approval of shareholders referred to in Section 10 hereof,
to carry out and consummate the transactions contemplated herein. Pillar has all
necessary federal, state and local authorizations, licenses and approvals
necessary or desirable to carry on its business as such business is now being
conducted and upon receipt by Pillar of an exemptive order under Section 17 of
the 1940 Act, to consummate the transactions contemplated by this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Pillar, and represents the legal, valid and binding obligation of
Pillar, enforceable against Pillar in accordance with the terms hereof, subject
as to enforcement to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent transfer or conveyance, and other similar
laws of general applicability relating to or affecting creditors' rights and to
general equity principles and provided that the provisions of this Agreement
intended to limit liability for particular matters to an investment portfolio
and its assets, including but not limited to Section 33 of this Agreement, may
not be enforceable. The execution and
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delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement will not, violate the Declaration of Trust or
By-laws or any other organizational document of Pillar or any material
agreement, contract or other arrangement to which Pillar is a party or by
which Pillar or its properties or Assets may be bound, subject or affected.
(e) Each Pillar Fund has elected to qualify, and has qualified as of
and since its first taxable year, as a regulated investment company under Part I
of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
and each Pillar Fund currently qualifies, and shall continue to qualify, as a
regulated investment company under such Part of the Code for its taxable year
ending on the date on which the Applicable Effective Time of the Reorganization
occurs. Each Pillar Fund has been a regulated investment company under such Part
of the Code at all times since the end of the first taxable year when it first
so qualified, and shall continue to be a regulated investment company under such
Part of the Code at all times until the Applicable Effective Time of the
Reorganization occurs with respect to such Pillar Fund.
(f) All federal, state, local and foreign income, profits, franchise,
sales, withholding, customs, transfer and other taxes, including, without
limitation, interest, additions to tax, and penalties thereon, (collectively,
"Taxes") that relate to the Assets of Pillar or of any Pillar Fund, and that are
either due or properly shown to be due on any return filed by Pillar or by any
Pillar Fund have been (as of the Applicable Effective Time of the Reorganization
shall have been) fully and timely paid or provided for; and to Pillar's
knowledge, there are no levies, liens, or other encumbrances relating to Taxes
existing, threatened or pending with respect to the
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Assets of Pillar (or with respect to any Assets of any Pillar Fund). All
federal and other tax returns and reports of Pillar and each Pillar Fund
required by law to be filed on or before the Applicable Effective Time of the
Reorganization, have been or will be filed in a timely manner, and all
federal and other taxes owed by Pillar on behalf of the Pillar Funds, have
been or will be timely paid so far as due, and to the best of Pillar's
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to any such return.
(g) The financial statements of each of the Pillar Funds for its
respective fiscal year ended December 31, 2000, examined by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
copies of which have been previously furnished to Galaxy, present fairly (i) the
financial condition of such Pillar Fund as of the date indicated therein and
(ii) the results of operations of such Pillar Fund for the periods indicated, in
the case of both (i) and (ii), in conformity with generally accepted accounting
principles consistently applied.
(h) Prior to or as of the First Valuation Time, each of the
Reorganizing Pillar Funds shall have declared a dividend or dividends, with a
record date and ex-dividend date prior to or as of the First Valuation Time,
which, together with all previous dividends, shall have the effect of
distributing to its shareholders all of its net investment company income, if
any, for the taxable periods or years ended on or before December 31, 2000 and
for the period from said date to and including the Applicable Effective Time of
the Reorganization (computed without regard to any deduction for dividends
paid), and all of its net capital gain, if any, realized in taxable periods or
years ended on or before December 31, 2000 and in the period from said date to
and including the Applicable Effective Time of the Reorganization.
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(i) At the Applicable Valuation Time and the Applicable Effective Time
of the Reorganization with respect to each Pillar Fund, all liabilities of such
Pillar Fund which are required to be reflected in the net asset value per share
of such Pillar Fund in accordance with applicable law are reflected in the net
asset value per share of such Pillar Fund.
(j) To Pillar's knowledge, there are currently, and at the Applicable
Valuation Time and the Applicable Effective Time of the Reorganization with
respect to each Pillar Fund there shall be, no legal, administrative or other
proceedings or investigations pending or threatened against or otherwise
involving Pillar or any Pillar Fund which could result in liability on the part
of Pillar or a Pillar Fund.
(k) Subject to the approvals of shareholders referred to in Section 10,
at both the First Valuation Time and the Applicable Effective Time of the
Reorganization with respect to each Reorganizing Pillar Fund, Pillar, on behalf
of each Reorganizing Pillar Fund, shall have full right, power and authority to
sell, assign, transfer and deliver the Assets of such Reorganizing Pillar Fund.
Upon delivery and payment for the Assets of the Reorganizing Pillar Funds as
contemplated in Section 2(b) above, each Corresponding Galaxy Fund shall acquire
good and marketable title to the Assets of its Corresponding Pillar Fund, in
each case, free and clear of all liens and encumbrances, and subject to no
restrictions on the ownership or transfer thereof (except as imposed by federal
or state securities laws).
(l) Subject to the approvals of shareholders referred to in Section 10,
at both the Second Valuation Time and the Applicable Effective Time of the
Reorganization with respect to each Continuing Pillar Fund, Pillar, on behalf of
each Continuing Pillar Fund, shall
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have full right, power and authority to sell, assign, transfer and deliver the
Assets of such Continuing Pillar Fund. Upon delivery and payment for the Assets
of the Continuing Pillar Fund, as contemplated in Section 2(b) above, each Shell
Galaxy Fund shall acquire good and marketable title to the Assets of its
Corresponding Pillar Fund, in each case, free and clear of all liens and
encumbrances, and subject to no restrictions on the ownership or transfer
thereof (except as imposed by federal or state securities laws).
(m) No consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity, is required for the
consummation by Pillar and by each Pillar Fund of the transactions contemplated
by this Agreement, except as may be required by the 1933 Act, the Securities
Exchange Act of 1934, as amended ("1934 Act"), the 1940 Act, or state securities
laws (including, in the case of each of the foregoing, the rules and regulations
thereunder).
(n) On the effective date of the N-14 Registration Statement (as
hereinafter defined), at the time of the shareholders' meeting referred to in
Section 10 hereof and at each Applicable Effective Time of the Reorganization,
the registration statement filed by Galaxy on Form N-14 relating to the shares
of each Galaxy Fund that will be registered with the SEC pursuant to this
Agreement, together with any and all supplements and amendments thereto and the
documents contained or incorporated therein by reference, as supplemented and
amended, including, without limitation, the proxy statement of Pillar and the
prospectuses of Pillar and Galaxy with respect to the transactions contemplated
by this Agreement (such registration statement, together with such supplements
and amendments and the documents contained therein
-18-
or incorporated therein by reference, as supplemented and amended, the "N-14
Registration Statement") shall with respect to Pillar or any of the Pillar
Funds: (i) comply in all material respects with the provisions of the 1933
Act, the 1934 Act, the 1940 Act, and applicable state securities laws
(including, in the case of each of the foregoing, the rules and regulations
thereunder), and (ii) not contain any untrue statement of a material fact or
omit to state a material fact that is required to be stated therein or that
is necessary to make the statements therein not misleading.
(o) All of the issued and outstanding shares of each of the Pillar
Funds have been duly and validly issued, are fully paid and non-assessable by
Pillar (except that shareholders of a Pillar Fund may under certain
circumstances be held personally liable for its obligations), and were offered
for sale and sold in conformity with all applicable federal and state securities
laws (including, in the case of each of the foregoing, the rules and regulations
thereunder). All shares of any Pillar Fund issued on or after the date hereof
shall be duly and validly issued, fully paid and non-assessable by Pillar
(except that shareholders of a Pillar Fund may under certain circumstances be
held personally liable for its obligations) and offered for sale and sold in
conformity with all applicable federal and state securities laws (including, in
the case of each of the foregoing, the rules and regulations thereunder). No
shareholder of any of the Pillar Funds currently has, or will hereafter have,
any statutory or contractual preemptive right of subscription or purchase in
respect of any shares of any Pillar Fund.
-19-
(p) Pillar shall not sell or otherwise dispose of any Galaxy Fund
Shares received in the transactions contemplated herein, except in
distribution to the Recordholders as contemplated herein.
9. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
GALAXY. Galaxy, on behalf of itself and each of the Galaxy Funds, represents,
warrants, covenants and agrees as follows:
(a) Galaxy is a
Massachusetts business trust duly created pursuant to
its Declaration of Trust for the purpose of acting as a management investment
company under the 1940 Act and is validly existing under the laws of, and duly
authorized to transact business in, the Commonwealth of
Massachusetts.
(b) Galaxy is duly and appropriately registered with the SEC as an
open-end, management investment company under the 1940 Act and its registration
with the SEC as such an investment company is in full force and effect as of the
date hereof.
(c) Galaxy currently has the power to own all of its Assets and to
carry out and consummate the transactions contemplated herein. Galaxy has all
necessary federal, state and local authorizations, licenses and approvals
necessary or desirable to carry on its business as such business is now being
conducted and upon receipt by Galaxy of an exemptive order under Section 17 of
the 1940 Act, to consummate the transactions contemplated by this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Galaxy, and represents the legal, valid and binding obligation of
Galaxy,
-20-
enforceable against Galaxy in accordance with the terms hereof, subject
as to enforcement to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent transfer or conveyance, and other similar
laws of general applicability relating to or affecting creditors' rights and to
general equity principles and provided that the provisions of this Agreement
intended to limit liability for particular matters to an investment portfolio
and its assets, including but not limited to Section 32 of this Agreement, may
not be enforceable. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement will not,
violate the Declaration of Trust or Code of Regulations or any other
organizational document of Galaxy, or any material agreement, contract or other
arrangement to which Galaxy is a party or by which Galaxy or its properties or
Assets may be bound, subject or affected.
(e) Each Galaxy Fund has elected to qualify, and has qualified as of
and since its first taxable year, as a regulated investment company under Part I
of Subchapter M of the Code, and each Galaxy Fund has been a regulated
investment company under such Part of the Code at all times since the end of its
first taxable year when it so qualified. Each Galaxy Fund currently qualifies,
and shall continue to qualify, as a regulated investment company under the Code.
(f) All Taxes that relate to the Assets of Galaxy or of any Galaxy
Fund, and that are either due or properly shown to be due on any return filed by
Galaxy or by any Galaxy Fund have been (or as of the Applicable Effective Time
of the Reorganization shall have been) fully and timely paid or provided for;
and to Galaxy's knowledge, there are no levies, liens, or
-21-
other encumbrances relating to Taxes existing, threatened or pending with
respect to the Assets of Galaxy (or with respect to any Assets of any Galaxy
Fund). All federal and other tax returns and reports of Galaxy and each
Galaxy Fund required by law to be filed on or before the Applicable Effective
Time of the Reorganization, have been or will be filed in a timely manner,
and all federal and other taxes owed by Galaxy on behalf of the Galaxy Funds,
have been or will be timely paid so far as due, and to the best of Galaxy's
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to any such return.
(g) The financial statements of each of the Galaxy Funds for its
respective fiscal year ended October 31, 2000, examined by Ernst & Young LLP,
copies of which have been previously furnished to Pillar Funds, present fairly
(i) the financial condition of such Galaxy Fund as of the date indicated therein
and (ii) the results of operations of such Galaxy Fund for the periods
indicated, in the case of both (i) and (ii), in conformity with generally
accepted accounting principles consistently applied.
(h) At the Applicable Valuation Time and the Applicable Effective Time
of the Reorganization with respect to each Galaxy Fund, all liabilities of such
Galaxy Fund which are required to be reflected in the net asset value per share
of the Galaxy Fund Shares issued by such Galaxy Fund pursuant to this Agreement
in accordance with applicable law are reflected in the net asset value per share
of such Galaxy Fund.
(i) To Galaxy's knowledge, there are currently, and at the Applicable
Valuation Time and the Applicable Effective Time of the Reorganization with
respect to each Galaxy Fund there shall be, no legal, administrative or other
proceedings or investigations
-22-
pending or threatened against or otherwise involving Galaxy or any Galaxy Fund
which could result in liability on the part of Galaxy or a Galaxy Fund.
(j) No consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity, is required for the
consummation by Galaxy and by each Galaxy Fund of the transactions contemplated
by this Agreement except as may be required by the 1933 Act, 1934 Act, the 1940
Act or state securities laws (including, in the case of each of the foregoing,
the rules and regulations thereunder).
(k) On the effective date of the N-14 Registration Statement, at the
time of the shareholders' meeting referred to in Section 10 hereof and at the
Applicable Effective Time of the Reorganization, with respect to Galaxy or any
of the Galaxy Funds, the N-14 Registration Statement shall: (i) comply in all
material respects with the provisions of the 1933 Act, the 1934 Act, the 1940
Act, and applicable state securities laws (including, in the case of each of the
foregoing, the rules and regulations thereunder), and (ii) not contain any
untrue statement of a material fact or omit to state a material fact that is
required to be stated therein or that is necessary to make the statements
therein not misleading.
(l) The Galaxy Fund Shares to be issued and delivered to each Pillar
Fund pursuant to the terms hereof, shall have been duly authorized as of the
Applicable Effective Time of the Reorganization, and, when so issued and
delivered, shall be registered under the 1933 Act, duly and validly issued, and
fully paid and non-assessable by Galaxy (except that shareholders of a Galaxy
Fund may under certain circumstances be held personally liable for its
obligations), and
-23-
no shareholder of any Galaxy Fund shall have any statutory or contractual
preemptive right of subscription or purchase in respect thereof.
(m) For the period beginning at the Applicable Effective Time of the
Reorganization with respect to the Galaxy Shell Funds and the Continuing Pillar
Funds and ending not less than three years thereafter, Galaxy shall provide or
cause to be provided, liability coverage for the officers and trustees of Pillar
which covers the actions of such trustees and officers of Pillar for the period
they served as such and is at least comparable to the liability coverage
currently applicable to the trustees and officers of Pillar. Galaxy agrees that
all rights to indemnification existing in favor of the Pillar Trustees, acting
in their capacities as such, under Pillar's Declaration of Trust as in effect as
of the date of this Agreement shall survive the Reorganization as obligations of
Galaxy, shall continue in full force and effect without any amendment thereto,
and shall constitute rights which may be asserted against Galaxy.
10. SHAREHOLDER ACTION ON BEHALF OF THE PILLAR FUNDS. As soon as
practicable after the effective date of the N-14 Registration Statement, but
in any event prior to the Applicable Effective Time of the Reorganization,
and as a condition to the consummation of the transactions contemplated
hereby, the Board of Trustees of Pillar shall call, and subject to obtaining
any necessary quorum, Pillar shall hold, a meeting of the shareholders of
each of the Pillar Funds for the purpose of considering and voting upon:
(a) Approval of this Agreement and the transactions contemplated
hereby, including, without limitation, the transfer by such Pillar Fund to its
Corresponding Galaxy Fund, of the Assets belonging to such Pillar Fund and the
assumption by such Corresponding Galaxy
-24-
Fund of the Liabilities of such Pillar Fund in exchange for the Galaxy Fund
Shares issued by such Corresponding Galaxy Fund to such Pillar Fund, in each
case, in accordance with, and at the respective times set forth in, Section 2
hereof;
(b) The liquidation of such Pillar Fund through the distribution of the
Galaxy Fund Shares received by such Pillar Fund, to the Recordholders of the
Pillar Fund as described in this Agreement;
(c) The deregistration of Pillar under the 1940 Act and the termination
of Pillar under state law;
(d) Approval of an Investment Advisory Agreement between Pillar and
Fleet Investment Advisors, Inc. with respect to each Pillar Fund; and
(e) Such other matters as may be determined by the Boards of Trustees
of the parties.
11. N-14 REGISTRATION STATEMENT. Galaxy shall file the N-14 Registration
Statement. Galaxy and Pillar have cooperated and shall continue to cooperate
with each other, and have furnished and shall continue to furnish each other
with the information relating to themselves that is required by the 1933 Act,
the 1934 Act, the 1940 Act and applicable state securities laws (including,
in the case of each of the foregoing, the rules and regulations thereunder)
to be included in the N-14 Registration Statement (or that is necessary to
ensure that the N-14 Registration Statement does not contain any untrue
statement of a material fact and/or to ensure
-25-
that the N-14 Registration Statement does not omit to state a material fact
that is required to be stated therein or that is necessary to make the
statements therein not misleading).
12. GALAXY CONDITIONS. The obligations of Galaxy (and of each respective
Galaxy Fund) hereunder shall be subject to the following conditions precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the Board of Trustees of Pillar (including the
determinations required by Rule 17a-8(a) under the ▇▇▇▇ ▇▇▇) and by the
shareholders of each of the Pillar Funds, in each case, in the manner required
by law.
(b) Pillar shall have duly executed and delivered to Galaxy, on behalf
of each Pillar Fund, such bills of sale, assignments, certificates and other
instruments of transfer ("Transfer Documents") as Galaxy may reasonably deem
necessary or desirable to transfer to the Corresponding Galaxy Fund of such
Pillar Fund all of the right, title and interest of such Pillar Fund in and to
the respective Assets of such Pillar Fund. In each case, the Assets of each
Pillar Fund shall be accompanied by all necessary state stock transfer stamps or
cash for the appropriate purchase price therefor.
(c) All representations and warranties of Pillar made in this Agreement
shall be true and correct in all material respects on the date hereof, on the
Applicable Valuation Time and on the Applicable Effective Time of the
Reorganization as if made at and as of such date, and Pillar shall have
complied, in all material respects, with all of its covenants hereunder. As of
the Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, there shall have been no material adverse change in the
financial position of any Pillar Fund or of
-26-
Pillar since the date of the financial statements referred to in Section
8(g), other than those changes (including, without limitation, changes due to
net redemptions) incurred in the ordinary course of business as an investment
company since the date of the financial statements referred to in Section
8(g). At the Applicable Effective Time of the Reorganization, Galaxy shall
have received a certificate from the President or Vice President of Pillar,
dated as of such date, certifying on behalf of Pillar, that as of such date
each of the conditions set forth in Section 8 and in this Section 12 have
been, and continue to be, met.
(d) Galaxy shall have received opinions of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
addressed to Galaxy, in form and substance reasonably satisfactory to Galaxy,
and dated the Applicable Effective Time of the Reorganization, to the effect
that as of the date of such opinion, and subject to qualifications and
conditions reasonably acceptable to Galaxy: (i) Pillar is a
Massachusetts
business trust duly organized and validly existing under the laws of the
Commonwealth of
Massachusetts; (ii) the shares of each Reorganizing or
Continuing Pillar Fund, as appropriate, outstanding at the Applicable Effective
Time of the Reorganization are duly authorized, validly issued, fully paid and
non-assessable by such Pillar Fund (except that shareholders of a Pillar Fund
may under certain circumstances be held personally liable for its obligations),
and to such counsel's knowledge, no shareholder of any Pillar Fund has any
statutory preemptive right to subscription or purchase in respect thereof; (iii)
this Agreement and the Transfer Documents have been duly and validly authorized,
executed and delivered by Pillar and represent the legal, valid and binding
obligations of Pillar, enforceable against Pillar in accordance with their
terms, subject to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, marshalling, fraudulent transfer or conveyance and
similar laws
-27-
relating to or affecting creditors' rights and remedies generally and court
decisions with respect thereto, and such counsel shall express no opinion with
respect to the application of equitable principles in any proceeding, whether at
law or in equity, as to the enforceability of any provision of the Agreement
relating to remedies after default, as to the availability of any specific or
equitable relief of any kind, or with respect to the provisions of this
Agreement intended to limit liability for particular matters to a Pillar Fund
and its Assets, including but not limited to Section 33 of this Agreement; (iv)
the execution and delivery of this Agreement did not, and the consummation of
the transactions contemplated by this Agreement will not, violate the Agreement
and Declaration of Trust or By-laws of Pillar or except as may be noted in such
opinion, any material agreement known to counsel to which Pillar is a party or
by which Pillar may be bound; and (v) to such counsel's knowledge, no consent,
approval, authorization or order of any court, governmental authority or agency
is required for the consummation by Pillar of the transactions contemplated by
this Agreement, except such as have been obtained under the 1933 Act, the 1934
Act, the 1940 Act, and Massachusetts state securities laws (including, in the
case of each of the foregoing, the rules and regulations thereunder). Such
opinion may rely on a certificate of a Pillar Trustee or the President or Vice
President of Pillar as to factual matters.
(e) The N-14 Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Galaxy, contemplated by the SEC, and the
parties shall have received all permits, licenses and other authorizations
necessary under applicable state securities laws to consummate the transactions
contemplated by this Agreement and all such permits, licenses and other
authorizations shall be in full force and effect at such time.
-28-
(f) At the Applicable Effective Time of the Reorganization, Pillar has,
as of such date, performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to be performed or
complied with by Pillar prior to or at the Applicable Valuation Time and the
Applicable Effective Time of the Reorganization and Galaxy shall have received a
certificate from the President or Vice President of Pillar, dated as of such
date, certifying on behalf of Pillar that the conditions set forth in clause (f)
has been satisfied.
(g) Pillar's agreements with each of its service contractors shall have
terminated at the Applicable Effective Time of the Reorganization with respect
to the Galaxy Shell Funds and the Continuing Pillar Funds and each party has
received reasonable assurance that no claim for damages (liquidated or
otherwise) will arise as a result of such termination.
(h) Galaxy shall have received the tax opinions provided for in Section
14 hereof.
(i) Galaxy shall have received any necessary exemptive relief from the
SEC with respect to Section 17(a) of the 1940 Act.
13. PILLAR CONDITIONS. The obligations of Pillar (and of each
respective Pillar Fund) hereunder shall be subject to the following conditions
precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the Board of Trustees of Galaxy (including the
determinations required
-29-
by Rule 17a-8(a) under the ▇▇▇▇ ▇▇▇) and by the shareholders of each of the
Pillar Funds, in each case, in the manner required by law.
(b) All representations and warranties of Galaxy made in this Agreement
shall be true and correct in all material respects on the date hereof, on the
Applicable Valuation Time and on the Applicable Effective Time of the
Reorganization as if made at and as of such date, and Galaxy shall have
complied, in all material respects, with all of its covenants hereunder. As of
the Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, there shall have been no material adverse change in the
financial position of any Galaxy Fund or of Galaxy since the date of the
financial statements referred to in Section 9(g) other than those changes
(including, without limitation, changes due to net redemptions) incurred in the
ordinary course of business as an investment company since the date of the
financial statements referred to in Section 9(g). At the Applicable Effective
Time of the Reorganization, Pillar shall have received a certificate from the
President or Vice President of Galaxy, dated as of such date, certifying on
behalf of Galaxy, that as of such date each of the conditions set forth in
Section 9 and in this Section 13 have been, and continue to be, met.
(c) Pillar shall have received opinions of Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
addressed to Pillar in form and substance reasonably satisfactory to Pillar and
dated the Applicable Effective Time of the Reorganization, to the effect that as
of the date of such opinion, and subject to qualifications and conditions
reasonably acceptable to Pillar: (i) Galaxy is a Massachusetts business trust
duly organized and validly existing under the laws of the Commonwealth of
Massachusetts; (ii) the shares of each Existing or Shell Galaxy Fund, as
-30-
appropriate, to be delivered to its Corresponding Pillar Fund are duly
authorized and upon delivery will be validly issued, fully paid and
non-assessable by such Galaxy Fund (except that shareholders of a Galaxy Fund
may under certain circumstances be held personally liable for its obligations),
and, to such counsel's knowledge, no shareholder of any Galaxy Fund has any
statutory preemptive right to subscription or purchase in respect thereof; (iii)
this Agreement has been duly and validly authorized, executed and delivered by
Galaxy and represents the legal, valid and binding obligation of Galaxy,
enforceable against Galaxy in accordance with the terms hereof, subject to the
effect of bankruptcy, insolvency, reorganization, arrangement, moratorium,
marshalling, fraudulent transfer or conveyance and similar laws relating to or
affecting creditors' rights and remedies generally and court decisions with
respect thereto, and such counsel shall express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, as to the enforceability of any provision of the Agreement relating to
remedies after default, as to the availability of any specific or equitable
relief of any kind, or with respect to the provisions of this Agreement intended
to limit liability for particular matters to a Galaxy Fund and its Assets,
including but not limited to Section 32 of this Agreement; (iv) the execution
and delivery of this Agreement did not, and the consummation of the transactions
contemplated by this Agreement will not, violate the Declaration of Trust or
Code of Regulations of Galaxy, or any material agreement known to such counsel
to which Galaxy is a party or by which Galaxy may be bound; and (v) to such
counsel's knowledge, no consent, approval, authorization or order of any court,
governmental authority or agency is required for the consummation by Galaxy of
the transactions contemplated by this Agreement, except such as have been
obtained under the 1933 Act, the 1934 Act, the 1940 Act, and Massachusetts state
-31-
securities laws (including, in the case of each of the foregoing, the rules and
regulations thereunder). Such opinion may rely on the opinion of Ropes & ▇▇▇▇ to
the extent set forth in such opinion.
(d) The N-14 Registration Statement shall have become effective under
the 1933 Act and no stop order suspending such effectiveness shall have been
instituted, or, to the knowledge of Pillar, contemplated by the SEC, and the
parties shall have received all permits, licenses and other authorizations
necessary under state securities laws to consummate the transactions
contemplated by this Agreement, and all such permits, licenses and other
authorizations shall be in full force and effect at such time.
(e) At the Applicable Effective Time of the Reorganization, Galaxy has,
as of such date, performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to be performed or
complied with by Galaxy prior to or at the Applicable Valuation Time and the
Applicable Effective Time of the Reorganization and Pillar shall have received a
certificate from the President or Vice President of Galaxy, dated as of such
date, certifying that the conditions set forth in this clause (e) has been
satisfied.
(f) Pillar shall have received the tax opinion provided for in Section
14 hereof.
(g) Pillar shall have received any necessary exemptive relief from the
SEC with respect to Section 17(a) of the 1940 Act.
-32-
14. TAX OPINION. Galaxy and Pillar Funds shall receive an opinion of
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP addressed to both Galaxy and Pillar in a form
reasonably satisfactory to them, and dated as of the Applicable Effective Time
of the Reorganization, substantially to the effect that on the basis of facts,
representations, and assumptions set forth in such opinion:
(a) The Reorganization will consist of fifteen "reorganizations" within
the meaning of Section 368(a) of the Code, and each Pillar Fund and the
Corresponding Galaxy Fund will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code with respect to such Reorganization;
(b) In accordance with Section 361(a), 361(c)(1) and 357(a) of the
Code, no gain or loss will be recognized by any Pillar Fund upon the transfer of
substantially all of its Assets and Liabilities to the Corresponding Galaxy Fund
in exchange for the Galaxy Fund Shares of the Corresponding Galaxy Fund;
(c) In accordance with Section 1032(a) of the Code, no gain or loss
will be recognized by each Galaxy Fund upon the receipt of substantially all of
the Assets and assumption of substantially all of the Liabilities of the
Corresponding Pillar Fund in exchange for the Galaxy Fund Shares;
(d) In accordance with Section 362(b) of the Code, the basis of each
Pillar Fund's Assets received by the Corresponding Galaxy Fund pursuant to the
Reorganization will be the same as the basis of those Assets in the hands of the
Pillar Fund immediately prior to the Reorganization;
-33-
(e) In accordance with Section 1223(2) of the Code, the holding period
of each Pillar Fund's Assets in the hands of the Corresponding Galaxy Fund will
include the period for which such assets have been held by the Pillar Fund;
(f) In accordance with Section 361(a), 361(c)(1) and 357(a) of the
Code, no gain or loss will be recognized by any Pillar Fund on the distribution
to its shareholders of the Galaxy Fund Shares to be received by the Pillar Fund
in the Reorganization;
(g) In accordance with Section 354(a)(1) of the Code, no gain or loss
will be recognized by the shareholders of any Pillar Fund upon their receipt of
the Corresponding Galaxy Fund Shares in exchange for such shareholders' shares
of the Pillar Fund;
(h) In accordance with Section 358(a)(1) of the Code, the basis of the
Galaxy Fund Shares received by the shareholders of each Corresponding Pillar
Fund will be the same as the basis of the Pillar Fund shares surrendered by such
shareholders pursuant to the Reorganization;
(i) In accordance with Section 1223(1) of the Code, the holding period
for the Galaxy Fund Shares received by each Pillar Fund shareholder will include
the period during which such shareholder held the Pillar Fund shares surrendered
therefor, provided that such Pillar Fund shares are held as a capital asset in
the hands of such Pillar Fund shareholder on the date of the exchange; and
(j) Each Galaxy Fund will succeed to and take into account the tax
attributes described in Section 381(c) of the Code of the Corresponding Pillar
Fund as of the Applicable
-34-
Effective Time of the Reorganization, subject to the conditions and
limitations specified in the Code.
In rendering such opinion described in this paragraph, Drinker ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP may require and, to the extent it deems necessary and appropriate, may
rely, as to factual matters, upon representations made in certificates of Galaxy
Funds and Pillar Funds, their affiliates, and principal shareholders.
15. TAX DOCUMENTS. Pillar shall deliver to Galaxy at the Applicable
Effective Time of the Reorganization, confirmations and/or other evidence
satisfactory to Galaxy as to the adjusted tax basis of the Assets of each Pillar
Fund delivered to a Galaxy Fund in accordance with the terms of this Agreement.
16. FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto shall use its best efforts to take, or
cause to be taken, such action, to execute and deliver, or cause to be executed
and delivered, such additional documents and instruments and to do, or cause to
be done, all things necessary, proper or advisable under the provisions of this
Agreement and under applicable law to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
delivering and/or causing to be delivered to the other party hereto each of the
items required under this Agreement as a condition to such party's obligations
hereunder. In addition, Pillar shall deliver or cause to be delivered to Galaxy,
each account, book, record or other document of Pillar required to be maintained
by Pillar pursuant to Section 31(a) of the 1940 Act and Rules 31a-1 to 31a-3
thereunder (regardless of whose possession they are in) (the "Records").
-35-
17. TERMINATION AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Pillar set forth in this Agreement shall
terminate upon the consummation of the transactions contemplated herein;
provided, however, that nothing contained in this Section 18 shall be construed
(a) to terminate the obligations of each Galaxy Fund to discharge the
Liabilities of the Corresponding Pillar Fund assumed pursuant to Section 2(b)
hereof, or (b) to terminate the obligations of Galaxy to provide liability
coverage for the Trustees and officers of Pillar and to indemnify the Trustees
of Pillar, in each case, pursuant to the Covenants set forth in Section 9(m)
hereof.
18. TERMINATION OF AGREEMENT. This Agreement may be terminated by a
party at any time at or prior to the Applicable Effective Time of the
Reorganization by a vote of a majority of such party's Board of Trustees, as
applicable, as provided below:
(a) By Galaxy if the conditions set forth in Section 12 are not
satisfied as specified in said Section;
(b) By Pillar if the conditions set forth in Section 13 are not
satisfied as specified in said Section; or
(c) By mutual consent of both parties.
If a party terminates this Agreement because one or more of its
conditions have not been fulfilled, or if this Agreement is terminated by mutual
consent, this Agreement will become null and void insofar as it is so terminated
without any liability of any party to the other parties except as otherwise
provided herein.
-36-
19. AMENDMENT AND WAIVER. At any time prior to or (to the fullest
extent permitted by applicable law) after approval of this Agreement by the
shareholders of Pillar in accordance with Section 10 hereof, (a) the parties
hereto may, by written agreement authorized by their respective Boards of
Trustees and with or without the approval of their shareholders, amend,
modify or terminate any of the provisions of this Agreement, and (b) any
party may waive any breach by any other party or any failure by any other
party to satisfy any of the conditions to the obligations of the waiving
party (such waiver to be in writing and authorized by an authorized officer
of the waiving party) with or without the approval of such party's
shareholders.
20. GOVERNING LAW. This Agreement and the transactions contemplated
hereby shall be governed, construed and enforced in accordance with the internal
laws of the Commonwealth of Massachusetts, without giving effect to the
conflicts of law principles of such state.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
respective successors and permitted assigns of the parties hereto. This
Agreement and the rights, obligations and liabilities hereunder may not be
assigned by any party without the prior written consent of all other parties.
22. BENEFICIARIES. Nothing contained in this Agreement shall be deemed
to create rights in persons not parties hereto (including, without limitation,
any shareholder of Galaxy or Pillar) other than (a) the Trustees of Pillar with
respect to the covenants of Galaxy set forth in Section 9(m); and (b) the
successors and permitted assigns of the parties.
23. NOTICES. All notices required or permitted herein shall be in
writing and shall be deemed to be properly given when delivered personally or by
telecopier to the party entitled to
-37-
receive the notice or when sent by certified or registered mail, postage
prepaid, or delivered to a recognized overnight courier service, in each case,
properly addressed to the party entitled to receive such notice at the address
or telecopier number stated below or to such other address or telecopier number
as may hereafter be furnished in writing by notice similarly given by one party
to the other party hereto:
If to Galaxy:
The Galaxy Fund
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With copies to:
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III, Esq.
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
One ▇▇▇▇▇ Square
▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Pillar:
The Pillar Funds
c/o [Insert]
With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
24. EXPENSES AND WAIVERS. With regard to the expenses incurred by
Pillar and Galaxy in connection with this Agreement and the transactions
contemplated hereby, Pillar shall bear such expenses.
-38-
25. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto and supersedes any and all prior agreements,
arrangements and understandings relating to matters provided for herein.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
27. FAILURE OF ONE FUND TO CONSUMMATE THE TRANSACTIONS. Subject to the
conditions set forth in this Agreement, and provided that the Reorganization
shall continue to qualify for tax-free treatment under the Code and the opinion
is delivered to Galaxy and Pillar as provided in Section 14 hereof, the failure
of one fund to consummate the transactions contemplated hereby shall not affect
the consummation or validity of the Reorganization with respect to any other
fund, and the provisions of this Agreement shall be construed to effect this
intent.
28. NO BROKERS OR FINDERS. Each of the parties, on behalf of itself and
of each of its funds, hereby represents and warrants to the other party hereto
that that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
29. VALIDITY. Whenever possible, each provision and term of this
Agreement shall be interpreted in a manner to be effective and valid, but if any
provision or term of this Agreement is held to be prohibited by law or invalid,
then such provision or term shall be ineffective only in the jurisdiction or
jurisdictions so holding and only to the extent of such prohibition or
invalidity,
-39-
without invalidating or affecting in any manner whatsoever the remainder of
such provision or term or the remaining provisions or terms of this Agreement.
30. EFFECT OF FACSIMILE SIGNATURE. A facsimile signature of an
authorized officer of a party hereto on this Agreement and/or any Transfer
Document shall have the same effect as if executed in the original by such
officer.
31. HEADINGS. The headings contained herein are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
32. GALAXY LIABILITY. The names "The Galaxy Fund" and "Trustees of The
Galaxy Fund" refer respectively to the trust created and the trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated March 31, 1986, which is hereby referred to and a
copy of which is on file at the office of the Secretary of State of the
Commonwealth of Massachusetts and at the principal office of Galaxy. The
obligations of Galaxy entered into in the name or on behalf thereof by any of
the trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of Galaxy personally, but bind only the trust property, and all
persons dealing with any series of shares of Galaxy must look solely to the
trust property belonging to such series for the enforcement of any claims
against Galaxy.
Both parties specifically acknowledge and agree that any liability of
Galaxy under this Agreement with respect to a particular Galaxy Fund, or in
connection with the transactions contemplated herein with respect to a
particular Galaxy Fund, shall be discharged only out of the
-40-
assets of the particular Galaxy Fund and that no other portfolio of Galaxy
shall be liable with respect thereto.
33. PILLAR LIABILITY. The names "The Pillar Funds" and "Trustees of The
Pillar Funds" refer respectively to the trust created and the trustees, as
trustees but not individually or personally, acting from time to time under an
Agreement and Declaration of Trust dated September 9, 1991, which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of Pillar. The
obligations of Pillar entered into in the name or on behalf thereof by any of
the trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of Pillar personally, but bind only the trust property, and all
persons dealing with any series of shares of Pillar must look solely to the
trust property belonging to such series for the enforcement of any claims
against Pillar.
Both parties specifically acknowledge and agree that any liability of
Pillar under this Agreement with respect to a Pillar Fund, or in connection with
the transactions contemplated herein with respect to a particular Pillar Fund,
shall be discharged only out of the assets of the particular Pillar Fund and
that no other portfolio of Pillar shall be liable with respect thereto.
-41-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the date
first written above.
THE GALAXY FUND
By: /s/ ▇▇▇▇ ▇. ▇'▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
THE PILLAR FUNDS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
FLEET INVESTMENT ADVISORS INC.
Hereby joins in this Agreement
with respect to, and agrees to be
bound by, Section 24.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO and CIO
-42-
SCHEDULE A
COLUMN 1 COLUMN 2
-------- --------
THE PILLAR FUND AND SHARE CLASS THE GALAXY FUND AND SHARE CLASS
Pillar Institutional Select Money Market Fund Galaxy Institutional Money Market Fund
Shares Class I Shares
Pillar U.S. Treasury Securities Plus Money Market Fund Galaxy Institutional Treasury Money Market Fund
Shares
Class I Shares
Pillar U.S. Treasury Securities Money Market Fund Galaxy U.S. Treasury Money Market Fund
Class A Shares Retail A Shares
Class I Shares Trust Shares
Pillar Tax-Exempt Money Market Fund Galaxy Tax-Exempt Money Market Fund
Class A Shares Retail A Shares
Class I Shares Trust Shares
Pillar Prime Obligation Money Market Fund Galaxy Money Market Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class I Shares Trust Shares
Pillar Intermediate Term Government Securities Fund Galaxy Intermediate Government Income Fund
Class A Shares Retail A Shares
Class I Shares Trust Shares
Pillar Fixed Income Fund Galaxy High Quality Bond Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class I Shares Trust Shares
Pillar Pennsylvania Municipal Securities Fund Galaxy Pennsylvania Municipal Bond Fund
Class A Shares Retail A Shares
Class I Shares Trust Shares
Pillar New Jersey Municipal Securities Fund Galaxy New Jersey Municipal Bond Fund
Class A Shares Retail A Shares
Class I Shares Trust Shares
Pillar Balanced Fund Galaxy Asset Allocation Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class I Shares Trust Shares
A-1
Pillar Equity Income Fund Galaxy Equity Income Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class I Shares Trust Shares
Pillar Equity Value Fund Galaxy Large Cap Value Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class I Shares Trust Shares
Pillar Equity Growth Fund Galaxy Large Cap Equity Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class I Shares Trust Shares
Pillar Mid Cap Fund Galaxy Growth Fund II
Class I Shares Trust Shares
Pillar International Equity Fund Galaxy International Equity Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class I Shares Trust Shares
A-2
