FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this __ day of _____, 1999, by and between STI Classic Funds, a Massachusetts
business trust with its principal place of business at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Trust"), with respect to its Classic Institutional Cash
Management Money Market Fund and Classic Institutional U.S. Government
Securities Money Market Fund, each a separate investment portfolio of the Trust
(each an "Acquiring Fund" and, together, the "Acquiring Funds"), and The Arbor
Fund, a Massachusetts business trust, with its principal place of business at ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Arbor"), with respect to its Prime Obligations
Fund and U.S. Government Securities Money Fund, each a separate investment
portfolio of Arbor (each a "Selling Fund" and, together the "Selling Funds" and,
collectively with the Acquiring Funds, the "Funds").
This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization will consist of (i) the transfer of all of the assets of each
Selling Fund in exchange for shares of beneficial interest, no par value per
share, of its respective Acquiring Fund ("Acquiring Fund Shares") as set forth
on Schedule A attached hereto; (ii) the assumption by each Acquiring Fund of the
identified liabilities of each Selling Fund; and (iii) the distribution, after
the Closing Dates hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of each Selling Fund and the liquidation of each Selling Fund as
provided herein, all upon the terms and conditions set forth in this Agreement
(the "Reorganization").
WHEREAS, each Acquiring Fund and each Selling Fund is a separate investment
series of the Trust and Arbor, respectively, and the Trust and Arbor are
open-end, registered management investment companies and each Selling Fund owns
securities that generally are assets of the character in which its respective
Acquiring Fund is permitted to invest;
WHEREAS, each Fund is authorized to issue its shares of beneficial interest
or shares of common stock, as the case may be;
WHEREAS, the Trustees of the Trust have determined that the Reorganization
in the best interests of each Acquiring Fund's shareholders;
WHEREAS, the Trustees of Arbor have determined that the Reorganization with
respect to each Selling fund is in the best interests of the Selling Fund's
shareholders and that the interests of the existing shareholders of the Selling
Fund will not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows;
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUNDS IN EXCHANGE FOR ACQUIRING FUNDS SHARES
AND THE ASSUMPTION OF SELLING FUNDS' LIABILITIES AND LIQUIDATION OF THE SELLING
FUNDS
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein
and on the basis of the representations and warranties contained herein, each
Selling Fund agrees to transfer all of its assets, as set forth in paragraph
1.2, to its respective Acquiring Fund. In exchange, each Acquiring Fund agrees:
(i) to deliver to its respective Selling Funds the number of full and fractional
shares of the Acquiring Fund Shares, determined by (a) multiplying the shares
outstanding of each class of the Selling Fund by (b) the ratio computed by
dividing (x) the net asset value per share of each such class of the Selling
Fund by (y) the net asset value per share of the corresponding class of
Acquiring Fund Shares computed in the manner and as of the time and date set
forth in paragraph 2.2; and (ii) to assume the identified liabilities of the
Selling Fund, as set forth in paragraph 1.3. Such transactions shall take place
at the closing provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of each Selling Fund to be acquired
by its respective Acquiring Fund shall consist of all property, including,
without limitation, all cash, securities, commodities, interests in futures and
dividends or interest receivables, owned by the Selling Fund and any deferred or
prepaid expenses shown as an asset on the books of the Selling Fund on its
Closing Date.
Each Selling Fund has provided its respective Acquiring Fund with its most
recent audited financial statements, which contain a list of all of the Selling
Fund's assets as of the date of such statements. Each Selling Fund hereby
represents that as of the date of the execution of this Agreement, there have
been no changes in its financial position as reflected in said financial
statements other than those occurring in the ordinary course of business in
connection with the purchase and sale of securities and the payment of normal
operating expenses and the payment of dividends, capital gains distributions and
redemption proceeds to shareholders.
Each Selling Fund will, within a reasonable period of time prior to the
Closing Date, furnish each Acquiring Fund with a list of the Selling Fund's
portfolio securities and other investments. Each Acquiring Fund will, within a
reasonable time prior to the Closing Dates, furnish its respective Selling Funds
with a list of the securities, if any, on the Selling Fund's list referred to
above that do not conform to the Acquiring Fund's investment objectives,
policies, and restrictions. A Selling Fund, if requested by its Acquiring
Funds, will dispose of securities on the Acquiring Fund's list prior to the
Closing Date. In addition, if it is determined that the portfolios of a Selling
Fund and its Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the Acquiring Fund with
respect to such investments, the Selling Fund, if requested by the Acquiring
Fund, will dispose of a sufficient amount of such investments as may be
necessary to avoid violating such limitations
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as of the Closing Date. Notwithstanding the foregoing, nothing herein will
require a Selling Fund to dispose of any investments or securities if, in the
reasonable judgment of the Selling Fund's trustees or adviser, such disposition
would adversely affect the tax-free nature of the Reorganization or would
violate their fiduciary duties to the Selling Fund's shareholders.
1.3 LIABILITIES TO BE ASSUMED. Each Selling Fund will endeavor to
discharge all of its known liabilities and obligations prior to the Closing
Date. Each Acquiring Fund shall assume only those liabilities, expenses, costs,
charges and reserves reflected on a Statement of Assets and Liabilities of its
respective Selling Fund prepared on behalf of the Selling Fund, as of the
Valuation Date (as defined in paragraph 2.1), in accordance with generally
accepted accounting principles consistently applied from the prior audited
period. Each Acquiring Fund shall assume only those liabilities of its
respective Selling Fund reflected in its Statement of Assets and Liabilities and
shall not assume any other liabilities, whether absolute or contingent, known or
unknown, accrued or unaccrued, all of which shall remain the obligation of the
Selling Fund.
In addition, upon completion of the Reorganization, for purposes of
calculating the maximum amount of sales charges (including asset based sales
charges) permitted to be imposed by an Acquiring Fund under the National
Association of Securities Dealers, Inc. ("NASD") Conduct Rule 2830 (the "Maximum
Amount"), each Acquiring Fund will add to the Maximum Amount immediately prior
to the Reorganization, the Maximum Amount of each Selling Fund immediately prior
to the Reorganization, calculated in accordance with NASD Conduct Rule 2830.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after its Closing Date as
is conveniently practicable (the "Liquidation Date"): (a) each Selling Fund will
distribute in complete liquidation of the Selling Fund, pro rata to its
shareholders of record, determined as of the close of business on the Valuation
Date (the "Selling Fund Shareholders"), Acquiring Fund Shares received by the
Selling Fund pursuant to paragraph 1.1; and (b) the Selling Fund will thereupon
proceed to dissolve and terminate as set forth in paragraph 1.8 below. Such
distribution will be accomplished by the transfer of Acquiring Fund Shares
credited to the account of the Selling Fund on the books of the Acquiring Fund
to open accounts on the share records of the Acquiring Fund in the name of the
Selling Fund Shareholders, and representing the respective pro rata number of
Acquiring Fund Shares due such shareholders. All issued and outstanding shares
of the Selling Fund will simultaneously be canceled on the books of the Selling
Fund. The Acquiring Fund shall not issue certificates representing Acquiring
Fund Shares in connection with such transfer. Each Selling Fund Shareholder
shall have the right to receive any unpaid dividends or other distributions that
were declared by the Selling Fund before the Effective Time with respect to
Selling Fund shares that are held of record by a Selling Fund Shareholder at the
Effective Time on the Closing Date.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown
on the books of each Acquiring Fund's transfer agent. Shares of each Acquiring
Fund will be
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issued simultaneously to its corresponding Selling Fund, in an amount equal in
value to the net asset value of each Selling Fund's shares, to be distributed to
shareholders of each Selling Fund.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of each Selling
Fund is and shall remain the responsibility of the Selling Fund, up to and
including the Closing Date, and such later date on which the Selling Fund is
terminated.
1.8 TERMINATION. Each Selling Fund shall be terminated promptly following
its Closing Date and the making of all distributions pursuant to paragraph 1.4.
1.9 Subject to the conditions set forth in this Agreement, the failure of
one of the Selling Funds to consummate the transactions contemplated hereby
shall not affect the consummation or validity of a Reorganization with respect
to any other Selling Fund, and the provisions of this Agreement shall be
construed to effect this intent, including, without limitation, as the context
requires, construing the terms "Acquiring Fund" and "Selling Fund" as meaning
only those series of the Trust and Arbor, respectively, which are involved in a
Reorganization as of the Closing Dates.
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ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of a Selling Fund's assets to be
acquired by its respective Acquiring Fund hereunder shall be the value of such
assets computed as of the close of normal trading on the New York Stock Exchange
("NYSE") on the business day immediately prior to each respective Closing Date
(such time and date being hereinafter called a "Valuation Date"), using the
valuation procedures set forth in the Trust's Declaration of Trust and each
Acquiring Fund's then current prospectuses and statements of additional
information or such other valuation procedures as shall be mutually agreed upon
by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund
Shares shall be the net asset value per share computed as of the close of normal
trading on the NYSE on the Valuation Date, using the valuation procedures set
forth in the Trust's Declaration of Trust and each Acquiring Fund's then current
prospectuses and statements of additional information.
2.3 SHARES TO BE ISSUED. The number of each Acquiring Fund's shares to be
issued (including fractional shares, if any) in exchange for its respective
Selling Fund's assets, shall be determined by (a) multiplying the shares
outstanding of the Selling Fund by (b) the ratio computed by (x) dividing the
net asset value per share of the Selling Fund by (y) the net asset value per
share of the corresponding Acquiring Fund determined in accordance with
paragraph 2.2 [(a) x (b), where (b)=(x)DIVIDED BY(y)].
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
SunTrust Bank, Atlanta in accordance with its regular practice in pricing the
shares and assets of each Acquiring Fund. Each Acquiring Fund and Selling Fund
agrees, however, to use all commercially reasonable efforts to resolve any
material pricing differences between the prices of portfolio securities
determined in accordance with the pricing policies and procedures of a Selling
Fund and those determined in accordance with the pricing policies and procedures
of its respective Acquiring Fund.
2.5 MONEY MARKET FUND VALUE. It is understood and agreed that the value
of the assets of the Prime Obligations Fund and the value of shares of the
corresponding Acquiring Fund, the Classic Institutional Cash Management Money
Market Fund, for purposes of sales and redemptions shall be based on the
amortized cost valuation procedures that have been adopted by the Board of
Trustees of Arbor and the Board of Trustees of the Trust, respectively; PROVIDED
that if the difference between the per share net asset values of the Arbor Prime
Obligations Fund and the STI Classic Institutional Cash Management Money Market
Fund equals or exceeds $.0025 as next regularly computed immediately prior to
the Valuation Date by using such market values in accordance with the policies
and procedures established by the Trust (or as otherwise mutually determined by
the Board of Trustees of Arbor and the Board of Trustees of the Trust, either
the
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Board of Trustees of Arbor or the Board of Trustees of the Trust shall have the
right to postpone the Valuation Date and the Closing Date of the Reorganization
with respect to such Prime Obligations Fund until such time as the per share
difference is less than $.0025.
ARTICLE III
CLOSING AND CLOSING DATES
3.1 CLOSING DATES. The closing (the "Closing") shall occur in two steps
on or about May 15, 1999 for the Arbor Prime Obligations Fund and May 22, 1999
for the Arbor U.S. Government Securities Money Fund, or such other date(s) as
the parties may agree to in writing (the "Closing Dates"). All acts taking place
at the Closing shall be deemed to take place immediately prior to the Closing
Dates unless otherwise provided. The Closing shall be held as of 9:00 a.m. (the
"Effective Time") at the offices of the SEI Investments, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other time and/or place as the parties may
agree.
3.2 CUSTODIAN'S CERTIFICATE. Crestar Bank, as custodian for each Selling
Fund (the "Custodian"), shall deliver at the Closing a certificate of an
authorized officer stating that: (a) each Selling Fund's portfolio securities,
cash, and any other assets shall have been delivered in proper form to its
respective Acquiring Fund on the Closing Dates; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Selling Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation
Date, either: (a) the NYSE or another primary exchange on which the portfolio
securities of an Acquiring Fund or a Selling Fund are purchased or sold, shall
be closed to trading or trading on such exchange shall be restricted; or (b)
trading or the reporting of trading on the NYSE or elsewhere shall be disrupted
so that accurate appraisal of the value of the net assets of an Acquiring Fund
or a Selling Fund is impracticable, the Valuation Date shall be postponed until
the first business day after the day when trading is fully resumed and reporting
is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Crestar Bank, as transfer agent for
each Selling Fund as of the Closing Dates, shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the names
and addresses of Selling Fund Shareholders, and the number and percentage
ownership of outstanding shares owned by each such shareholder immediately prior
to the Closing. Each Acquiring Fund shall issue and deliver or cause Federated
Services Company, its transfer agent, to issue and deliver a confirmation
evidencing Acquiring Fund Shares to be credited on the Closing Dates to the
Secretary of Arbor or provide evidence satisfactory to the Selling Fund that
such Acquiring Fund Shares have been credited to the Selling Fund's account on
the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, receipts
and other documents, if any, as such other party or its counsel may reasonably
request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUNDS. Each Selling Fund represents
and warrants to its respective Acquiring Fund as follows:
(a) The Selling Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Massachusetts.
(b) The Selling Fund is a separate investment series of a
Massachusetts business trust that is registered as an open-end management
investment company, and its registration with the Securities and Exchange
Commission (the "Commission") as an investment company under the Investment
Company Act of 1940 (the "1940 Act"), is in full force and effect.
(c) The current prospectuses and statements of additional information
of the Selling Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933 (the "1933 Act") and the 1940 Act,
and the rules and regulations thereunder, and do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Selling Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in violation of any provision of Arbor's Declaration of Trust or By-Laws or of
any material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Selling Fund is a party or by which it is bound.
(e) The Selling Fund has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to them prior
to the Closing Date, except for liabilities, if any, to be discharged or
reflected in the Statement of Assets and Liabilities as provided in paragraph
1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its knowledge
threatened against the Selling Fund or any of its properties or assets, which,
if adversely determined, would materially and adversely affect its financial
condition, the conduct of its business, or the ability of the Selling Fund to
carry out the transaction contemplated by this Agreement. The Selling Fund
knows of no facts that might form the basis for the institution of such
proceedings and are not a party to or subject to the provisions of any order,
decree, or judgment of any court or governmental body that
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materially and adversely affects the Selling Fund's business or its ability to
consummate the transaction contemplated herein.
(g) The financial statements of the Selling Fund are in accordance
with generally accepted accounting principles, and such statements (copies of
which have been furnished to the Acquiring Funds) fairly reflect the financial
condition of the Selling Fund as of July 31, 1998, and there are no known
contingent liabilities of the Selling Fund as of that date not disclosed in such
statements.
(h) Since July 31, 1998, there have been no material adverse changes
in the Selling Fund's financial condition, assets, liabilities for business
(other than changes occurring in the ordinary course of business), or any
incurrence by the Selling Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this subparagraph (h), a
decline in the value of the net assets of the Selling Fund shall not constitute
a material adverse change.
(i) At the Closing Date, all federal and other tax returns and
reports of the Selling Fund required by law to be filed by such date, or
reasonably thereafter, shall have been filed, and all federal and other taxes
shown due on such returns and reports shall have been paid, or provision shall
have been made for the payment thereof. To the best of the Selling Fund's
knowledge, no such return is currently under audit, and no assessment has been
asserted with respect to such returns.
(j) For each fiscal year of their operation, the Selling Fund has met
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and has distributed in each such year all net
investment income and realized capital gains.
(k) All issued and outstanding shares of the Selling Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Selling Fund. All of the issued and outstanding
shares of the Selling Fund will, at the time of the Closing Date, be held by the
persons and in the amounts set forth in the records of the Selling Fund's
transfer agent as provided in paragraph 3.4. The Selling Fund has no
outstanding options, warrants, or other rights to subscribe for or purchase any
of the Selling Fund shares, and have no outstanding securities convertible into
any of the Selling Fund shares.
(l) At the Closing Date, the Selling Fund will have good and
marketable title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2, and full right, power, and authority to sell,
assign, transfer, and deliver such assets hereunder, and, upon delivery and
payment for such assets the Acquiring Fund will acquire good and marketable
title, subject to no restrictions on the full transfer of such assets, including
such restrictions as might arise under the 1933 Act, other than as disclosed to
and accepted by the Acquiring Fund.
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(m) The execution, delivery, and performance of this Agreement have
been duly authorized by all necessary action on the part of the Selling Fund.
Subject to approval by the Selling Fund Shareholders, this Agreement constitutes
a valid and binding obligation of the Selling Fund, enforceable in accordance
with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights and to general equity principles.
(n) The information to be furnished by the Selling Fund for use in
no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated herein shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations.
(o) From the effective date of the Registration Statement (as defined
in paragraph 5.7), through the time of the meeting of the Selling Fund
Shareholders and on the Closing Date, any written information furnished by the
Selling Funds with respect to a Selling Fund for use in the Prospectus/Proxy
Statement (as defined in paragraph 5.7), the Registration Statement or any other
materials provided in connection with the Reorganization does not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not misleading.
(p) The Selling Fund has elected to qualify and has qualified as a
"regulated investment company" under the Code, as of and since its first taxable
year; has been a "regulated investment company" under the Code at all times
since the end of its first taxable year when it so qualified; and qualifies and
shall continue to qualify as a "regulated investment company" under the Code for
its taxable year ending upon its liquidation.
(q) No governmental consents, approvals, authorizations or filings
are required under the 1933 Act, the Securities Exchange Act of 1934 (the "1934
Act"), the 1940 Act or Massachusetts law for the execution of this Agreement by
Arbor, for itself and on behalf of the Selling Fund, except for the
effectiveness of the Registration Statement, the necessary exemptive relief
requested from the Commission or its staff with respect to Sections 17(a) and
17(b) of the 1940 Act, and except for such other consents, approvals,
authorizations and filings as have been made or received, and such consents,
approvals, authorizations and filings as may be required subsequent to the
Closing Date, it being understood, however, that this Agreement and the
transactions contemplated herein must be approved by the shareholders of the
Selling Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUNDS. Each Acquiring Fund
represents and warrants to its respective Selling Fund as follows:
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(a) The Acquiring Funds is a separate investment series of a
Massachusetts business trust, duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts.
(b) The Acquiring Funds is a separate investment series of a
Massachusetts business trust that is registered as open-end management
investment company, and its registration with the Commission as an investment
company under the 1940 Act is in full force and effect.
(c) The current prospectuses and statements of additional information
of the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations
thereunder, and do not include any untrue statement of a material fact or omit
to state any material fact required to be stated or necessary to make such
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of the Trust's
Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the Selling Fund and
accepted by the Selling Fund, no litigation, administrative proceeding or
investigation of or before any court or governmental body is presently pending,
or to its knowledge, threatened against the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially and
adversely affect their financial condition and the conduct of its business or
the ability of the Acquiring Fund to carry out the transaction contemplated by
this Agreement. The Acquiring Fund knows of no facts that might form the basis
for the institution of such proceedings and they are not a party to or subject
to the provisions of any order, decree, or judgment of any court or governmental
body that materially and adversely affects its business or its ability to
consummate the transaction contemplated herein.
(f) The financial statements of the Acquiring Fund are in accordance
with generally accepted accounting principles, and such statements (copies of
which have been furnished to the Selling Funds) fairly reflect the financial
condition of the Acquiring Fund as of November 30, 1998, and there are no known
contingent liabilities of the Acquiring Fund as of such date which are not
disclosed in such statements.
(g) Since November 30, 1998 there have been no material adverse
changes in the Acquiring Fund's financial condition, assets, liabilities, or
business (other than changes occurring in the ordinary course of business), or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Selling Fund. For the purposes of this subparagraph (g),
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a decline in the value of the net assets of the Acquiring Fund shall not
constitute a material adverse change.
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Funds required by law to be filed by such date shall
have been filed. All federal and other taxes shown due on such returns and
reports shall have been paid or provision shall have been made for their
payment. To the best of the Acquiring Funds' knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such
returns.
(i) For each fiscal year of their operation, the Acquiring Fund has
met the requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and has distributed all net investment income
and realized capital gains.
(j) All issued and outstanding Acquiring Fund Shares are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Acquiring Fund. The Acquiring Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any Acquiring
Funds Share, and there are no outstanding securities convertible into any
Acquiring Fund Shares.
(k) The execution, delivery, and performance of this Agreement have
been duly authorized by all necessary action on the part of the Acquiring Fund,
and this Agreement constitutes a valid and binding obligation of the Acquiring
Fund enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights and to general equity principles.
(1) Acquiring Fund Shares to be issued and delivered to the Selling
Fund for the account of the Selling Fund Shareholders pursuant to the terms of
this Agreement will, at the Closing Date, have been duly authorized. When so
issued and delivered, such shares will be duly and validly issued Acquiring Fund
Shares, and will be fully paid and non-assessable.
(m) The information to be furnished by the Acquiring Fund for use in
no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated herein shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations.
(n) From the effective date of the Registration Statement (as defined
in paragraph 5.7), through the time of the meeting of the Selling Fund
shareholders and on the Closing Dates, any written information furnished by the
Trust with respect to an Acquiring Fund for use in the Prospectus/Proxy
Statement (as defined paragraph 5.7), the Registration Statement or any other
materials provided in connection with the Reorganization does not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not misleading.
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(o) The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and any
state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
(p) No governmental consents, approvals, authorizations or filings
are required under the 1933 Act, the 1934 Act, the 1940 Act or Massachusetts law
for the execution of this Agreement by the Trust, for itself and on behalf of
the Acquiring Fund, or the performance of the Agreement by the Trust, for itself
and on behalf of the Acquiring Fund, except for the effectiveness of the
Registration Statement, the necessary exemptive relief requested from the
Commission or its staff with respect to Sections 17(a) and 17(b) of the 1940
Act, and such other consents, approvals, authorizations and filings as have been
made or received, and except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date.
(q) The Acquiring Fund intends to qualify as "regulated investment
company" under the Code, and with respect to each Acquiring Fund that has
conducted material investment operations prior to the Closing Date, the
Acquiring Fund has elected to qualify and has qualified as a "regulated
investment company" under the Code as of and since its first taxable year; has
been a "regulated investment company" under the Code at all times since the end
of its first taxable year when it so qualified; and qualifies and shall continue
to qualify as a "regulated investment company" under the Code for its current
taxable year.
ARTICLE V
COVENANTS OF EACH ACQUIRING FUND AND EACH SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. Subject to paragraph 8.5 each Acquiring
Fund and Selling Fund will operate their respective business in the ordinary
course between the date of this Agreement and the respective Closing Date, it
being understood that such ordinary course of business will include customary
dividends and distributions and shareholder redemptions.
5.2 APPROVAL OF SHAREHOLDERS. Arbor will call a meeting of Selling Fund
Shareholders to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. Each Selling Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. Each Selling Fund will assist its respective
Acquiring Fund in obtaining such information as the Acquiring Fund reasonably
requests concerning the beneficial ownership of the Selling Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, each
Acquiring Fund and its respective Selling Fund will each take or cause
to be taken, all action, and do or cause
12
to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the applicable
Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within sixty days after the applicable Closing Date, each Selling Fund
shall furnish its respective Acquiring Fund, in such form as is reasonably
satisfactory to the Acquiring Fund, a statement of the earnings and profits of
the Selling Fund for federal income tax purposes that will be carried over by
the Acquiring Fund as a result of Section 381 of the Code, and which will be
reviewed by PricewaterhouseCoopers LLP and certified by Arbor's Treasurer.
5.7 PREPARATION OF FORM N-14 REGISTRATION STATEMENT. The Trust will
prepare and file with the Commission a registration statement on Form N-14 under
the 1933 Act (the "Registration Statement"), relating to the Acquiring Fund
Shares, which, without limitation, shall include a proxy statement of each
Selling Fund and the prospectus of each Acquiring Fund relating to the
transaction contemplated by this Agreement (the "Prospectus/Proxy Statement").
The Registration Statement shall be in compliance with the 1933 Act, the 1934
Act and the 1940 Act. Each Selling Fund will provide its respective Acquiring
Funds with the materials and information necessary to prepare the
Prospectus/Proxy Statement for inclusion in the Registration Statement, in
connection with the meeting of the Selling Funds Shareholders to consider the
approval of this Agreement and the transactions contemplated herein.
5.8 INDEMNIFICATION OF TRUSTEES. The Trust will assume all liabilities
and obligations of Arbor relating to any obligation of Arbor to indemnify its
current and former Trustees and officers, acting in their capacities as such, to
the fullest extent permitted by law and Arbor's Agreement and Declaration of
Trust, as in effect as of the date of this Agreement. Without limiting the
foregoing, the Trust agrees that all rights to indemnification and all
limitations of liability existing in favor of the current and former Trustees
and officers, acting in their capacities as such, under Arbor's Agreement and
Declaration of Trust as in effect as of the date of this Agreement shall survive
the Reorganization and shall continue in full force and effect, without any
amendment thereto, and shall constitute rights which may be asserted against the
Trust, its successors or assigns.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH SELLING FUND
The obligations of each Selling Fund to consummate the transactions
provided for herein shall be subject, at their election, to the performance by
its respective Acquiring Fund of all the obligations to be performed by it
pursuant to this Agreement on or before the applicable Closing Date, and, in
addition subject to the following conditions:
6.1 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the Closing Dates, with the same force and effect as if made on and as of
the Closing Dates. Each Acquiring Fund shall have delivered to its respective
Selling Fund a certificate executed in the Acquiring Fund's name by the
13
Trust's President or Vice President and its Treasurer or Assistant Treasurer, in
form and substance satisfactory to the Selling Fund and dated as of the
applicable Closing Date, to such effect and as to such other matters as the
Selling Fund shall reasonably request.
6.2 Each Selling Funds shall have received on the applicable Closing Date
an opinion from ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the Trust, dated as of
the Closing Date, in a form reasonably satisfactory to the Selling Fund,
covering the following points:
(a) Each Acquiring Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts, and has the power
to own all of its properties and assets and to carry on its business as
presently conducted.
(b) Each Acquiring Funds is a separate investment series of a
Massachusetts business trust registered as an investment company under the 1940
Act, and, to such counsel's knowledge, such registration with the Commission is
in full force and effect.
(c) This Agreement has been duly authorized, executed, and delivered
by the Trust on behalf of each Acquiring Fund and, assuming due authorization,
execution and delivery of this Agreement by the Selling Funds, is a valid and
binding obligation of the Acquiring Funds enforceable against each Acquiring
Funds in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and to general equity principles.
(d) Assuming that a consideration of not less than the net asset
value of Acquiring Fund Shares has been paid, Acquiring Funds Shares to be
issued and delivered to each Selling Fund on behalf of the Selling Fund
Shareholders, as provided by this Agreement, are duly authorized and upon such
delivery will be legally issued and outstanding and fully paid and non-
assessable, and no shareholder of an Acquiring Fund has any preemptive rights
with respect to Acquiring Fund Shares.
(e) The Registration Statement, has been declared effective by the
Commission and to such counsel's knowledge, no stop order under the 1933 Act
pertaining thereto has been issued, and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or the Commonwealth of Massachusetts is required for
consummation by the Acquiring Funds of the transactions contemplated herein,
except as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act,
and as may be required under state securities laws.
(f) The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated herein will not, result in a
violation of the Trust's Declaration of Trust or By-Laws or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which an Acquiring Fund is a party or by
which an Acquiring Fund or any of its properties may be bound or, to the
knowledge of such
14
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which an Acquiring Fund is
a party or by which it is bound.
(g) The descriptions in the Prospectus/Proxy Statement of statutes,
legal and governmental proceedings and material contracts, if any (only insofar
as they relate to an Acquiring Fund), are accurate and fairly present the
information required to be shown.
(h) Such counsel does not know of any legal or governmental
proceedings (only insofar as they relate to an Acquiring Fund) existing on or
before the effective date of the Registration Statement or the Closing Dates
which are required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement which are not described or filed as
required.
(i) To the knowledge of such counsel, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to an Acquiring Fund or any of its properties
or assets. The Acquiring Funds are not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body, which
materially and adversely affects the Acquiring Funds' business, other than as
previously disclosed in the Registration Statement.
Such counsel shall also state that they have participated in conferences
with officers and other representatives of each Acquiring Fund at which the
contents of the Prospectus/Proxy Statement and related matters were discussed.
Although such counsel are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Prospectus/Proxy Statement (except to the extent indicated in their opinion in
paragraph (g), above), on the basis of the foregoing (relying as to materiality
to a large extent upon the opinions of the Trust's officers and other
representatives of each Acquiring Fund), no facts have come to their attention
that lead them to believe that the Prospectus/Proxy Statement as of its date, as
of the date of each Selling Fund Shareholders' meeting, and as of the applicable
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated regarding an Acquiring Fund or
necessary, in the light of the circumstances under which they were made, to make
the such statements regarding an Acquiring Fund not misleading. Such opinion
may state that such counsel does not express any opinion or belief as to the
financial statements or any financial or statistical data, or as to the
information relating to each Selling Fund, contained in the Prospectus/Proxy
Statement or the Registration Statement, and that such opinion is solely for the
benefit of Arbor and each Selling Fund. Such opinion shall contain such other
assumptions and limitations as shall be in the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ &
Bockius LLP appropriate to render the opinions expressed therein.
In this paragraph 6.2, references to the Prospectus/Proxy Statement include
and relate to only the text of such Prospectus/Proxy Statement and not to any
exhibits or attachments thereto or to any documents incorporated by reference
therein.
6.3 As of the Closing Date with respect to the Reorganization of each
Selling Fund, there shall have been no material change in the investment
objective, policies and restrictions nor any
15
material change in the investment management fees, other fees payable for
services provided to each Acquiring Fund, fee waiver or expense reimbursement
undertakings of the Acquiring Funds from those fee amounts and undertakings of
the Acquiring Fund described in the Prospectus/Proxy Statement.
6.4 For the period beginning at the applicable Closing Date and ending not
less than six years thereafter, the Trust, its successor or assigns shall
provide, or cause to be provided, liability coverage at least as comparable to
the liability coverage currently applicable to both former and current Trustees
and officers of Arbor, covering the actions of such Trustees and officers of
Arbor for the period they served as such.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND
The obligations of each Acquiring Fund to consummate the transactions
provided for herein shall be subject, at their election, to the performance by
the Selling Fund of all the obligations to be performed by the Selling Funds
pursuant to this Agreement, on or before the applicable Closing Date and, in
addition, shall be subject to the following conditions:
7.1 All representations, covenants, and warranties of a Selling Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the applicable Closing Date, with the same force and effect as if made on
and as of the Closing Date. Each Selling Fund shall have delivered to its
respective Acquiring Funds on the Closing Date a certificate executed in the
Selling Fund's name by Arbor's President or Vice President and the Treasurer or
Assistant Treasurer, in form and substance satisfactory to the Acquiring Fund
and dated as of the Closing Dates, to such effect and as to such other matters
as the Acquiring Fund shall reasonably request.
7.2 Each Selling Fund shall have delivered to its respective Acquiring
Fund a statement of the Selling Fund's assets and liabilities, together with a
list of the selling Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Dates, certified by the Treasurer of Arbor.
7.3 Each Acquiring Fund shall have received on the applicable Closing Date
an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to each Selling Fund, dated
as of the Closing Date in a form satisfactory to the Acquiring Fund covering the
following points:
(a) The Selling Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and each has the
power to own all of its properties and assets and to carry on its business as
presently conducted.
(b) The Selling Fund is a separate investment series of a
Massachusetts business trust registered as an investment company under the 1940
Act, and, to such counsel's knowledge, such registration with the Commission is
in full force and effect.
16
(c) This Agreement has been duly authorized, executed and delivered
by Arbor on behalf of each Selling Fund and, assuming due authorization,
execution and delivery of this Agreement by the Trust on behalf of each
Acquiring Fund is a valid and binding obligation of the Selling Fund enforceable
against the Selling Fund in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and to general equity
principles.
(d) To the knowledge of such counsel, except for the filing of
Articles of Transfer pursuant to Massachusetts law, no consent, approval,
authorization or order of any court or governmental authority of the United
States or the Commonwealth of Massachusetts is required for consummation by a
Selling Fund of the transactions contemplated herein, except as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may be
required under state securities laws.
(e) The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, result in a
violation of Arbor's Declaration of Trust or By-laws, or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which a Selling Fund is a party or by
which it or any of its properties may be bound or, to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which the Selling Fund is a
party or by which it is bound.
(f) The descriptions in the Prospectus/Proxy Statement of statutes,
legal and government proceedings and material contracts, if any (only insofar as
they relate to a Selling Fund), are accurate and fairly present the information
required to be shown.
(g) Such counsel does not know of any legal or governmental
proceedings (insofar as they relate to a Selling Fund) existing on or before the
date of mailing of the Prospectus/Proxy Statement and the applicable Closing
Date, which are required to be described in the Prospectus/Proxy Statement or to
be filed as an exhibit to the Registration Statement which are not described or
filed as required.
(h) To the knowledge of such counsel, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to a Selling Fund or any of its respective
properties or assets. To the knowledge of such counsel, no Selling Fund is a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely affects the Selling
Fund's business other than as previously disclosed in the Prospectus/Proxy
Statement.
(i) Assuming that a consideration of not less than the net asset
value of Selling Fund Shares has been paid, and assuming that such shares were
issued in accordance with the terms of each Selling Fund's registration
statement, or any amendment thereto, in effect at the time of such issuance, all
issued and outstanding shares of the Selling Fund are legally issued and fully
paid and non-assessable.
17
Such counsel shall also state that they have participated in conferences
with officers and other representatives of each Selling Fund at which the
contents of the Prospectus/Proxy Statement and related matters were discussed.
Although such counsel are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Prospectus/Proxy Statement (except to the extent indicated in their opinion at
paragraph (f), above), on the basis of the foregoing (relying as to materiality
to a large extent upon the opinions of Arbor's officers and other
representatives of each Selling Fund), no facts have come to their attention
that lead them to believe that the Prospectus/Proxy Statement as of its date, as
of the date of each Selling Fund Shareholders' meeting, and as of the applicable
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein regarding a Selling Fund or
necessary, in the light of the circumstances under which they were made, to make
the statements therein regarding the Selling Fund not misleading. Such opinion
may state that such counsel do not express any opinion or belief as to the
financial statements or any financial or statistical data, or as to the
information relating to each Acquiring Fund contained in the Prospectus/Proxy
Statement or Registration Statement, and that such opinion is solely for the
benefit of the Trust and each Acquiring Fund. Such opinion shall contain such
other assumptions and limitations as shall be in the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ &
Bockius LLP appropriate to render the opinions expressed therein.
In this paragraph 7.3, references to the Prospectus/Proxy Statement include
and relate to only the text of such Prospectus/Proxy Statement and not to any
exhibits or attachments thereto or to any documents incorporated by reference
therein.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH
ACQUIRING FUND AND SELLING FUND
If any of the conditions set forth below do not exist on or before the
applicable Closing Date with respect to each Selling Fund or its respective
Acquiring Fund, the other party to this Agreement shall, at its option, not be
required to consummate the transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
each Selling Fund in accordance with Massachusetts law and the provisions of
Arbor's Declaration of Trust and By-Laws. Certified copies of the resolutions
evidencing such approval shall have been delivered to the respective Acquiring
Fund. Notwithstanding anything herein to the contrary, neither an Acquiring
Fund nor a Selling Fund may waive the conditions set forth in this paragraph
8.1.
8.2 On each Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with this Agreement or the transactions
contemplated herein.
18
8.3 All required consents of other parties and all other consents, orders,
and permits of federal, state and local regulatory authorities (including those
of the Commission and of State Blue Sky securities authorities, including any
necessary "no-action" positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of an Acquiring Fund or a Selling Fund, provided that
either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued. To the best knowledge of the parties to this Agreement, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
8.5 Each Selling Fund shall have declared and paid a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to the Selling Fund Shareholders all of the Selling Fund's net
investment company taxable income for all taxable periods ending on or prior to
the applicable Closing Dates (computed without regard to any deduction for
dividends paid) and all of its net capital gains realized in all taxable periods
ending on or prior to the Closing Dates (after reduction for any capital loss
carry forward).
8.6 The parties shall have received a favorable opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP addressed to each Acquiring Fund and Selling Fund substantially to
the effect that for federal income tax purposes with respect to each Selling
Fund:
(a) The transfer of all of the Selling Fund's assets in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of the identified
liabilities of the Selling Fund (followed by the distribution of Acquiring Fund
Shares to the Selling Fund shareholders in dissolution and liquidation of the
Selling Fund) will constitute a "reorganization" within the meaning of Section
368(a) of the Code and the Acquiring Fund and the Selling Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Selling Fund solely in exchange for Acquiring Funds
Share and the assumption by the Acquiring Fund of the identified liabilities of
the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund upon the
transfer of the Selling Fund's assets to the Acquiring Fund in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of the identified
liabilities of the Selling Fund or upon the distribution (whether actual or
constructive) of Acquiring Funds Shares to Selling Fund Shareholders in exchange
for such shareholders' shares of the Selling Fund.
(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for Acquiring Fund
Shares in the Reorganization.
19
(e) The aggregate tax basis for Acquiring Funds Share received by
each Selling Fund Shareholder pursuant to the Reorganization will be the same as
the aggregate tax basis of the Selling Fund shares exchanged therefor by such
shareholder. The holding period of Acquiring Funds Share to be received by each
Selling Fund Shareholder will include the period during which the Selling Fund
shares exchanged therefore were held by such shareholder provided the Selling
Fund shares are held as capital assets at the time of the Reorganization).
(f) The tax basis of the Selling Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately prior to the Reorganization. The holding period of the assets
of the Selling Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Selling Fund.
Such opinion shall be based on customary assumptions and such
representations as ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP may reasonably request, and each
Selling Fund and Acquiring Fund will cooperate to make and certify the accuracy
of such representations. Notwithstanding anything herein to the contrary,
neither an Acquiring Fund nor a Selling Fund may waive the conditions set forth
in this paragraph 8.6.
ARTICLE IX
EXPENSES
9.1 Except as otherwise provided for herein, all expenses solely and
directly related to the transactions contemplated by this Agreement incurred by
a Selling Fund will be borne by SunTrust Banks, Inc. Such expenses include,
without limitation, (a) expenses associated with the preparation and filing of
the Registration Statement/Proxy Statement on Form N-14 under the 1933 Act
covering Acquiring Fund Shares to be issued pursuant to the provisions of this
Agreement; (b) postage; (c) printing; (d) accounting fees, (e) legal fees
incurred by each Selling Funds; and (f) solicitation costs of the transaction.
Notwithstanding the foregoing, the Trust shall pay (a) expenses incurred in
connection with the entering into and the carrying out of the provisions of this
Agreement (b) registration or qualification fees and expenses of preparing and
filing such forms as are necessary under applicable state securities laws to
qualify Acquiring Fund Shares to be issued in connection herewith in each state
in which the Selling Fund Shareholders are resident as of the date of the
mailing of the Prospectus/Proxy Statement to such shareholders; and (c) their
own federal and state registration fees.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust on behalf of each Acquiring Fund and Arbor on behalf of each
Selling Fund agrees that neither party has made to the other party any
representation, warranty and/or covenant not set forth herein, and that this
Agreement constitutes the entire agreement between the parties.
20
10.2 Except as specified in the next sentence set forth in this section
10.2, the representations, warranties, and covenants contained in this Agreement
or in any document delivered pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after each Closing and the obligations of each of
the Acquiring Funds in sections 5.9 and 6.4, shall continue in effect beyond the
consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Trust
and Arbor. In addition, either the Trust or Arbor may at their option terminate
this Agreement at or prior to either Closing Date due to:
(a) a breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to each Closing Date, if
not cured within 30 days; or
(b) a condition herein expressed to be precedent to the obligations
of the terminating party that has not been met and it reasonably appears that it
will not or cannot be met.
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either an
Acquiring Fund, a Selling Funds, the Trust, Arbor, the respective Trustees or
officers, to the other party or its Trustees or officers. Each, however, shall
bear the expenses incurred by it incidental to the preparation and carrying out
of this Agreement as provided in paragraph 9.1.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
each Selling Funds and the Acquiring Fund; provided, however, that following the
meeting of the Selling Fund Shareholders called by a Selling Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of Acquiring Fund Shares to
be issued to the Selling Fund Shareholders under this Agreement to the detriment
of such shareholders without their further approval.
21
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without giving effect to the
conflicts of laws provisions thereof; provided, however, that the due
authorization, execution and delivery of this Agreement, in the case of each
Selling Fund, shall be governed and construed in accordance with the laws of the
Commonwealth of Massachusetts, without giving effect to the conflicts of laws
provisions thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of each Acquiring Fund and
each Selling Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of the Trust or Arbor
personally, as the case may be, but shall bind only the trust property of the
Acquiring Fund or the Selling Fund, as the case may be, as provided in the
respective Declarations of Trust of Arbor and the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
Arbor, on behalf of each Acquiring Fund and Selling Fund, respectively, and
signed by authorized officers of each Trust, acting as such. Such authorization
by such Trustees nor such execution and delivery by such officers shall not be
deemed to have been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the trust property of each
Acquiring Fund and each Selling Fund as provided in the Declarations of Trust of
Arbor and the Trust, respectively.
22
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
STI CLASSIC FUNDS
By:
---------------------------
Name:
Title:
THE ARBOR FUND
By:
---------------------------
Name:
Title:
23
SCHEDULE A
SUMMARY OF THE REORGANIZATION
----------------------------------
(shareholders of each Selling Fund will receive shares of the
class of the Acquiring Fund opposite their current class)
THE ARBOR FUND/STI CLASSIC FUNDS
--------------------------------------------------------------------------------
EXISTING ARBOR FUND EXISTING STI CLASSIC FUND
(SELLING FUND) (ACQUIRING FUND)
--------------------------------------------------------------------------------
Prime Obligations Fund Classic Institutional Cash Management
Money Market Fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXISTING ARBOR FUND NEW (SHELL) STI CLASSIC FUND
(SELLING FUND) (ACQUIRING FUND)
--------------------------------------------------------------------------------
U.S. Government Securities Money Fund Classic Institutional U.S. Government
Securities Money Market Fund
--------------------------------------------------------------------------------
24