Exhibit (4)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
February 6, 2004, between ▇▇▇▇▇ ▇▇▇▇▇ Series Trust II ("▇▇▇▇▇ ▇▇▇▇▇ Trust"), on
behalf of ▇▇▇▇▇ ▇▇▇▇▇ Tax-Managed Emerging Markets Fund, a segregated portfolio
of assets ("series") thereof ("Acquiring Fund"), and PIMCO Funds: Multi-Manager
Series ("PIMCO Trust"), on behalf of its PIMCO PPA Tax-Efficient Structured
Emerging Markets Fund series ("Target"). (Acquiring Fund and Target are
sometimes referred to herein individually as a "Fund" and collectively as the
"Funds"; and ▇▇▇▇▇ ▇▇▇▇▇ Trust and PIMCO Trust are sometimes referred to herein
individually as an "Investment Company" and collectively as the "Investment
Companies.") All agreements, representations, actions, and obligations described
herein made or to be taken or undertaken by a Fund are made and shall be taken
or undertaken by ▇▇▇▇▇ ▇▇▇▇▇ Trust on behalf of Acquiring Fund and by PIMCO
Trust on behalf of Target.
The Investment Companies, each of which is a Massachusetts business trust,
wish to effect a reorganization described in section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended ("Code"), and intend this Agreement to
be, and adopt it as, a "plan of reorganization" within the meaning of the
regulations under section 368 of the Code ("Regulations"). The reorganization
will involve Target's changing its identity -- by converting from a series of
PIMCO Trust to a series of ▇▇▇▇▇ ▇▇▇▇▇ Trust -- by transferring its assets to
Acquiring Fund (which is being established solely for the purpose of acquiring
those assets and continuing Target's business) in exchange solely for voting
shares of beneficial interest in Acquiring Fund ("Acquiring Fund Shares") and
Acquiring Fund's assumption of Target's liabilities, followed by the
distribution of those shares pro rata to the holders of shares of beneficial
interest in Target ("Target Shares") constructively in exchange therefor, all on
the terms and conditions set forth herein. (All such transactions are referred
to herein as the "Reorganization.")
Each of Target and Acquiring Fund currently has a single class of shares
(designated Institutional Class shares and Class I shares, respectively), the
rights, powers, privileges, and obligations of which are substantially similar.
In consideration of the mutual promises contained herein, the parties agree
as follows:
1. PLAN OF REORGANIZATION
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1.1. Target agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to Acquiring Fund as of the
Effective Time (as defined in paragraph 2.1). PIMCO Trust, on behalf of its
series, PIMCO Structured Emerging Markets Fund (which holds bare legal title to
the Nominee Account Securities, as described in paragraph 1.2, for the benefit
and on behalf of Target, pursuant to the letter referred to in paragraph 1.2),
agrees to assign, sell, convey, transfer, and deliver such title and all other
right, title, and interest therein, to Acquiring Fund at the Effective Time.
Acquiring Fund agrees in exchange therefor, at the Effective Time
(a) to issue and deliver to Target the number of full and fractional
(rounded to the third decimal place) Acquiring Fund Shares equal to
the number of full and fractional (rounded to the third decimal place)
Target Shares then outstanding, and
(b) to assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
These transactions shall take place at the Closing (as defined in paragraph
2.1).
1.2. The Assets shall consist of all property Target owns -- including all
cash, cash equivalents, securities, receivables (including interest and
dividends receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records (other than those required
by applicable law to be maintained by PIMCO Trust, provided that PIMCO Trust
shall deliver copies of such books and records to ▇▇▇▇▇ ▇▇▇▇▇ Trust), deferred
and prepaid expenses, and all Nominee Account Securities (as such term is
defined in the Nominee Account Letter dated June 25, 2002 from PIMCO Trust on
behalf of Target as accepted and agreed to by PIMCO Trust on behalf of its
series, PIMCO Structured Emerging Markets Fund), each as shown as assets on
Target's books at the Effective Time.
1.3. The Liabilities shall consist of all of Target's liabilities, debts,
obligations, and duties (other than liabilities arising pursuant to paragraph
10.1) of whatever kind or nature, whether absolute, accrued, contingent, or
otherwise, whether or not arising in the ordinary course of business, whether or
not determinable at the Effective Time, and whether or not specifically referred
to in this Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares it receives
pursuant to paragraph 1.1(a) to its shareholders of record, determined as of the
Effective Time (each a "Shareholder" and, collectively, "Shareholders"),
constructively in exchange for their Target Shares. That distribution, which
shall constitute due delivery of those Acquiring Fund Shares, shall be
accomplished by ▇▇▇▇▇ ▇▇▇▇▇ Trust's transfer agent's opening accounts on
Acquiring Fund's share transfer books in the Shareholders' names and
transferring those Acquiring Fund Shares thereto. Each Shareholder's account
shall be credited with the number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares equal to the number of full and fractional
(rounded to the third decimal place) Target Shares that Shareholder held at the
Effective Time. All issued and outstanding Target Shares shall simultaneously be
canceled on Target's share transfer books. Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares issued in connection with
the Reorganization.
1.5. Any transfer taxes payable on issuance of Acquiring Fund Shares in a
name other than that of the registered holder on Target's books at the Effective
Time of the Target Shares constructively exchanged therefor shall be paid by the
person to whom those Acquiring Fund Shares are to be issued, as a condition of
that transfer.
1.6. As soon as reasonably practicable after the distribution of the
Acquiring Fund Shares pursuant to paragraph 1.4, but in all event within six
months after the Effective Time, each of Target and PIMCO Structured Emerging
Markets Fund shall be terminated as a series of PIMCO Trust and any further
actions shall be taken in connection therewith as required by applicable law.
2. CLOSING AND EFFECTIVE TIME
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2.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the principal office of ▇▇▇▇▇ ▇▇▇▇▇ Trust,
located at The ▇▇▇▇▇ ▇▇▇▇▇ Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, on the date of this Agreement. All acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of business (i.e., 4:00
p.m., Eastern time) on the date hereof or at such other time as to which the
Investment Companies may agree ("Effective Time").
2.2 PIMCO Trust's custodian shall deliver at the Closing a certificate of
an authorized representative verifying the information (including adjusted basis
and holding period for federal income tax purposes, by lot) concerning the
Assets, including all portfolio securities. PIMCO Trust's custodian shall
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deliver at the Closing a certificate of an authorized representative stating
that (a) the Assets it holds will be transferred to Acquiring Fund's custodian
as of the Effective Time and (b) all necessary taxes in conjunction with the
delivery of the Assets, including all applicable federal and state stock
transfer stamps and foreign transfer taxes, if any, have been paid or provision
for payment has been made.
2.3. PIMCO Trust shall deliver to ▇▇▇▇▇ ▇▇▇▇▇ Trust at the Closing a list
of the names and addresses of the Shareholders and the number of outstanding
Target Shares each Shareholder owns, all as of the Effective Time, certified by
PIMCO Trust's Secretary or an Assistant Secretary thereof. ▇▇▇▇▇ ▇▇▇▇▇ Trust's
transfer agent shall deliver at the Closing a certificate as to the opening on
Acquiring Fund's share transfer books of accounts in the Shareholders' names.
▇▇▇▇▇ ▇▇▇▇▇ Trust shall issue and deliver a confirmation to PIMCO Trust
evidencing the Acquiring Fund Shares to be credited to Target (pursuant to
paragraph 1.1(a)) at the Effective Time or provide evidence satisfactory to
PIMCO Trust that those Acquiring Fund Shares have been credited to Target's
account on Acquiring Fund's books; and as soon as practicable after receipt of
the Shareholder list mentioned above, ▇▇▇▇▇ ▇▇▇▇▇ Trust shall issue and deliver
a confirmation to PIMCO Trust evidencing the Acquiring Fund Shares to be
credited to the Shareholders (pursuant to paragraph 1.4) or provide evidence
satisfactory to PIMCO Trust that those Acquiring Fund Shares have been credited
to the Shareholders' accounts on Acquiring Fund's books.
2.4. ▇▇▇▇▇ ▇▇▇▇▇ Trust shall deliver to PIMCO Trust an Assumption of
Liabilities, executed on Acquiring Fund's behalf, dated as of the Closing, in
form and substance reasonably acceptable to PIMCO Trust and reflecting paragraph
1.1(b).
2.5. Each Investment Company shall deliver to the other at the Closing (a)
a certificate executed in its name by its President or any Vice President in
form and substance reasonably satisfactory to the recipient and dated the
Effective Time, to the effect that the representations and warranties it made in
this Agreement are true and correct in all material respects at the Effective
Time except as they may be affected by the transactions contemplated by this
Agreement and (b) as reasonably requested by an Investment Company or its
counsel, bills of sale, assumptions of liabilities, checks, assignments, stock
certificates, receipts, and other documents each signed (to the extent
applicable) by the President, Treasurer or any Vice President of the other
Investment Company or an authorized person of the relevant service provider for
that Investment Company.
3. REPRESENTATIONS AND WARRANTIES
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3.1. PIMCO Trust, on behalf of Target, represents and warrants as follows:
3.1.1. PIMCO Trust is a trust operating under a written declaration of
trust, the beneficial interest in which is divided into transferable shares
("Business Trust"), that is duly organized and validly existing under the laws
of The Commonwealth of Massachusetts; and a copy of its Second Amended and
Restated Agreement and Declaration of Trust, as amended ("PIMCO Trust's
Declaration"), is on file with the Secretary of State of The Commonwealth of
Massachusetts. PIMCO Trust is qualified as a foreign association in every
jurisdiction where required, except to the extent that failure to so qualify
would not have a material adverse effect on PIMCO Trust or Target. PIMCO Trust
has all necessary federal, state, and local authorizations to carry on Target's
business as a series of an investment company and to carry out this Agreement;
3.1.2. PIMCO Trust is duly registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"), and
that registration is in full force and effect;
3.1.3. Target is a duly established and designated series of PIMCO Trust;
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3.1.4. At the Closing, PIMCO Trust, on behalf of Target, will have good and
marketable title to the Assets and full right, power, and authority to sell,
assign, transfer, and deliver the Assets free of any liens or other encumbrances
(other than customary liens of custodians for fees and securities that are
subject to "securities loans" as referred to in section 851(b)(2) of the Code);
and on delivery and payment for the Assets, Acquiring Fund will acquire good and
marketable title thereto;
3.1.5. PIMCO Trust's current prospectus and statement of additional
information with respect to Target, each as from time to time amended or
supplemented (collectively, "PIMCO Prospectuses"), conform in all material
respects to the applicable requirements of the Securities Act of 1933, as
amended ("1933 Act"), and the 1940 Act and the rules and regulations thereunder
and do not contain, with respect to Target, 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;
3.1.6. Target is not in violation of, and the execution and delivery of
this Agreement by PIMCO Trust, on behalf of Target, and consummation of the
transactions contemplated hereby will not conflict with or violate,
Massachusetts law or any provision of PIMCO Trust's Declaration or By-Laws or of
any agreement, instrument, lease, or other undertaking to which PIMCO Trust
(with respect to Target) is a party or by which it is bound or result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, judgment, or decree to which PIMCO Trust (with respect to Target) is
a party or by which it is bound, except as otherwise disclosed in writing to and
consented to by ▇▇▇▇▇ ▇▇▇▇▇ Trust, the consent of which shall not be
unreasonably withheld;
3.1.7. All material contracts and other commitments of or applicable to
Target (other than this Agreement and investment contracts, including options,
futures, and forward contracts) will be terminated, or provision for discharge
of any liabilities of Target thereunder will be made, at or prior to the
Effective Time, without either Fund's incurring any liability or penalty with
respect thereto and without diminishing or releasing any rights Target may have
had with respect to actions taken or omitted or to be taken by any other party
thereto prior to the Closing, except as otherwise disclosed in writing to and
consented to by ▇▇▇▇▇ ▇▇▇▇▇ Trust, the consent of which shall not be
unreasonably withheld;
3.1.8. Except as otherwise disclosed in writing to and consented to by
▇▇▇▇▇ ▇▇▇▇▇ Trust, the consent of which shall not be unreasonably withheld: (a)
no legal, administrative, or other proceedings, or investigation of or before
any court or governmental body is presently pending or (to PIMCO Trust's
knowledge) threatened against PIMCO Trust with respect to Target or any of
Target's properties or assets that, if adversely determined, would materially
and adversely affect Target's financial condition or the conduct of its
business; and (b) PIMCO Trust knows of no facts that might form the basis for
the institution of any such litigation, proceeding, or investigation and is not
a party to or subject to the provisions of any order, decree, or judgment of any
court or governmental body that materially or adversely affects its business or
its ability to consummate the transactions contemplated hereby;
3.1.9. The execution, delivery, and performance of this Agreement have been
duly authorized as of the date hereof by all necessary action on the part of
PIMCO Trust's board of trustees, which has made the determinations required by
Rule 17a-8(a) under the 1940 Act; and assuming the due execution, delivery, and
performance of this Agreement by ▇▇▇▇▇ ▇▇▇▇▇ Trust, on behalf of Acquiring Fund,
and subject to valid approval by Target's shareholders, this Agreement
constitutes a valid and legally binding obligation of Target, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, and similar laws
relating to or affecting creditors' rights and by general principles of equity;
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3.1.10. No governmental consents, approvals, authorizations, or filings are
required under the 1933 Act, the Securities Exchange Act of 1934, as amended, or
the 1940 Act (collectively, "Federal Securities Laws") or any state (as used
herein, including the District of Columbia and Puerto Rico) securities or blue
sky laws (collectively, "State Securities Laws") for the execution or
performance of this Agreement by PIMCO Trust, on behalf of Target, except for
(a) the filing with the Securities and Exchange Commission ("SEC") of a
registration statement by ▇▇▇▇▇ ▇▇▇▇▇ Trust on Form N-14 relating to the
Acquiring Fund Shares issuable hereunder, and any supplement or amendment
thereto ("Registration Statement"), including therein a prospectus/proxy
statement ("Proxy Statement"), (b) the filing with the SEC of supplements to the
PIMCO Prospectuses in connection with the Reorganization, and (c) such consents,
approvals, authorizations, and filings as have been made or received or as may
be required subsequent to the Effective Time (including under State Securities
Laws);
3.1.11. On the effective date of the Registration Statement, at the time of
the Shareholders' Meeting (as defined in paragraph 4.2), and at the Effective
Time, the Proxy Statement will (a) comply in all material respects with the
applicable provisions of the Federal Securities Laws and the rules and
regulations thereunder and (b) not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided that the foregoing shall not apply to
statements in or omissions from the Proxy Statement made in reliance on and in
conformity with information furnished by ▇▇▇▇▇ ▇▇▇▇▇ Trust for use therein;
3.1.12. Target incurred the Liabilities, which are associated with the
Assets, in the ordinary course of its business; and there are no Liabilities
other than liabilities disclosed or provided for in PIMCO Trust's financial
statements referred to in paragraph 3.1.17 and liabilities Target incurred in
the ordinary course of its business subsequent to June 30, 2003, or otherwise
disclosed to ▇▇▇▇▇ ▇▇▇▇▇ Trust, none of which has been materially adverse to
Target's business, assets, or the results of its operations;
3.1.13. Target is a "fund" as defined in section 851(g)(2) of the Code; it
qualified for treatment as a regulated investment company under Subchapter M of
the Code ("RIC") for each past taxable year since it commenced operations and
will continue to meet all the requirements for that qualification for its
current taxable year; the Assets will be invested at all times through the
Effective Time in a manner that ensures compliance with the foregoing; and
Target has no earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it;
3.1.14. Target is not under the jurisdiction of a court in a "title 11 or
similar case" (as defined in section 368(a)(3)(A) of the Code);
3.1.15. During the five-year period ending at the Effective Time, (a)
neither Target nor any person "related" (within the meaning of section
1.368-1(e)(3) of the Regulations) to Target will have acquired Target Shares,
either directly or through any transaction, agreement, or arrangement with any
other person, with consideration other than Acquiring Fund Shares or Target
Shares, except for shares redeemed in the ordinary course of Target's business
as a series of an open-end investment company as required by section 22(e) of
the 1940 Act, and (b) no distributions will have been made with respect to
Target Shares, other than normal, regular dividend distributions made pursuant
to Target's historic dividend-paying practice and other distributions that
qualify for the deduction for dividends paid (within the meaning of section 561
of the Code) referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code;
3.1.16. Target's federal income tax returns, and all applicable state and
local tax returns, for all taxable years through and including the taxable year
ended June 30, 2003, have been timely filed and all taxes payable pursuant to
those returns have been timely paid;
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3.1.17. PIMCO Trust's financial statements for the fiscal year ended June
30, 2003, which have been delivered to ▇▇▇▇▇ ▇▇▇▇▇ Trust, fairly represent
Target's financial position as of that date and the results of its operations
and changes in its net assets for the fiscal year then ended;
3.1.18. Not more than 25% of the value of Target's total assets (excluding
cash, cash items, and U.S. government securities) is invested in the stock and
securities of any one issuer, and not more than 50% of the value of such assets
is invested in the stock and securities of five or fewer issuers;
3.1.19. All issued and outstanding Target Shares are, and at the Effective
Time will be, duly and validly issued and outstanding, fully paid, and
non-assessable by PIMCO Trust and have been offered and sold in every state
(including the District of Columbia) in compliance in all material respects with
applicable registration requirements of the 1933 Act and State Securities Laws;
all issued and outstanding Target Shares will, at the Effective Time, be held by
the persons and in the amounts set forth in the certified list delivered
pursuant to paragraph 2.3; and Target does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any Target Shares, nor is
there outstanding any security convertible into any Target Shares; and
3.1.20. Before January 1, 1997, PIMCO Trust claimed classification for
federal tax purposes as an association taxable as a corporation and has not
elected otherwise since.
3.2. ▇▇▇▇▇ ▇▇▇▇▇ Trust, on behalf of Acquiring Fund, represents and
warrants as follows:
3.2.1. ▇▇▇▇▇ ▇▇▇▇▇ Trust is a Business Trust that is duly organized and
validly existing under and by virtue of the laws of The Commonwealth of
Massachusetts; and a copy of its Amended and Restated Declaration of Trust
("▇▇▇▇▇ ▇▇▇▇▇ Trust's Declaration") is on file with the Secretary of State of
The Commonwealth of Massachusetts. ▇▇▇▇▇ ▇▇▇▇▇ Trust is qualified as a foreign
association in every jurisdiction where required, except to the extent that
failure to so qualify would not have a material adverse effect on ▇▇▇▇▇ ▇▇▇▇▇
Trust or Acquiring Fund. ▇▇▇▇▇ ▇▇▇▇▇ Trust has all necessary federal, state, and
local authorizations to carry on Acquiring Fund's business as a series of an
investment company and to carry out this Agreement;
3.2.2. ▇▇▇▇▇ ▇▇▇▇▇ Trust is duly registered as an open-end management
investment company under the 1940 Act, and that registration is in full force
and effect;
3.2.3. Before the Closing, Acquiring Fund will be a duly established and
designated series of ▇▇▇▇▇ ▇▇▇▇▇ Trust;
3.2.4. Acquiring Fund has not commenced operations and will not do so until
immediately after the Closing;
3.2.5. Except for the Ownership Share issued pursuant to paragraph 5.7,
there are no (a) issued and outstanding Acquiring Fund Shares, (b) options,
warrants, or other rights to subscribe for or purchase any Acquiring Fund
Shares, (c) securities convertible into any Acquiring Fund Shares, or (d) any
other securities issued by Acquiring Fund;
3.2.6. No consideration other than Acquiring Fund Shares (and Acquiring
Fund's assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
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3.2.7. The Acquiring Fund Shares to be issued and delivered to Target
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued and
outstanding shares of Acquiring Fund, fully paid and non-assessable by ▇▇▇▇▇
▇▇▇▇▇ Trust;
3.2.8. The issuance of the Acquiring Fund Shares pursuant to this Agreement
will be in compliance with all applicable Federal and State Securities Laws;
3.2.9. Acquiring Fund is not in violation of, and the execution and
delivery of this Agreement by ▇▇▇▇▇ ▇▇▇▇▇ Trust, on behalf of Acquiring Fund,
and consummation of the transactions contemplated hereby will not conflict with
or violate, Massachusetts law or any provision of ▇▇▇▇▇ ▇▇▇▇▇ Trust's
Declaration or By-Laws or of any agreement, instrument, lease, or other
undertaking to which ▇▇▇▇▇ ▇▇▇▇▇ Trust (with respect to Acquiring Fund) is a
party or by which it is bound or result in the acceleration of any obligation,
or the imposition of any penalty, under any agreement, judgment, or decree to
which ▇▇▇▇▇ ▇▇▇▇▇ Trust (with respect to Acquiring Fund) is a party or by which
it is bound, except as otherwise disclosed in writing to and consented to by
PIMCO Trust, the consent of which shall not be unreasonably withheld;
3.2.10. Except as otherwise disclosed in writing to and consented to by
PIMCO Trust, the consent of which shall not be unreasonably withheld: (a) no
legal, administrative, or other proceedings, or investigation of or before any
court or governmental body is presently pending or (to ▇▇▇▇▇ ▇▇▇▇▇ Trust's
knowledge) threatened against ▇▇▇▇▇ ▇▇▇▇▇ Trust with respect to Acquiring Fund
or any of Acquiring Fund's properties or assets that, if adversely determined,
would materially and adversely affect Acquiring Fund's financial condition or
the conduct of its business; and (b) ▇▇▇▇▇ ▇▇▇▇▇ Trust knows of no facts that
might form the basis for the institution of any such litigation, proceeding, or
investigation and is not a party to or subject to the provisions of any order,
decree, or judgment of any court or governmental body that materially or
adversely affects its business or its ability to consummate the transactions
contemplated hereby;
3.2.11. Acquiring Fund has no known liabilities of a material nature,
contingent or otherwise;
3.2.12. The execution, delivery, and performance of this Agreement have
been duly authorized as of the date hereof by all necessary action on the part
of ▇▇▇▇▇ ▇▇▇▇▇ Trust's board of trustees (together with PIMCO Trust's board of
trustees, the "Boards"), which has made the determinations required by Rule
17a-8(a) under the 1940 Act; and, assuming the due execution, delivery, and
performance of this Agreement by PIMCO Trust, on behalf of Target, this
Agreement constitutes a valid and legally binding obligation of Acquiring Fund,
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws relating to or affecting creditors' rights and by general
principles of equity;
3.2.13. No governmental consents, approvals, authorizations, or filings are
required under the Federal Securities Laws or any State Securities Laws for the
execution or performance of this Agreement by ▇▇▇▇▇ ▇▇▇▇▇ Trust, on behalf of
Acquiring Fund, except for (a) the filing with the SEC of the Registration
Statement (and the Proxy Statement included therein) and (b) such consents,
approvals, authorizations, and filings as have been made or received or as may
be required subsequent to the Effective Time (including under State Securities
Laws);
3.2.14. On the effective date of the Registration Statement, at the time of
the Shareholders' Meeting, and at the Effective Time, the Registration Statement
will (a) comply in all material respects with the applicable provisions of the
Federal Securities Laws and the rules and regulations thereunder and (b) not
contain any untrue statement of a material fact or omit to state a material fact
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required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided
that the foregoing shall not apply to statements in or omissions from the Proxy
Statement made in reliance on and in conformity with information furnished by
PIMCO Trust for use therein;
3.2.15. There are no material contracts outstanding to which Acquiring Fund
is a party, other than this Agreement, the contracts, agreements, and plans
referred to in paragraph 5.8, and any other contracts as are or will be
disclosed in the Registration Statement;
3.2.16. Acquiring Fund was established by the Board of ▇▇▇▇▇ ▇▇▇▇▇ Trust in
order to effect the Reorganization;
3.2.17. Acquiring Fund will be a "fund" as defined in section 851(g)(2) of
the Code; it will qualify for treatment as a RIC for the taxable year in which
the Reorganization occurs; and it intends to continue to meet all the
requirements for that qualification for the next taxable year;
3.2.18. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares issued in
the ordinary course of its business as a series of an open-end investment
company; nor does Acquiring Fund, or any person "related" (within the meaning of
section 1.368-1(e)(3) of the Regulations) to Acquiring Fund, have any plan or
intention to acquire -- during the five-year period beginning at the Effective
Time, either directly or through any transaction, agreement, or arrangement with
any other person -- with consideration other than Acquiring Fund Shares, any
Acquiring Fund Shares issued to the Shareholders pursuant to the Reorganization,
except for redemptions in the ordinary course of such business as required by
section 22(e) of the 1940 Act;
3.2.19. Following the Reorganization, Acquiring Fund (a) will continue
Target's "historic business" (within the meaning of section 1.368-1(d)(2) of the
Regulations) and (b) will use a significant portion of Target's "historic
business assets" (within the meaning of section 1.368-1(d)(3) of the
Regulations) in a business; in addition, Acquiring Fund (c) has no plan or
intention to sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and dispositions
necessary to maintain its status as a RIC, and (d) expects to retain
substantially all the Assets in the same form as it receives them in the
Reorganization, unless and until subsequent investment circumstances suggest the
desirability of change or it becomes necessary to make dispositions thereof to
maintain such status;
3.2.20. There is no plan or intention for Acquiring Fund to be dissolved or
merged into another business (or a statutory) trust or a corporation or any
"fund" thereof (as defined in section 851(g)(2) of the Code) following the
Reorganization;
3.2.21. During the five-year period ending at the Effective Time, neither
Acquiring Fund nor any person "related" (within the meaning of section
1.368-1(e)(3) of the Regulations) to Acquiring Fund will have acquired Target
Shares with consideration other than Acquiring Fund Shares;
3.2.22. Assuming the truthfulness and correctness of the representation and
warranty in paragraph 3.1.18, immediately after the Reorganization, (a) not more
than 25% of the value of Acquiring Fund's total assets (excluding cash, cash
items, and U.S. government securities) will be invested in the stock and
securities of any one issuer and (b) not more than 50% of the value of such
assets will be invested in the stock and securities of five or fewer issuers;
and
3.2.23. Before January 1, 1997, ▇▇▇▇▇ ▇▇▇▇▇ Trust claimed classification
for federal tax purposes as an association taxable as a corporation and has not
elected otherwise since.
8
3.3. Each Investment Company, on behalf of its Fund, represents and
warrants to the other, as follows:
3.3.1. The fair market value of the Acquiring Fund Shares each Shareholder
receives will be approximately equal to the fair market value of its Target
Shares it constructively surrenders in exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of their
Target Shares before the Reorganization to any person "related" (within the
meaning of section 1.368-1(e)(3) of the Regulations) to either Fund or (ii) any
portion of the Acquiring Fund Shares they receive in the Reorganization to any
person "related" (within such meaning) to Acquiring Fund, (b) does not
anticipate dispositions of those Acquiring Fund Shares at the time of or soon
after the Reorganization to exceed the usual rate and frequency of dispositions
of shares of Target as a series of an open-end investment company, (c) expects
that the percentage of Shareholder interests, if any, that will be disposed of
as a result of or at the time of the Reorganization will be de minimis, and (d)
does not anticipate that there will be extraordinary redemptions of Acquiring
Fund Shares immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
3.3.4. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount;
3.3.5. None of the compensation received by any Shareholder who is an
employee of or service provider to Target will be separate consideration for, or
allocable to, any of the Target Shares that Shareholder held; none of the
Acquiring Fund Shares any such Shareholder receives will be separate
consideration for, or allocable to, any employment agreement, investment
advisory agreement, or other service agreement; and the compensation paid to any
such Shareholder will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's-length for similar
services;
3.3.6. Immediately after consummation of the Reorganization, (a) the
Shareholders will own all the Acquiring Fund Shares and will own such shares
solely by reason of their ownership of the Target Shares immediately before the
Reorganization and (b) Acquiring Fund will hold the same assets -- except for
assets used to pay expenses, if any, incurred in connection with the
Reorganization that are not Reorganization Expenses (as defined in paragraph
3.3.7) -- and be subject to the same liabilities that Target held or was subject
to immediately before the Reorganization, plus any liabilities for the Funds'
expenses incurred in connection with the Reorganization. Such excepted assets,
together with the amount of all redemptions and distributions (other than
regular, normal dividends) Target made immediately preceding the Reorganization,
will, in the aggregate, constitute less than 1% of its net assets;
3.3.7. Neither Fund will be reimbursed for any expenses incurred by it 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
3.3.8. The aggregate value of the acquisitions, redemptions, and
distributions limited by paragraphs 3.1.15, 3.2.18, and 3.2.21 will not exceed
50% of the value (without giving effect to such acquisitions, redemptions, and
distributions) of the proprietary interest in Target at the Effective Time.
9
4. COVENANTS
---------
4.1. PIMCO Trust covenants to operate Target's business in the ordinary
course between the date hereof and the Closing, it being understood that (a)
such ordinary course will include declaring and paying customary dividends and
other distributions, honoring redemption, subscription, and exchange requests,
and other changes in operations contemplated by its normal business activities
and (b) Target will retain exclusive control of its investments until the
Closing.
4.2. PIMCO Trust covenants to call a meeting of Target's shareholders to
consider and act on this Agreement ("Shareholders' Meeting") and to take all
other action necessary to obtain approval of the transactions contemplated
hereby.
4.3. PIMCO Trust covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
4.4. PIMCO Trust covenants that it will assist ▇▇▇▇▇ ▇▇▇▇▇ Trust in
obtaining information ▇▇▇▇▇ ▇▇▇▇▇ Trust reasonably requests concerning the
beneficial ownership of Target Shares to the extent such requests comply with
PIMCO Trust's policies and procedures regarding the privacy of consumer
information.
4.5. PIMCO Trust covenants that its books and records relating to Target
required to be maintained under the 1940 Act and the rules and regulations
thereunder will be turned over to ▇▇▇▇▇ ▇▇▇▇▇ Trust at the Closing, except for
those required by applicable law to be maintained by PIMCO Trust, in which case,
PIMCO Trust shall deliver copies of such books and records to ▇▇▇▇▇ ▇▇▇▇▇ Trust.
4.6. Each Investment Company covenants to cooperate in preparing the Proxy
Statement in compliance with applicable federal and State Securities Laws.
4.7. Each Investment Company covenants that it will, from time to time, as
and when requested by the other Investment Company, execute and deliver or cause
to be executed and delivered all assignments and other instruments, and will
take or cause to be taken further action, the other Investment Company may deem
necessary or desirable to vest in, and confirm to, (a) Acquiring Fund, title to
and possession of all the Assets, and (b) Target, title to and possession of the
Acquiring Fund Shares to be delivered hereunder and Acquiring Fund's assumption
of the Liabilities, and otherwise to carry out the intent and purpose hereof.
4.8. ▇▇▇▇▇ ▇▇▇▇▇ Trust covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and
State Securities Laws it deems appropriate to continue its operations after the
Effective Time.
4.9. Subject to this Agreement, each Investment Company covenants to take
or cause to be taken all actions, and to do or cause to be done all things,
reasonably necessary, proper, or advisable to consummate and effectuate the
transactions contemplated hereby.
10
5. CONDITIONS PRECEDENT
--------------------
Each Investment Company's obligations hereunder shall be subject to (a) the
other Investment Company's performance of all its obligations to be performed
hereunder at or before the Effective Time, (b) all representations and
warranties of the other Investment Company contained herein being true and
correct in all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated hereby, as of the Effective Time,
with the same force and effect as if made at and as of the Effective Time, and
(c) the following further conditions that, at or before the Effective Time:
5.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Board and shall have been approved by
Target's shareholders in accordance with PIMCO Trust's Declaration and By-Laws
and applicable law.
5.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The Registration Statement shall have become
effective under the 1933 Act; no stop orders suspending the effectiveness
thereof shall have been issued; to the best knowledge of the Investment
Companies, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened, or contemplated; and the SEC shall not
have issued an unfavorable report with respect to the Reorganization under
section 25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin
consummation of the transactions contemplated hereby under section 25(c) of the
1940 Act. All consents, orders, and permits of federal, state, and local
regulatory authorities (including the SEC and state securities authorities)
deemed reasonably necessary by either Investment Company to permit consummation,
in all material respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain same would not involve a risk of a
material adverse effect on either Fund's assets or properties, provided that
either Investment Company may for itself waive any of such conditions.
5.3. At the Effective Time, no action, suit, or other proceeding shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit, or to obtain damages or other relief in
connection with, the transactions contemplated hereby.
5.4. PIMCO Trust shall have received an opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
Vice President - Legal of ▇▇▇▇▇ ▇▇▇▇▇ Management ("EV Counsel"), dated the day
of the Closing, substantially to the effect that:
5.4.1. Acquiring Fund is a duly established series of ▇▇▇▇▇ ▇▇▇▇▇ Trust, an
unincorporated voluntary association validly existing under and by virtue of the
laws of The Commonwealth of Massachusetts with power under ▇▇▇▇▇ ▇▇▇▇▇ Trust's
Declaration to own all its properties and assets and, to the knowledge of EV
Counsel, to carry on its business as presently conducted;
5.4.2. This Agreement (a) has been duly authorized, executed, and delivered
by ▇▇▇▇▇ ▇▇▇▇▇ Trust on behalf of Acquiring Fund and (b) assuming Target's
compliance with Paragraph 3.1.11 of this Agreement, and due authorization,
execution, and delivery of this Agreement by PIMCO Trust on behalf of Target, is
a valid and legally binding obligation of ▇▇▇▇▇ ▇▇▇▇▇ Trust with respect to
Acquiring Fund, enforceable in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting the enforcement of
creditors' rights and by general principles of equity;
11
5.4.3. The Acquiring Fund Shares to be issued and distributed to the
Shareholders under this Agreement, assuming their due delivery as contemplated
by this Agreement, are duly authorized, and upon such delivery will be validly
issued and outstanding and will be fully paid and non-assessable by ▇▇▇▇▇ ▇▇▇▇▇
Trust and Acquiring Fund, and no shareholder of Acquiring Fund has any
preemptive right to subscription or purchase in respect thereof;
5.4.4. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, materially
violate ▇▇▇▇▇ ▇▇▇▇▇ Trust's Declaration or By-Laws or any provision of any
agreement attached as an exhibit to ▇▇▇▇▇ ▇▇▇▇▇ Trust's Registration Statement
on Form N-1A to which ▇▇▇▇▇ ▇▇▇▇▇ Trust (with respect to Acquiring Fund) is a
party or by which it is bound or (to the knowledge of EV Counsel, without any
independent inquiry or investigation) result in the acceleration of any
obligation, or the imposition of any penalty, under any such agreement or any
judgment or decree known to EV Counsel (without any independent inquiry or
investigation) to which ▇▇▇▇▇ ▇▇▇▇▇ Trust (with respect to Acquiring Fund) is a
party or by which it is bound, except as set forth in that opinion or as
otherwise disclosed in writing to and accepted by PIMCO Trust;
5.4.5. To the knowledge of EV Counsel (without any independent inquiry or
investigation), no consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by ▇▇▇▇▇ ▇▇▇▇▇ Trust (on
behalf of Acquiring Fund) of the transactions contemplated herein, except those
obtained under the Federal Securities Laws and those that may be required under
State Securities Laws; and
5.4.6. ▇▇▇▇▇ ▇▇▇▇▇ Trust is registered with the SEC as an investment
company, and to the knowledge of EV Counsel (without any independent inquiry or
investigation) no order has been issued or proceeding instituted to suspend that
registration.
In addition, PIMCO Trust shall have received an opinion of EV Counsel
relating to legal proceedings in such form and covering such matters as may be
agreed upon by PIMCO Counsel and EV Counsel.
In rendering the foregoing opinions, EV Counsel may (1) make assumptions
regarding the authenticity, genuineness, and/or conformity of documents and
copies thereof without independent verification thereof, (2) limit the opinions
to the laws of The Commonwealth of Massachusetts and the United States of
America (but not the blue sky laws of any jurisdiction, including those of The
Commonwealth of Massachusetts), and (3) rely on certain factual representations
made by ▇▇▇▇▇ ▇▇▇▇▇ Trust and its service providers.
5.5. ▇▇▇▇▇ ▇▇▇▇▇ Trust shall have received an opinion of Ropes & ▇▇▇▇ LLP
("PIMCO Counsel"), dated the day of the Closing, substantially to the effect
that:
5.5.1. Target is a duly established series of PIMCO Trust, an
unincorporated voluntary association validly existing under and by virtue of the
laws of The Commonwealth of Massachusetts with power under PIMCO Trust's
Declaration to own all its properties and assets and, to the knowledge of PIMCO
Counsel, to carry on its business as presently conducted;
5.5.2. This Agreement (a) has been duly authorized, executed, and delivered
by PIMCO Trust on behalf of Target and (b) assuming Acquiring Fund's compliance
with Paragraph 3.2.14 of this Agreement, and due authorization, execution, and
delivery of this Agreement by ▇▇▇▇▇ ▇▇▇▇▇ Trust on behalf of Acquiring Fund, is
a valid and legally binding obligation of PIMCO Trust with respect to Target,
12
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws relating to or affecting the enforcement of creditors' rights and
by general principles of equity;
5.5.3. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, materially
violate PIMCO Trust's Declaration or By-Laws or any provision of any agreement
attached as an exhibit to PIMCO Trust's Registration Statement on Form N-1A to
which PIMCO Trust (with respect to Target) is a party or by which it is bound or
(to the knowledge of PIMCO Counsel, without any independent inquiry or
investigation) result in the acceleration of any obligation, or the imposition
of any penalty, under any such agreement or any judgment or decree known to
PIMCO Counsel (without independent inquiry or investigation) to which PIMCO
Trust (with respect to Target) is a party or by which it is bound, except as set
forth in that opinion or as otherwise disclosed in writing to and accepted by
▇▇▇▇▇ ▇▇▇▇▇ Trust, it being understood that with respect to investment
restrictions contained in the PIMCO Trust's Declaration, By-Laws or
Prospectuses, PIMCO Counsel may rely upon a certificate of an officer of PIMCO
Trust whose responsibility it is to advise PIMCO Trust and Target with respect
to such matters;
5.5.4. To the knowledge of PIMCO Counsel (without any independent inquiry
or investigation), no consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by PIMCO Trust (on
behalf of Target) of the transactions contemplated herein, except those obtained
under the Federal Securities Laws and those that may be required under State
Securities Laws; and
5.5.5. PIMCO Trust is registered with the SEC as an investment company, and
to the knowledge of PIMCO Counsel (without any independent inquiry or
investigation) no order has been issued or proceeding instituted to suspend that
registration.
In addition, EV Trust shall have received an opinion of PIMCO Counsel
relating to legal proceedings in such form and covering such matters as may be
agreed upon by PIMCO Counsel and EV Counsel.
In rendering the foregoing opinions, PIMCO Counsel may (1) make assumptions
regarding the authenticity, genuineness, and/or conformity of documents and
copies thereof without independent verification thereof, (2) limit the opinions
to the laws of The Commonwealth of Massachusetts and the United States of
America (but not the blue sky laws of any jurisdiction, including those of The
Commonwealth of Massachusetts), and (3) rely on certain factual representations
made by PIMCO Trust and its service providers.
5.6. Each Investment Company shall have received an opinion of ▇▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP ("Tax Counsel"), addressed to and in form and substance
reasonably satisfactory to it, as to the federal income tax consequences
mentioned below ("Tax Opinion"). In rendering the Tax Opinion, Tax Counsel may
rely as to factual matters, exclusively and without independent verification, on
the representations and warranties made in this Agreement, which Tax Counsel may
treat as representations and warranties made to it, and in separate letters
addressed to Tax Counsel and the certificates delivered pursuant to paragraph
2.4. The Tax Opinion shall be substantially to the effect that, based on the
facts and assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income tax
purposes:
13
5.6.1. Acquiring Fund's acquisition of the Assets in exchange solely for
Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities,
followed by Target's distribution of those shares pro rata to the Shareholders
constructively in exchange for their Target Shares, will qualify as a
"reorganization" (as defined in 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);
5.6.2. Target will recognize no gain or loss on the transfer of the Assets
to Acquiring Fund in exchange solely for Acquiring Fund Shares and Acquiring
Fund's assumption of the Liabilities or on the subsequent distribution of those
shares to the Shareholders in constructive exchange for their Target Shares;
5.6.3. Acquiring Fund will recognize no gain or loss on its receipt of the
Assets in exchange solely for Acquiring Fund Shares and its assumption of the
Liabilities;
5.6.4. Acquiring Fund's basis in each Asset will be the same as Target's
basis therein immediately before the Reorganization, and Acquiring Fund's
holding period for each Asset will include Target's holding period therefor;
5.6.5. A Shareholder will recognize no gain or loss on the constructive
exchange of all its Target Shares solely for Acquiring Fund Shares pursuant to
the Reorganization;
5.6.6. A Shareholder's aggregate basis in the Acquiring Fund Shares it
receives in the Reorganization will be the same as the aggregate basis in its
Target Shares it constructively surrenders in exchange for those Acquiring Fund
Shares, and its holding period for those Acquiring Fund Shares will include, in
each instance, its holding period for those Target Shares, provided the
Shareholder held them as capital assets at the Effective Time; and
5.6.7. For purposes of section 381 of the Code, Acquiring Fund will be
treated as if there had been no Reorganization. Accordingly, the Reorganization
will not result in the termination of Target's taxable year, Target's tax
attributes enumerated in section 381(c) of the Code will be taken into account
by Acquiring Fund as if there had been no Reorganization, and the part of
Target's taxable year before the Reorganization will be included in Acquiring
Fund's taxable year after the Reorganization.
Notwithstanding subparagraphs 5.6.2 and 5.6.4, the Tax Opinion may state
that no opinion is expressed as to the effect of the Reorganization on the Funds
or any Shareholder with respect to any Asset as to which any unrealized gain or
loss is required to be recognized for federal income tax purposes at the end of
a taxable year (or on the termination or transfer thereof) under a
▇▇▇▇-to-market system of accounting.
5.7. Before the Closing, ▇▇▇▇▇ ▇▇▇▇▇ Trust's Board shall have authorized
the issuance of, and Acquiring Fund shall have issued, one Acquiring Fund Share
("Ownership Share") to ▇▇▇▇▇ ▇▇▇▇▇ Management or an affiliate thereof in
consideration of the payment of $10.00 to vote on the management contract and
investment sub-advisory contract referred to in paragraph 5.8. After such vote,
but in any event prior to the Closing, the Ownership Share will be redeemed for
the same amount.
5.8. ▇▇▇▇▇ ▇▇▇▇▇ Trust (on behalf of and with respect to Acquiring Fund)
shall have entered into, or adopted, as appropriate, a management contract,
investment sub-advisory contract, and other agreements and plans necessary for
Acquiring Fund's operation as a series of an open-end investment company. Each
such contract and agreement shall have been approved by ▇▇▇▇▇ ▇▇▇▇▇ Trust's
Board and, to the extent required by law (as interpreted by SEC staff
positions), by such of the Board members who are not "interested persons" (as
defined in the ▇▇▇▇ ▇▇▇) thereof and by ▇▇▇▇▇ ▇▇▇▇▇ Management or its affiliate
as Acquiring Fund's sole shareholder.
14
5.9. That the shareholders of Target, by approving this Agreement pursuant
to paragraph 5.1, shall have acknowledged Acquiring Fund's investment objective,
fundamental investment policies, and investment advisory arrangement.
5.10. At any time before the Closing, either Investment Company may waive
any of the foregoing conditions (except that set forth in paragraph 5.1) if, in
the judgment of its Board, that waiver will not have a material adverse effect
on its Fund's shareholders' interests.
6. BROKERAGE FEES AND EXPENSES
---------------------------
6.1. Each Investment Company represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
6.2. ▇▇▇▇▇ ▇▇▇▇▇ Management agrees that it will bear and promptly pay any
and all Reorganization Expenses incurred by the Funds (including all brokerage
commissions, dealer ▇▇▇▇-ups, transfer taxes, and similar expenses incurred by
Target in connection with the Reorganization).
7. ENTIRE AGREEMENT; NO SURVIVAL
-----------------------------
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. Except as indicated below, the representations, warranties, and
covenants contained herein or in any document delivered pursuant hereto or in
connection herewith shall not survive the Closing. The covenants to be performed
after the Closing on behalf of Target and Acquiring Fund in paragraphs 10.1 and
10.2, respectively, shall survive the Closing.
8. TERMINATION OF AGREEMENT
------------------------
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Target's shareholders:
8.1. By either Investment Company (a) in the event of the other Investment
Company's material breach of any representation, warranty, or covenant contained
herein to be performed at or prior to the Effective Time, (b) if a condition to
its obligations has not been met and it reasonably appears that such condition
will not or cannot be met, (c) if a governmental body issues an order, decree,
or ruling having the effect of permanently enjoining, restraining, or otherwise
prohibiting the consummation of the Reorganization, or (d) if the Closing has
not occurred on or before April 30, 2004; or
8.2. By the Investment Companies' mutual agreement.
In the event of termination under paragraphs 8.1(b), (c) or (d) or 8.2,
there shall be no liability for damages on the part of either Investment
Company, or their trustees or officers, to the other Investment Company.
9. AMENDMENT
---------
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's shareholders, in any manner
mutually agreed on in writing by the parties; provided that following that
approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
15
10. INDEMNIFICATION
---------------
10.1. Target shall indemnify and hold harmless, out of the assets of Target
(which shall be deemed to include the part of the assets of Acquiring Fund
represented by the Acquiring Fund Shares following the Effective Time), ▇▇▇▇▇
▇▇▇▇▇ Trust and the trustees and officers of ▇▇▇▇▇▇ ▇▇▇▇▇ Trust (collectively,
for purposes of this paragraph 10.1, "Indemnified Parties") against any and all
expenses, losses, claims, damages, and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parties in connection
with, arising out of, or resulting from any claim, action, suit, or proceeding
in which any one or more of the Indemnified Parties may be involved or with
which any one or more of the Indemnified Parties may be threatened by reason of
any untrue statement or alleged untrue statement of a material fact relating to
PIMCO Trust or Target contained in this Agreement or the Registration Statement
or any amendment or supplement to any of the foregoing, or arising out of or
based upon the omission or alleged omission to state in any of the foregoing a
material fact relating to PIMCO Trust or Target required to be stated therein or
necessary to make the statements relating to PIMCO Trust or Target therein not
misleading, including, without limitation, any amounts paid by any one or more
of the Indemnified Parties in a reasonable compromise or settlement of any such
claim, action, suit, or proceeding, or threatened claim, action, suit, or
proceeding, made with the consent of PIMCO Trust or Target. An Indemnified Party
will notify PIMCO Trust (and Target if before the Effective Time) in writing
within ten days after the receipt by such Indemnified Party of any notice of
legal process or any suit brought against or claim made against such Indemnified
Party as to any matters covered by this paragraph 10.1. Target shall be entitled
to participate at its own expense in the defense of any claim, action, suit, or
proceeding covered by this paragraph 10.1, or, if it so elects, to assume at its
expense by counsel satisfactory to such Indemnified Party the defense of any
such claim, action, suit, or proceeding, and if Target elects to assume such
defense, such Indemnified Party shall be entitled to participate in the defense
of any such claim, action, suit, or proceeding at its, his, or her own expense.
Target's obligation under this paragraph 10.1 to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that Target will
pay in the first instance any expenses, losses, claims, damages, and liabilities
required to be paid by it under this paragraph 10.1 without the necessity of the
Indemnified Parties' first paying the same.
10.2. Acquiring Fund shall indemnify and hold harmless, out of the assets
of Acquiring Fund, PIMCO Trust and the trustees and officers of PIMCO Trust
(collectively, for purposes of this paragraph 10.2, "Indemnified Parties")
against any and all expenses, losses, claims, damages, and liabilities at any
time imposed upon or reasonably incurred by any one or more of the Indemnified
Parties in connection with, arising out of, or resulting from any claim, action,
suit, or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement of a
material fact relating to ▇▇▇▇▇ ▇▇▇▇▇ Trust or Acquiring Fund contained in this
Agreement or the Registration Statement or any amendment or supplement to any of
the foregoing, or arising out of or based upon the omission or alleged omission
to state in any of the foregoing a material fact relating to ▇▇▇▇▇ ▇▇▇▇▇ Trust
or Acquiring Fund required to be stated therein or necessary to make the
statements relating to ▇▇▇▇▇ ▇▇▇▇▇ Trust or Acquiring Fund therein not
misleading, including, without limitation, any amounts paid by any one or more
of the Indemnified Parties in a reasonable compromise or settlement of any such
claim, action, suit, or proceeding, or threatened claim, action, suit, or
proceeding, made with the consent of ▇▇▇▇▇ ▇▇▇▇▇ Trust or Acquiring Fund. An
Indemnified Party will notify ▇▇▇▇▇ ▇▇▇▇▇ Trust and Acquiring Fund in writing
16
within ten days after the receipt by such Indemnified Party of any notice of
legal process or any suit brought against or claim made against such Indemnified
Party as to any matters covered by this paragraph 10.2. Acquiring Fund shall be
entitled to participate at its own expense in the defense of any claim, action,
suit, or proceeding covered by this paragraph 10.2, or, if it so elects, to
assume at its expense by counsel satisfactory to such Indemnified Party the
defense of any such claim, action, suit, or proceeding, and if Acquiring Fund
elects to assume such defense, such Indemnified Party shall be entitled to
participate in the defense of any such claim, action, suit, or proceeding at
its, his, or her own expense. Acquiring Fund's obligation under this paragraph
10.2 to indemnify and hold harmless the Indemnified Parties shall constitute a
guarantee of payment so that Acquiring Fund will pay in the first instance any
expenses, losses, claims, damages, and liabilities required to be paid by it
under this paragraph 10.2 without the necessity of the Indemnified Parties'
first paying the same.
11. RULE 145
--------
If, notwithstanding paragraph 1.4, Acquiring Fund issues any share
certificates in connection with the Reorganization, then pursuant to Rule 145
under the 1933 Act, Acquiring Fund will, in connection with the issuance of any
Acquiring Fund Shares to any person who at the time of the Reorganization is
deemed to be an affiliate of a party to the transaction pursuant to Rule 145(c),
cause to be affixed upon any certificate(s) issued to such person (if any) a
legend as follows:
"THESE SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO ▇▇▇▇▇
▇▇▇▇▇ TAX-MANAGED EMERGING MARKETS FUND OR ITS PRINCIPAL UNDERWRITER UNLESS
(I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (II) IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE FUND SUCH REGISTRATION IS NOT REQUIRED."
and, further, Acquiring Fund will issue stop transfer instructions to its
transfer agent with respect to such shares. Target will provide Acquiring Fund
as of the Effective Time with the name of any Shareholder who is to the
knowledge of Target an affiliate of Target at such time.
12. COVENANTS, ETC. DEEMED MATERIAL
-------------------------------
All covenants, agreements, representations, and warranties made under this
Agreement and any certificates delivered pursuant to this Agreement shall be
deemed to have been material and relied upon by each of the parties,
notwithstanding any investigation made by them or on their behalf.
13. NOTICES
-------
Any notice, report, statement, or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given personally or
by prepaid telegraph, telecopy, or certified mail addressed to ▇▇▇▇▇ ▇▇▇▇▇ Trust
at The ▇▇▇▇▇ ▇▇▇▇▇ Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and to PIMCO
Trust at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
14. MISCELLANEOUS
-------------
a. This Agreement shall be governed by and construed in accordance with
the internal laws of The Commonwealth of Massachusetts; provided that,
in the case of any conflict between those laws and the federal
securities laws, the latter shall govern.
b. This Agreement shall be binding upon an inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by either party without the prior written
17
consent of the other party. Nothing expressed or implied herein is
intended or shall be construed to confer on or give any person, firm,
trust, or corporation other than the parties and their respective
successors and assigns any rights or remedies under or by reason of
this Agreement.
c. Each Investment Company acknowledges that the other is a Business
Trust organized in series form. This Agreement is executed by ▇▇▇▇▇
▇▇▇▇▇ Trust on behalf of Acquiring Fund and by its trustees and/or
officers in their capacity as such, and not individually. ▇▇▇▇▇ ▇▇▇▇▇
Trust's obligations under this Agreement are not binding on or
enforceable against any of its trustees, officers, or shareholders but
are only binding on and enforceable against the assets and property of
Acquiring Fund and no other series thereof, and a trustee of ▇▇▇▇▇
▇▇▇▇▇ Trust shall not be personally liable hereunder to PIMCO Trust or
its trustees or shareholders for any act, omission, or obligation of
▇▇▇▇▇ ▇▇▇▇▇ Trust or any other trustee thereof. ▇▇▇▇▇ ▇▇▇▇▇ Trust
agrees that, in asserting any rights or claims under this Agreement on
behalf of Acquiring Fund, it shall look only to Target's assets and
property in settlement of those rights and claims and not to the
trustees, officers, or shareholders thereof.
d. A copy of the PIMCO Trust's Declaration is on file with the Secretary
of State of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the trustees of
PIMCO Trust on behalf of Target as trustees and not individually and
that the obligations of this instrument are not binding upon any of
the trustees, officers, or shareholders of PIMCO Trust individually
but are binding only upon the assets and property of Target. PIMCO
Trust agrees that, in asserting any rights or claims under this
Agreement on behalf of Target, it shall look only to Acquiring Fund's
assets and property in settlement of those rights and claims and not
to the trustees, officers, or shareholders thereof.
e. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by each
Investment Company and delivered to the other party. The headings
contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
[Remainder of page intentionally left blank.]
18
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officer as of the day and year first written
above.
▇▇▇▇▇ ▇▇▇▇▇ SERIES TRUST II, on behalf of
▇▇▇▇▇ ▇▇▇▇▇ Tax-Managed Emerging Markets Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President
PIMCO FUNDS: MULTI-MANAGER SERIES, on
behalf of PIMCO PPA Tax-Efficient Structured
Emerging Markets Fund
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
President
Agreed and accepted as to Section 6.2 only:
▇▇▇▇▇ ▇▇▇▇▇ Management
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President