AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (Agreement) is
made as of this 11th day of September, 2006, by and among ▇▇▇▇
▇▇▇▇▇ Partners Variable Portfolios II, a Massachusetts
business trust (the Acquiring Entity), with its principal
place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, on behalf of its series ▇▇▇▇ ▇▇▇▇▇ Partners Variable
Fundamental Value Portfolio (the Acquiring Fund), ▇▇▇▇ ▇▇▇▇▇
Partners Variable Portfolios I, Inc., a Maryland corporation
(the Acquired Entity), with its principal place of business at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on behalf of its
series ▇▇▇▇ ▇▇▇▇▇ Partners Variable All Cap Portfolio (the
Acquired Fund), and, solely for purposes of paragraph 10.2
hereof, ▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC.
WHEREAS, each of the Acquired Fund and the Acquiring Fund
is a series of an open-end management investment company
registered pursuant to the Investment Company Act of 1940, as
amended (the 1940 Act);
WHEREAS, it is intended that, for United States federal
income tax purposes (i) the transactions contemplated by this
Agreement shall qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the Code) and (ii) this Agreement shall constitute a
plan of reorganization within the meaning of Treasury
Regulation Section 1.368-2(g);
WHEREAS, the reorganization will consist of (1) the sale,
assignment, conveyance, transfer and delivery of all of the
property and assets of the Acquired Fund to the Acquiring Fund
in exchange solely for classes of shares of beneficial
interest of the Acquiring Fund (the Acquiring Fund Shares)
corresponding to the classes of outstanding shares of common
stock of the Acquired Fund (the Acquired Fund Shares), as
described herein, (2) the assumption by the Acquiring Fund of
all liabilities of the Acquired Fund, and (3) the subsequent
distribution of the Acquiring Fund Shares and any of the
remaining properties and assets to the shareholders of the
Acquired Fund and the termination of the Acquired Fund, as
provided herein (the Reorganization), all upon the terms and
conditions hereinafter set forth in this Agreement;
WHEREAS, the Acquired Fund currently owns securities that
are generally assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, the Board of Trustees of the Acquiring Entity
(the Acquiring Entity Board) has determined, with respect to
the Acquiring Fund, that the sale, assignment, conveyance,
transfer and delivery of all of the property and assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of
all liabilities of the Acquired Fund by the Acquiring Fund is
in the best interests of the Acquiring Fund and its
shareholders and that the interests of the existing
shareholders of the Acquiring Fund will not be diluted as a
result of this transaction;
WHEREAS, the Board of Directors of the Acquired Entity
(the Acquired Entity Board) has determined, with respect to
the Acquired Fund, that the sale, assignment, conveyance,
transfer and delivery of all of the property and assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of
all liabilities of the Acquired Fund by the Acquiring Fund is
in the best interests of the Acquired Fund and its
shareholders and that the interests of the existing
shareholders of the Acquired Fund will not be diluted as a
result of this transaction;
NOW, THEREFORE, in consideration of the premises and of
the covenants and agreements hereinafter set forth, the
parties hereto covenant and agree as follows:
1.
TRANSFER OF THE ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING
FUND IN EXCHANGE FOR ACQUIRING FUND SHARES, THE ASSUMPTION
OF ALL ACQUIRED FUND LIABILITIES, THE SUBSEQUENT
DISTRIBUTION OF ACQUIRING FUND SHARES AND THE TERMINATION OF
THE ACQUIRED FUND
1.1 Subject to requisite approvals and the other terms and
conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired
Entity, on behalf of the Acquired Fund, agrees to sell,
assign, convey, transfer and deliver all of its property and
assets, as set forth in paragraph 1.2, to the Acquiring Fund,
and the Acquiring Entity, on behalf of the Acquiring Fund,
agrees in exchange therefor: (a) to deliver to the Acquired
Fund the number of full and fractional Acquiring Fund Shares
corresponding to each class of the Acquired Fund Shares as of
the time and date set forth in paragraph 3.1, determined by
dividing the value of the Acquired Funds net assets with
respect to each class of the Acquired Fund (computed in the
manner and as of the time and date set forth in paragraph 2.1)
by the net asset value of one 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 (b) to assume
all liabilities of the Acquired Fund. Such transactions shall
take place on a closing date as provided for in paragraph 3.1
(the Closing Date). For purposes of this Agreement, the Class
I shares and Class II shares of the Acquired Fund correspond
to the non-designated shares of the Acquiring Fund, and the
term Acquiring Fund Shares should be read to include such
shares of the Acquiring Fund.
1.2 The property and assets of the Acquired Entity,
attributable to the Acquired Fund, to be sold, assigned,
conveyed, transferred and delivered to and acquired by the
Acquiring Entity, on behalf of the Acquiring Fund, shall
consist of all assets and property of every kind and nature of
the Acquired Fund, including, without limitation, all rights,
receivables (including dividend, interest and other
receivables), cash, cash equivalents, claims (whether absolute
or contingent, known or unknown), securities, commodities and
futures interests, good will and other intangible property,
any deferred or prepaid expenses and all interests, rights,
privileges and powers, the Acquired Fund owns at the Valuation
Date (as defined in paragraph 2.1) (collectively, Assets). The
Acquiring Entity, on behalf of the Acquiring Fund, shall
assume all of the liabilities and obligations of the Acquired
Fund, including, without limitation, all indemnification
obligations of the Acquired Fund with respect to the current
and former members of the Acquired Entity Board and officers
of the Acquired Entity, whether accrued or contingent, known
or unknown, existing at the Valuation Date (collectively,
Liabilities). The Acquired Fund will sell, assign, convey,
transfer and deliver to the Acquiring Entity, on behalf of the
Acquiring Fund, any rights, stock dividends, or other
securities received by the Acquired Fund after the Closing
Date as stock dividends or other distributions on or with
respect to the property and assets transferred, which rights,
stock dividends, and other securities shall be deemed included
in the property and assets transferred to the Acquiring
Entity, on behalf of the Acquiring Fund, at the Closing Date
and shall not be separately valued, in which case any such
distribution that remains unpaid as of the Closing Date shall
be included in the determination of the value of the assets of
the Acquired Fund acquired by the Acquiring Entity on behalf
of the Acquiring Fund.
1.3 The Acquired Fund will make reasonable efforts to
discharge all of its known Liabilities prior to the Valuation
Date.
1.4 On or as soon as practicable prior to the Closing
Date, the Acquired Fund will declare and pay to its
shareholders of record one or more dividends and/or other
distributions so that it will have distributed substantially
all of its investment company taxable income as defined in the
Code (computed without regard to any deduction for dividends
paid) and realized net capital gain as defined in the Code
(after deduction for any available capital loss carryover), if
any, for all tax periods ending on or before the Closing Date
(and treating the current taxable year as ending on the
Closing Date) such that the Acquired Fund will have no tax
liability under Section 852 or Section 4982 for the current
and any prior tax periods.
1.5 Immediately following the actions contemplated by
paragraph 1.1, the Acquired Entity shall take such actions
necessary to complete the reorganization of the Acquired Fund.
To complete the reorganization, the Acquired Entity, on behalf
of the Acquired Fund, shall (a) distribute to the latters
shareholders of record with respect to each class of Acquired
Fund Shares as of the Closing Date (Acquired Fund
Shareholders), on a pro rata basis within that class, the
Acquiring Fund Shares of the corresponding class received by
the Acquired Entity, on behalf of the Acquired Fund, pursuant
to paragraph 1.1, (b) thereafter, redeem or cancel, as the
case may be, shares of the Acquired Fund in accordance with
Maryland law and (c) terminate the Acquired Fund. Such
distribution shall be accomplished, with respect to each class
of Acquired Fund Shares, by the transfer of the corresponding
Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the
names of the Acquired Fund Shareholders. The aggregate net
asset value of each class of Acquiring Fund Shares to be so
credited to each corresponding class of Acquired Fund
Shareholders shall, with respect to each class, be equal to
the aggregate net asset value of the Acquired Fund Shares of
each corresponding class owned by Acquired Fund Shareholders
on the Closing Date. The Acquiring Fund shall not issue
certificates representing any class of Acquiring Fund Shares
in connection with such exchange.
1.6 Ownership of Acquiring Fund Shares will be shown on
the books of the Acquiring Funds transfer agent.
1.7 Any reporting responsibility of the Acquired Fund,
including, but not limited to, the responsibility for filing
regulatory reports, tax returns, or other documents with the
Securities and Exchange Commission (Commission), any state
securities commission, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Acquired Entity, on
behalf of the Acquired Fund. The Acquiring Entity shall fully
cooperate to the extent necessary or desirable for these
responsibilities to be discharged.
2. VALUATION
2.1 The value of the Assets and the amount of the
Liabilities shall be determined as of the time for calculation
of net asset value as set forth in the then-current prospectus
for the Acquired Fund, and after the declaration of any
dividends by the Acquired Fund, on the Closing Date (such time
and date being hereinafter called the Valuation Date),
computed using the valuation procedures established by the
Acquired Entity Board. All computations of value and amounts
shall be made by (a) State Street Bank and Trust Company, in
its capacity as accounting agent for the Acquired Fund, or
(b) in the case of securities subject to fair valuation, in
accordance with the valuation procedures of the Acquired
Entity adopted in good faith by the Acquired Entity Board. All
computations of value and amounts pursuant to this paragraph
2.1 shall be subject to confirmation by the Acquiring Funds
independent registered public accounting firm.
2.2. The net asset value per share of each class of
Acquiring Fund Shares shall be determined to the nearest full
cent on the Valuation Date, using the valuation procedures
established by the Acquiring Entity Board. All computations of
value shall be made by (a) State Street Bank and Trust
Company, in its capacity as accounting agent for the Acquiring
Fund, or (b) in the case of securities subject to fair
valuation, in accordance with the valuation procedures of the
Acquiring Entity adopted in good faith by the Acquiring Entity
Board. All computations of value pursuant to this paragraph
2.2 shall be subject to confirmation by the Acquired Funds
independent registered public accounting firm.
2.3 The number of Acquiring Fund Shares of each class to
be issued in exchange for the Assets shall be determined with
respect to each such class by dividing the value of the net
assets with respect to each class of Acquired Fund Shares,
determined using the same valuation procedures referred to in
paragraph 2.1, by the net asset value of an Acquiring Fund
Share of the corresponding class, determined using the same
valuation procedures referred to in paragraph 2.2.
3. CLOSING AND CLOSING DATE
3.1 Subject to the terms and conditions set forth herein,
the Closing Date shall be April 27, 2007, or such other date
as the parties may agree. All acts taking place at the closing
of the transactions provided for in this Agreement (Closing)
shall be deemed to take place simultaneously as of the close
of business on the Closing Date unless otherwise agreed to by
the parties. The close of business on the Closing Date shall
be as of 4:00 p.m., Eastern Time or such later time on that
date as the Acquired Funds net asset value and/or the net
asset value per share of each class of shares of the Acquiring
Fund is calculated in accordance with paragraph 2.2 and after
the declaration of any dividends. The Closing shall be held at
the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP or at such other
time and/or place as the parties may agree.
3.2 The Acquired Entity shall direct State Street Bank and
Trust Company (the Custodian) to transfer ownership of the
Assets from the accounts of the Acquired Fund that the
Custodian maintains as custodian for the Acquired Fund to the
accounts of the Acquiring Fund that the Custodian maintains as
custodian for the Acquiring Fund and to deliver to the
Acquiring Entity, at the Closing, a certificate of an
authorized officer stating that (i) the Assets of the Acquired
Fund have been so transferred as of the Closing Date, and
(ii) all necessary taxes in connection with the delivery of
the Assets of the Acquired Fund, including all applicable
federal and state stock transfer stamps, if any, have been
paid or provision for payment has been made.
3.3 The Acquired Entity shall direct PFPC Inc., in its
capacity as transfer agent for the Acquired Fund (Transfer
Agent), to deliver to the Acquiring Entity at the Closing a
certificate of an authorized officer stating that its records
contain the name and address of each Acquired Fund Shareholder
and the number and percentage ownership of each outstanding
class of Acquired Fund Shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall
deliver to the Secretary of the Acquired Fund a confirmation
evidencing that (a) the appropriate number of Acquiring Fund
Shares have been credited to the Acquired Funds account on the
books of the Acquiring Fund pursuant to paragraph 1.1 prior to
the actions contemplated by paragraph 1.5 and (b) the
appropriate number of Acquiring Fund Shares have been credited
to the accounts of the Acquired Fund Shareholders on the books
of the Acquiring Fund pursuant to paragraph 1.5. At the
Closing, each party shall deliver to the other party such
bills of sale, checks, assignments, share certificates, if
any, receipts or other documents as the other party or its
counsel may reasonably request.
3.4 In the event that on the Valuation Date (a) the New
York Stock Exchange or another primary trading market for
portfolio securities of the Acquiring Fund or the Acquired
Fund (each, an Exchange) shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting
of trading on such Exchange or elsewhere shall be disrupted so
that accurate appraisal of the value of the net assets of the
Acquired Fund or the Acquiring Fund is impracticable (in the
judgment of the Acquiring Entity Board with respect to the
Acquiring Fund and the Acquired Entity Board with respect to
the Acquired Fund), the Closing Date shall be postponed until
the first Friday (that is also a business day) after the day
when trading shall have been fully resumed and reporting shall
have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as has been fully disclosed to the Acquiring
Entity in Schedule 4.1 of this Agreement, the Acquired Entity,
on behalf of the Acquired Fund, represents and warrants to the
Acquiring Entity and the Acquiring Fund as follows:
(a) The Acquired Fund is duly established as a series
of the Acquired Entity, which is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Maryland, with power under its
Articles of Incorporation, as amended and/or supplemented
(the Acquired Entity Charter), to own all of its assets
and to carry on its business as it is being conducted as
of the date hereof. The Acquired Entity is duly qualified
to do business as a foreign corporation in each
jurisdiction in which the conduct of its business makes
such qualification necessary except where the failure to
so qualify would not have a material adverse effect on the
condition (financial or otherwise), business, properties,
net assets or results of operations of the Acquired
Entity. The Acquired Entity has all necessary federal,
state and local authorization to carry on its business as
now being conducted and to fulfill the terms of this
Agreement, except as set forth in paragraph 4.1(c).
(b) The Acquired Entity is a registered open-end
management investment company, and its registration with
the Commission as an investment company under the 1940
Act, and the registration of each class of Acquired Fund
Shares under the Securities Act of 1933, as amended (1933
Act), is in full force and effect.
(c) No consent, approval, authorization, or order of
any court or governmental authority is required for the
consummation by the Acquired Fund of the transactions
contemplated herein, except such as may be required under
the 1933 Act, the Securities Exchange Act of 1934 (1934
Act), the ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ securities laws and the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Act.
(d) The current prospectus and statement of additional
information of the Acquired Fund (true and correct copies
of which have been delivered to the Acquiring Entity) and
each prospectus and statement of additional information of
the Acquired Fund used during the three (3) years prior to
the date of this Agreement conforms or conformed at the
time of its use in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the
rules and regulations of the Commission thereunder and
does not or did not at the time of its use include any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not materially
misleading.
(e) On the Closing Date, the Acquired Entity, on
behalf of the Acquired Fund, will have good and marketable
title to the Assets and full right, power and authority to
sell, assign, convey, transfer and deliver such Assets
hereunder free of any liens or other encumbrances, and
upon delivery and payment for the Assets, the Acquiring
Entity, on behalf of the Acquiring Fund, will acquire good
and marketable title thereto, subject to no restrictions
on the full transfer thereof, excluding such restrictions
as might arise under the 1933 Act.
(f) The Acquired Fund is not engaged currently, and
the execution, delivery and performance of this Agreement
by the Acquired Entity, on behalf of the Acquired Fund,
will not result, in a material violation of Maryland law
or of the Acquired Entity Charter or the by-laws of the
Acquired Entity, or of any agreement, indenture,
instrument, contract, lease or other undertaking to which
the Acquired Entity, on behalf of the Acquired Fund, is a
party or by which it is bound, and the execution, delivery
and performance of this Agreement by the Acquired Entity,
on behalf of the Acquired Fund, will not result in the
acceleration of any material obligation, or the imposition
of any material penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree to which
the Acquired Entity, on behalf of the Acquired Fund, is a
party or by which it is bound.
(g) All material contracts or other commitments of the
Acquired Fund (other than this Agreement, certain
investment contracts, including options, futures, swaps
and forward contracts, the indemnification agreements of
the current and former members of the Acquired Entity
Board, and those contracts listed in Schedule 4.1) will
terminate without liability to the Acquired Fund on or
prior to the Closing Date. Each contract listed in
Schedule 4.1 is a valid, binding and enforceable
obligation of the Acquired Fund and, to the Acquired Funds
knowledge, the other parties thereto (assuming due
authorization, execution and delivery by the other parties
thereto) and the assignment by the Acquired Fund to the
Acquiring Fund of each such contract will not result in
the termination of such contract, any breach or default
thereunder by the Acquired Fund or the imposition of any
penalty thereunder.
(h) No litigation or administrative proceeding or
investigation of or before any court or governmental body
is presently pending or, to the Acquired Entitys
knowledge, threatened against the Acquired Entity, with
respect to the Acquired Fund or any of its properties or
assets, that, if adversely determined, would materially
and adversely affect its financial condition or the
conduct of the Acquired Funds business. The Acquired
Entity, on behalf of the Acquired Fund, is not a party to
or subject to the provisions of any order, decree or
judgment of any court or governmental body which
materially and adversely affects the Acquired Funds
business or the Acquired Entitys ability to consummate the
transactions herein contemplated on behalf of the Acquired
Fund.
(i) The Statement of Assets and Liabilities,
Statements of Operations and Changes in Net Assets and
Schedule of Investments of the Acquired Fund as at the
last day of and for the most recently completed fiscal
year of the Acquired Fund prior to the date of this
Agreement, have been audited by KPMG LLP, an independent
registered public accounting firm, and are in accordance
with accounting principles generally accepted in the
United States of America (GAAP) consistently applied, and
such statements (true and correct copies of which have
been furnished to the Acquiring Entity) present fairly, in
all material respects, the financial condition of the
Acquired Fund as of such date and for such period in
accordance with GAAP, and there are no known contingent,
accrued or other liabilities of the Acquired Fund required
to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date that are
not disclosed therein. The Statement of Assets and
Liabilities, Statements of Operations and Changes in Net
Assets and Schedule of Investments (unaudited) of the
Acquired Fund as at the last day of and for the most
recently completed fiscal half year of the Acquired Fund
following the date of the audited annual statements
referenced above are in accordance with GAAP consistently
applied, and such statements (true and correct copies of
which have been furnished to the Acquiring Entity) present
fairly, in all material respects, the financial condition
of the Acquired Fund, and all known contingent, accrued or
other liabilities of the Acquired Fund required to be
reflected on a balance sheet (including the notes thereto)
in accordance with GAAP as of such date are disclosed
therein.
(j) Since the last day of the most recently completed
fiscal year of the Acquired Fund prior to the date of this
Agreement, there has not been any material adverse change
in the Acquired Funds financial condition, assets,
liabilities or business, other than changes occurring in
the ordinary course of business, or any incurrence by the
Acquired Fund of indebtedness for money borrowed maturing
more than one year from the date such indebtedness was
incurred. For the purposes of this subparagraph (j), a
decline in net asset value per share of Acquired Fund
Shares due to declines in market values of securities held
by the Acquired Fund, the discharge of Acquired Fund
liabilities, or the redemption of Acquired Fund Shares by
shareholders of the Acquired Fund shall not constitute a
material adverse change.
(k) On the Closing Date, all federal and other tax
returns, dividend reporting forms and other tax-related
reports of the Acquired Fund required by law to have been
filed by such date (including any extensions) shall have
been filed and are or will be correct in all material
respects, and all federal and other taxes shown as due or
required to be shown as due on said returns and reports
shall have been paid or provision shall have been made for
the payment thereof and, to the best of the Acquired
Entitys knowledge, no such return is currently under audit
and no assessment has been asserted with respect to such
returns.
(l) For each taxable year of its operation (including
the current taxable year, assuming such year ends on the
Closing Date), the Acquired Fund has met (or will meet)
the requirements of Subchapter M of Chapter 1 of the Code
for qualification and treatment as a regulated investment
company, has elected to be treated as such, and has been
(or will be) eligible to compute and has computed (or will
compute) its federal income tax under Section 852 of the
Code, and on or before the Closing Date, will have
distributed or will have declared dividends intended to be
sufficient to distribute substantially all of (i) the
excess of (x) its investment income excludible from gross
income under Section 103 of the Code over (y) its
deductions disallowed under Sections 265 and 171 of the
Code (net tax-exempt income), (ii) its investment company
taxable income (as defined in the Code) (computed without
regard to any deduction for dividends paid) and (iii) any
net capital gain (after reduction for any allowable
capital loss carryover) (as defined in the Code) that has
accrued or been recognized, respectively, through the
Closing Date such that for all tax periods ending on or
before the Closing Date (and treating the current tax year
as ending on the Closing Date) the Acquired Fund will not
have any tax liability under Section 852 or Section 4982.
(m) All issued and outstanding Acquired Fund Shares
are, and on the Closing Date will be, duly authorized and
validly and legally issued and outstanding, fully paid and
non-assessable by the Acquired Entity and have been
offered and sold in any state, territory or the District
of Columbia in compliance in all material respects with
applicable registration requirements of all applicable
federal and state securities laws. All of the issued and
outstanding Acquired Fund Shares will, at the time of
Closing, be held by the persons and in the amounts set
forth in the records of the Transfer Agent, on behalf of
the Acquired Fund, as provided in paragraph 3.3. The
Acquired Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any
of the Acquired Fund Shares, nor is there outstanding any
security convertible into any of the Acquired Fund Shares.
(n) The Acquired Fund will review its assets to ensure
that at any time after its shareholders have approved this
Agreement and prior to the Closing Date its assets do not
include any assets that the Acquiring Fund is not
permitted, or reasonably believes to be unsuitable for it,
to acquire, including without limitation any security
that, prior to its acquisition by the Acquired Fund, is
unsuitable for the Acquiring Fund to acquire.
(o) The execution, delivery and performance of this
Agreement, and the transactions contemplated herein, have
been duly authorized by all necessary action on the part
of the Acquired Entity Board, on behalf of the Acquired
Fund, and this Agreement constitutes a valid and binding
obligation of the Acquired Entity, on behalf of the
Acquired Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors rights and to general equity
principles.
(p) The combined proxy statement and prospectus (Proxy
Statement) to be included in the Registration Statement
(as defined in paragraph 5.6), insofar as it relates to
the Acquired Fund, from the effective date of the
Registration Statement through the date of the meeting of
shareholders of the Acquired Fund contemplated therein and
on the Closing Date, will (i) not contain any statement
which, at the time and in light of the circumstances under
which it is made, is false or misleading with respect to
any material fact, or which omits to state any material
fact necessary in order to make the statements therein not
false or misleading (provided that this representation and
warranty shall not apply to statements in or omissions
from the Proxy Statement made in reliance upon and in
conformity with information that was furnished by the
Acquiring Entity for use therein) and (ii) comply in all
material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and the rules and regulations
thereunder. The information to be furnished by the
Acquired Fund for use in registration statements and other
documents filed or to be filed with any federal, state or
local regulatory authority, which may be necessary in
connection with the transactions contemplated hereby,
shall be accurate and complete in all material respects
and shall comply in all material respects with federal
securities and other laws and regulations thereunder
applicable thereto.
4.2 Except as has been fully disclosed to the Acquired
Entity in Schedule 4.2 to this Agreement, the Acquiring
Entity, on behalf of the Acquiring Fund, represents and
warrants to the Acquired Entity and the Acquired Fund as
follows:
(a) The Acquiring Fund is duly established as a series
of the Acquiring Entity, which is a business trust duly
organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, with the power
under its Declaration of Trust, as amended and/or
supplemented (the Acquiring Entity Charter), to own all of
its assets and to carry on its business as it is being
conducted as of the date hereof. The Acquiring Entity is
duly qualified to do business as a foreign trust in each
jurisdiction in which the conduct of its business makes
such qualification necessary except where the failure to
so qualify would not have a material adverse effect on the
condition (financial or otherwise), business, properties,
net assets or results of operations of the Acquiring
Entity. The Acquiring Entity has all necessary federal,
state and local authorization to carry on its business as
now being conducted and to fulfill the terms of this
Agreement except as described in paragraph 4.2(c).
(b) The Acquiring Entity is a registered open-end
management investment company, and its registration with
the Commission as an investment company under the 1940
Act, and the registration of each class of Acquiring Fund
Shares under the 1933 Act, is in full force and effect or
will be in full force and effect as of the Closing Date.
(c) No consent, approval, authorization, or order of
any court or governmental authority is required for the
consummation by the Acquiring Fund of the transactions
contemplated herein, except such as may be required under
the 1933 Act, the 1934 Act, the 1940 Act, state securities
laws and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(d) The current prospectus and statement of additional
information of the Acquiring Fund (true and correct copies
of which have been delivered to the Acquired Entity) and
each prospectus and statement of additional information of
the Acquiring Fund used during the three (3) years prior
to the date of this Agreement conforms or conformed at the
time of its use in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the
rules and regulations of the Commission thereunder and
does not or did not at the time of its use include any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not materially
misleading.
(e) The Acquiring Fund is not engaged currently, and
the execution, delivery and performance of this Agreement
by the Acquiring Entity, on behalf of the Acquiring Fund,
will not result, in a material violation of Massachusetts
law or of the Acquiring Entity Charter or the by-laws of
the Acquiring Entity, or of any agreement, indenture,
instrument, contract, lease or other undertaking to which
the Acquiring Entity, on behalf of the Acquiring Fund, is
a party or by which it is bound, and the execution,
delivery and performance of this Agreement by the
Acquiring Entity, on behalf of the Acquiring Fund, will
not result in the acceleration of any material obligation,
or the imposition of any material penalty, under any
agreement, indenture, instrument, contract, lease,
judgment or decree to which the Acquiring Entity, on
behalf of the Acquiring Fund, is a party or by which it is
bound.
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body
is presently pending or, to the Acquiring Entitys
knowledge, threatened against the Acquiring Entity, with
respect to the Acquiring Fund, or any of its properties or
assets, that, if adversely determined, would materially
and adversely affect its financial condition or the
conduct of such Acquiring Funds business. The Acquiring
Entity, on behalf of the Acquiring Fund, is not a party to
or subject to the provisions of any order, decree or
judgment of any court or governmental body which
materially and adversely affects the Acquiring Funds
business or the Acquiring Entitys ability to consummate
the transactions herein contemplated on behalf of the
Acquiring Fund.
(g) The Statement of Assets and Liabilities,
Statements of Operations and Changes in Net Assets and
Schedule of Investments of the Acquiring Fund as at the
last day of and for the most recently completed fiscal
year of the Acquiring Fund prior to the date of this
Agreement, have been audited by KPMG LLP, an independent
registered public accounting firm, and are in accordance
with GAAP consistently applied, and such statements (true
and correct copies of which have been furnished to the
Acquired Entity) present fairly, in all material respects,
the financial condition of the Acquiring Fund as of such
date and for such period in accordance with GAAP, and
there are no known contingent, accrued or other
liabilities of the Acquiring Fund required to be reflected
on a balance sheet (including the notes thereto) in
accordance with GAAP as of such date that are not
disclosed therein. The Statement of Assets and
Liabilities, Statements of Operations and Changes in Net
Assets and Schedule of Investments (unaudited) of the
Acquiring Fund as at the last day of and for the most
recently completed fiscal half year of the Acquiring Fund
following the date of the audited annual statements
referenced above in accordance with GAAP consistently
applied, and such statements (true and correct copies of
which have been furnished to the Acquired Entity) present
fairly, in all material respects, the financial condition
of the Acquiring Fund, and all known contingent, accrued
or other liabilities of the Acquiring Fund required to be
reflected on a balance sheet (including the notes thereto)
in accordance with GAAP as of such date are disclosed
therein.
(h) Since the last day of the most recently completed
fiscal year of the Acquiring Fund prior to the date of
this Agreement, there has not been any material adverse
change in the Acquiring Funds 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 for money borrowed maturing
more than one year from the date such indebtedness was
incurred. For the purposes of this subparagraph (h), a
decline in net asset value per share of Acquiring Fund
Shares due to declines in market values of securities held
by the Acquiring Fund, the discharge of Acquiring Fund
liabilities, or the redemption of Acquiring Fund Shares by
shareholders of the Acquiring Fund shall not constitute a
material adverse change.
(i) On the Closing Date, all federal and other tax
returns, dividend reporting forms and other tax-related
reports of the Acquiring Fund required by law to have been
filed by such date (including any extensions) shall have
been filed and are or will be correct in all material
respects, and all federal and other taxes shown as due or
required to be shown as due on said returns and reports
shall have been paid or provision shall have been made for
the payment thereof and, to the best of the Acquiring
Entitys knowledge, no such return is currently under audit
and no assessment has been asserted with respect to such
returns.
(j) For each taxable year of its operation (including
the taxable year that includes the Closing Date), the
Acquiring Fund has met (or will meet) the requirements of
Subchapter M of Chapter 1 of the Code for qualification
and treatment as a regulated investment company, has
elected to be treated as such, and has been (or will be)
eligible to compute and has computed (or will compute) its
federal income tax under Section 852 of the Code, and will
have distributed (or will distribute pursuant to the
provisions of Section 855 of the Code) substantially all
of (i) its net tax-exempt income, (ii) its investment
company taxable income (computed without regard to any
deduction for dividends paid) (as defined in the Code) and
(iii) any net capital gain (after reduction for any
capital loss carryover) (as defined in the Code) for
taxable years ending prior to the Closing Date such that
for all those years the Acquiring Fund will have no tax
liability under Section 852 or Section 4982.
(k) All issued and outstanding Acquiring Fund Shares
are, and on the Closing Date will be, duly authorized and
validly and legally issued and outstanding, fully paid and
non-assessable by the Acquiring Entity and will have been
offered and sold in any state, territory or the District
of Columbia in compliance in all material respects with
applicable registration requirements of all applicable
federal and state securities laws. The Acquiring Fund does
not have outstanding any options, warrants or other rights
to subscribe for or purchase any Acquiring Fund Shares,
nor is there outstanding any security convertible into any
Acquiring Fund Shares. All of the Acquiring Fund Shares to
be issued and delivered to the Acquired Entity, for the
account of the Acquired Fund Shareholders, pursuant to
this Agreement, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be duly
and validly and legally issued Acquiring Fund Shares and
be fully paid and non-assessable by the Acquiring Entity.
(l) The execution, delivery and performance of this
Agreement, and the transactions contemplated herein, have
been duly authorized by all necessary action on the part
of the Acquiring Entity Board, on behalf of the Acquiring
Fund, and this Agreement constitutes a valid and binding
obligation of the Acquiring Entity, on behalf 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.
(m) The Proxy Statement to be included in the
Registration Statement, insofar as it relates to the
Acquiring Fund and the Acquiring Fund Shares, from the
effective date of the Registration Statement through the
date of the meeting of shareholders of the Acquired Fund
contemplated therein and on the Closing Date, will (i) not
contain any statement which, at the time and in the light
of the circumstances under which it is made, is false or
misleading with respect to any material fact, or which
omits to state any material fact necessary to make the
statements therein not false or misleading (provided that
this representation and warranty shall not apply to
statements in or omissions from the Proxy Statement made
in reliance upon and in conformity with information that
was furnished by the Acquired Entity for use therein) and
(ii) comply in all material respects with the provisions
of the 1933 Act, the 1934 Act and the 1940 Act and the
rules and regulations thereunder. The information to be
furnished by the Acquiring Fund for use in registration
statements and other documents filed or to be filed with
any federal, state or local regulatory authority, which
may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material
respects with federal securities and other laws and
regulations applicable thereto.
5. COVENANTS
The Acquired Entity, on behalf of the Acquired Fund, and
the Acquiring Entity, on behalf of the Acquiring Fund,
respectively, hereby further covenant as follows:
5.1 The Acquired Fund and the Acquiring Fund each will
operate its business in the ordinary course and shall comply
in all material respects with all applicable laws, rules and
regulations between the date hereof and the Closing Date, it
being understood that such ordinary course of business will
include the declaration and payment of customary dividends and
other distributions, and any other distribution that may be
advisable.
5.2 The Acquired Entity will call and hold a meeting of
the shareholders of the Acquired Fund to consider and act upon
this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 The Acquiring Fund Shares to be acquired by the
Acquired Fund hereunder are not being acquired for the purpose
of making any distribution thereof, other than in accordance
with the terms of this Agreement.
5.4 The Acquired Entity, on behalf of the Acquired Fund,
will assist the Acquiring Entity in obtaining such information
as the Acquiring Entity reasonably requests concerning the
beneficial ownership of the Acquired Fund Shares.
5.5 Subject to the provisions of this Agreement, the
Acquiring Entity, on behalf of the Acquiring Fund, and the
Acquired Entity, on behalf of the Acquired Fund, each will
take, or cause to be taken, all action, and do or cause to be
done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by
this Agreement.
5.6 The Acquiring Entity, on behalf of the Acquiring Fund,
shall prepare and file a Registration Statement on Form N-14
in compliance with the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations thereunder with respect to the
Reorganization (the Registration Statement). The Acquired
Entity, on behalf of the Acquired Fund, will provide to the
Acquiring Entity such information regarding the Acquired Fund
as may be reasonably necessary for the preparation of the
Registration Statement.
5.7 The Acquiring Entity, on behalf of the Acquiring Fund,
and the Acquired Entity, on behalf of the Acquired Fund, each
will use its reasonable best efforts to fulfill or obtain the
fulfillment of the conditions precedent to effect the
transactions contemplated by this Agreement as promptly as
practicable.
5.8 The Acquired Entity, on behalf of the Acquired Fund,
will, from time to time, as and when reasonably requested by
the Acquiring Entity, execute and deliver or cause to be
executed and delivered all such assignments and other
instruments and will take or cause to be taken such further
action as the Acquiring Entity, on behalf of the Acquiring
Fund, may reasonably deem necessary or desirable in order to
vest in and confirm (a) the Acquired Entitys title to and
possession of the Acquiring Fund Shares to be delivered
hereunder and (b) the Acquiring Entitys title to and
possession of all the Assets and to otherwise to carry out the
intent and purpose of this Agreement.
5.9 The Acquiring Entity, on behalf of the Acquiring Fund,
will use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act and such
of the state blue sky or securities laws as may be necessary
in order to continue its operations after the Closing Date.
5.10 The Acquiring Entity shall not change the Acquiring
Entity Charter, prospectus or statement of additional
information so as to restrict permitted investments for the
Acquiring Fund, except as required by the Commission prior to
the Closing.
5.11 Prior to the Valuation Date, the Acquired Entity
Board shall adopt the valuation procedures of the Acquiring
Entity with respect to the Acquired Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED ENTITY
The obligations of the Acquired Entity, on behalf of the
Acquired Fund, to consummate the transactions provided for
herein shall be subject, at the Acquired Entitys election, to
the following conditions:
6.1 All representations and warranties of the Acquiring
Entity, on behalf of the Acquiring Fund, contained in this
Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and
as of the Closing Date.
6.2 The Acquiring Entity, on behalf of the Acquiring Fund,
shall have performed all of the covenants and complied with
all of the provisions required by this Agreement to be
performed or complied with by the Acquiring Entity, on behalf
of the Acquiring Fund, on or before the Closing Date.
6.3 The Acquiring Entity, on behalf of the Acquiring Fund,
shall have executed and delivered an assumption of the
Liabilities and all such other agreements and instruments as
the Acquired Entity may reasonably deem necessary or desirable
in order to vest in and confirm (a) the Acquired Funds title
to and possession of the Acquiring Fund Shares to be delivered
hereunder and (b) the Acquiring Entitys assumption of all of
the Liabilities and to otherwise to carry out the intent and
purpose of this Agreement.
6.4 The Acquiring Entity, on behalf of the Acquiring Fund,
shall have delivered to the Acquired Fund a certificate
executed in the name of the Acquiring Entity on behalf of the
Acquiring Fund, by the Acquiring Entitys President or Vice
President and its Treasurer or Assistant Treasurer, in a form
reasonably satisfactory to the Acquired Entity and dated as of
the Closing Date, as to the matters set forth in paragraphs
6.1 and 6.2 and as to such other matters as the Acquired
Entity shall reasonably request.
6.5 The Acquiring Entity, on behalf of the Acquiring Fund,
and the Acquired Entity, on behalf of the Acquired Fund, shall
have agreed on the number of full and fractional Acquiring
Fund Shares to be issued in connection with the Reorganization
after such number has been calculated in accordance with
paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING ENTITY
The obligations of the Acquiring Entity, on behalf of the
Acquiring Fund, to consummate the transactions provided for
herein shall be subject, at the Acquiring Entitys election, to
the following conditions:
7.1 All representations and warranties of the Acquired
Entity, on behalf of the Acquired Fund, contained in this
Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and
as of the Closing Date.
7.2 The Acquired Entity, on behalf of the Acquired Fund,
shall have performed all of the covenants and complied with
all of the provisions required by this Agreement to be
performed or complied with by the Acquired Entity, on behalf
of the Acquired Fund, on or before the Closing Date.
7.3 The Acquired Entity shall have delivered to the
Acquiring Entity, on behalf of the Acquiring Fund, a Statement
of Assets and Liabilities of the Acquired Fund as of the
Closing Date, including a schedule of investments, certified
by the Treasurer of the Acquired Entity on behalf of the
Acquired Fund. The Acquired Entity, on behalf of the Acquired
Fund, shall have executed and delivered all such assignments
and other instruments of transfer as the Acquiring Entity may
reasonably deem necessary or desirable in order to vest in and
confirm (a) the Acquired Funds title to and possession of the
Acquiring Fund Shares to be delivered hereunder and (b) the
Acquiring Funds title to and possession of all the Assets and
to otherwise to carry out the intent and purpose of this
Agreement.
7.4 The Acquired Entity, on behalf of the Acquired Fund,
shall have delivered to the Acquiring Entity a certificate
executed in the name of the Acquired Entity, on behalf of the
Acquired Fund, by the Acquired Entitys President or Vice
President and its Treasurer or Assistant Treasurer, in a form
reasonably satisfactory to the Acquiring Entity and dated as
of the Closing Date, as to the matters set forth in paragraphs
7.1 and 7.2 and as to such other matters as the Acquiring
Entity shall reasonably request.
7.5 The Acquired Entity, on behalf of the Acquired Fund,
and the Acquiring Entity, on behalf of the Acquiring Fund,
shall have agreed on the number of full and fractional
Acquiring Fund Shares to be issued in connection with the
Reorganization after such number has been calculated in
accordance with paragraph 1.1.
8.
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING
ENTITY AND ACQUIRED ENTITY
If any of the conditions set forth below have not been
satisfied on or before the Closing Date with respect to the
Acquired Entity, on behalf of the Acquired Fund, or the
Acquiring Entity, on behalf of the Acquiring Fund, the other
party to this Agreement shall be entitled on behalf of the
Acquired Fund or Acquiring Fund, as applicable, at its option,
to refuse to consummate the transactions contemplated by this
Agreement:
8.1 This Agreement and the transactions contemplated
herein shall have been approved by the requisite vote of the
holders of the outstanding shares of the Acquired Fund, in
accordance with the provisions of the Acquired Entity Charter,
the by-laws of the Acquired Entity, and Maryland law, and
certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Entity.
Notwithstanding anything herein to the contrary, neither the
Acquiring Entity nor the Acquired Entity may waive the
condition set forth in this paragraph 8.1.
8.2 On the Closing Date, no court or governmental agency
of competent jurisdiction shall have issued any order that
remains in effect and that restrains or enjoins the Acquired
Entity, with respect to the Acquired Fund, or the Acquiring
Entity, with respect to the Acquiring Fund, from completing
the transactions contemplated by this Agreement.
8.3 All consents of other parties and all other consents,
orders and permits of federal, state and local regulatory
authorities deemed necessary by the Acquiring Entity or the
Acquired Entity to permit consummation, in all material
respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain any such
consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either
party hereto may for itself waive any of such conditions.
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 and, to the best
knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be
pending.
8.5 The parties shall have received the opinion of Dechert
LLP, dated the Closing Date, substantially to the effect that,
based upon certain facts, assumptions and representations made
by the Acquired Entity, on behalf of the Acquired Fund, the
Acquiring Entity, on behalf of the Acquiring Fund, and their
respective authorized officers, (i) the transactions
contemplated by this Agreement will constitute a
reorganization within the meaning of Section 368(a) of the
Code; (ii) no gain or loss will be recognized by the Acquiring
Fund upon receipt of the Assets in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of the
Acquired Fund Liabilities; (iii) the basis in the hands of the
Acquiring Fund in the Assets will be the same as the basis of
the Acquired Fund in the Assets immediately prior to the
transfer thereof; (iv) the holding periods of the Assets in
the hands of the Acquiring Fund will include the periods
during which the Assets were held by the Acquired Fund (except
where investment activities of the Acquiring Fund have the
effect of reducing or eliminating the holding period with
respect to an asset); (v) no gain or loss will be recognized
by the Acquired Fund upon the transfer of the Assets to the
Acquiring Fund in exchange for the Acquiring Fund Shares and
the assumption by the Acquiring Fund of the Acquired Fund
Liabilities, or upon the distribution of the Acquiring Fund
Shares by the Acquired Fund to its shareholders except for
gain or loss that may be recognized with respect to contracts
subject to Section 1256 of the Code and/or stock in a passive
foreign investment company as defined in Section 1297(a) of
the Code; (vi) no gain or loss will be recognized by the
Acquired Fund shareholders upon the exchange of their Acquired
Fund Shares for the Acquiring Fund Shares; (vii) the aggregate
basis of the Acquiring Fund Shares that each Acquired Fund
shareholder receives in connection with the transaction will
be the same as the aggregate basis of his or her Acquired Fund
Shares exchanged therefor; and (viii) an Acquired Fund
shareholders holding period for his or her Acquiring Fund
Shares will be determined by including the period for which he
or she held the Acquired Fund Shares exchanged therefor,
provided that he or she held the Acquired Fund Shares as
capital assets. The delivery of such opinion is conditioned
upon the receipt by Dechert LLP of representations it shall
request of the Acquiring Entity and the Acquired Entity.
Notwithstanding anything herein to the contrary, neither the
Acquiring Entity nor the Acquired Entity may waive the
condition set forth in this paragraph 8.5.
8.6 The Acquiring Entity, on behalf of the Acquiring Fund,
shall have received on the Closing Date an opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, in a form reasonably satisfactory to
the Acquiring Entity, and dated as of the Closing Date,
substantially to the effect that, based upon certain facts and
certifications made by the Acquired Entity, on behalf of the
Acquired Fund, and its authorized officers: (a) the Acquired
Entity is a corporation existing under the laws of the State
of Maryland; (b) the Acquired Entity, with respect to the
Acquired Fund, has the corporate power to carry on its
business as an open-end investment company registered under
the 1940 Act; (c) this Agreement has been duly authorized,
executed and, so far as known to such counsel, delivered by
the Acquired Entity, on behalf of the Acquired Fund, and
assuming due authorization, execution and delivery of this
Agreement by the Acquiring Entity, on behalf of the Acquiring
Fund, constitutes a valid and legally binding obligation of
the Acquired Entity, on behalf of the Acquired Fund,
enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and laws of general applicability
relating to or affecting creditors rights and to general
equity principles (whether in a proceeding under equity or at
law); provided that such counsel shall be entitled to state
that it expresses no opinion with respect to the validity,
binding effect or enforceability of any contractual provisions
purporting to provide indemnification of any person for any
claims, damages, liabilities or expenses which may be limited
by any applicable federal or state securities laws or as a
matter of public policy; (d) the execution and delivery of
this Agreement did not, and the transfer of the Assets for
Acquiring Fund Shares and the assumption by the Acquiring Fund
of the Liabilities pursuant to this Agreement will not,
violate the Acquired Entity Charter or the by-laws of the
Acquired Entity or any contracts or other documents known to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP which can affect the rights or
obligations of the Acquired Entity; (e) to the knowledge of
such counsel, all regulatory or court consents,
authorizations, approvals, orders or filings required to be
obtained or made by the Acquired Entity, on behalf of the
Acquired Fund, under the federal laws of the United States or
the laws of the State of Maryland for the transfer of the
Assets for Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Liabilities pursuant to this Agreement
have been obtained or made, except such as may be required
under state securities or blue sky laws as to which such
counsel need express no opinion; and (f) to the knowledge of
such counsel, and without any independent investigation, other
than as disclosed on the schedule provided by the Acquired
Entity pursuant to paragraph 4.1 of this Agreement, the
Acquired Fund is not subject to any litigation or
administrative proceeding that could reasonably be expected to
have a materially adverse effect on the operations of the
Acquired Fund. Such opinion may state that it is solely for
the benefit of the Acquiring Entity and the Acquiring Entity
Board. Such opinion may contain such assumptions and
limitations as shall be in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP appropriate to render the opinions expressed
therein. Such opinion also shall include such other matters
incident to the transactions contemplated hereby as the
Acquiring Entity, on behalf of the Acquiring Fund, may
reasonably request. With respect to all matters of Maryland
law, such counsel shall be entitled to state that, with the
approval of the Acquiring Entity, they have relied on the
opinion of ▇▇▇▇▇▇▇ LLP and that their opinion is subject to
the same assumptions, qualifications and limitations with
respect to such matters as are contained in the opinion of
▇▇▇▇▇▇▇ LLP.
8.7 The Acquired Entity, on behalf of the Acquired Fund,
shall have received on the Closing Date an opinion of ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, in a form reasonably satisfactory to the
Acquired Entity, and dated as of the Closing Date,
substantially to the effect that, based upon certain facts and
certifications made by the Acquiring Entity, on behalf of the
Acquiring Fund and its authorized officers: (a) the Acquiring
Entity is a business trust existing under the laws of the
Commonwealth of Massachusetts; (b) the Acquiring Entity, with
respect to the Acquiring Fund, has the power as a business
trust to carry on its business as an open-end investment
company registered under the 1940 Act; (c) this Agreement has
been duly authorized, executed and, so far as is known to such
counsel, delivered by the Acquiring Entity, on behalf of the
Acquiring Fund, and assuming due authorization, execution and
delivery of this Agreement by the Acquired Entity, on behalf
of the Acquired Fund, constitutes a valid and legally binding
obligation of the Acquiring Entity, on behalf of the Acquiring
Fund, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and laws of general applicability
relating to or affecting creditors rights and to general
equity principles (whether in a proceeding under equity or at
law); provided that such counsel shall be entitled to state
that it expresses no opinion with respect to the validity,
binding effect or enforceability of any contractual provisions
purporting to provide indemnification of any person for any
claims, damages, liabilities or expenses which may be limited
by any applicable federal or state securities laws or as a
matter of public policy; (d) the execution and delivery of
this Agreement did not, and the issuance of the Acquiring Fund
Shares and the assumption of the Liabilities in exchange for
the transfer of the Assets pursuant to this Agreement will
not, violate the Acquiring Entity Charter or the by-laws of
the Acquiring Entity or any contracts or other documents known
to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP which can affect the rights
and obligations of the Acquiring Entity; (e) to the knowledge
of such counsel, all regulatory or court consents,
authorizations, approvals, orders or filings required to be
obtained or made by the Acquiring Entity, on behalf of the
Acquiring Fund, under the federal laws of the United States or
the laws of the Commonwealth of Massachusetts with respect to
the issuance of the Acquiring Fund Shares and the assumption
of the Liabilities in exchange for the transfer of the Assets
pursuant to this Agreement have been obtained or made, except
such as may be required under state securities or blue sky
laws, as to which such counsel need express no opinion; and
(f) to the knowledge of such counsel, and without any
independent investigation, other than as disclosed on the
schedule provided by the Acquiring Entity pursuant to
paragraph 4.2 of this Agreement, the Acquiring Fund is not
subject to any litigation or administrative proceeding that
could reasonably be expected to have a materially adverse
effect on the operations of the Acquiring Fund. Such opinion
may state that it is solely for the benefit of the Acquired
Entity and the Acquired Entity Board. Such opinion may contain
such assumptions and limitations as shall be in the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP appropriate to render the
opinions expressed therein. Such opinion also shall include
such other matters incident to the transactions contemplated
hereby as the Acquired Entity, on behalf of the Acquired Fund,
may reasonably request. With respect to all matters of
Massachusetts law, such counsel shall be entitled to state
that, with the approval of the Acquired Entity, they have
relied on the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP and that their
opinion is subject to the same assumptions, qualifications and
limitations with respect to such matters as are contained in
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP.
8.8 The Assets will include no assets which the Acquiring
Fund, by reason of limitations contained in the Acquiring
Entity Charter or in investment restrictions in effect on the
Closing Date, may not properly acquire.
9. INDEMNIFICATION
9.1 The Acquiring Entity, out of the Acquiring Funds
assets and property (including any amounts paid to the
Acquiring Fund pursuant to any applicable liability insurance
policies or indemnification agreements) agrees to indemnify
and hold harmless the Acquired Entity and the members of the
Acquired Entity Board and its officers from and against any
and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable
legal fees and reasonable costs of investigation) to which the
Acquired Entity and those board members and officers may
become subject, insofar as such loss, claim, damage, liability
or expense (or actions with respect thereto) arises out of or
is based on (a) any breach by the Acquiring Entity, on behalf
of the Acquiring Fund, of any of its representations,
warranties, covenants or agreements set forth in this
Agreement or (b) any act, error, omission, neglect,
misstatement, materially misleading statement, breach of duty
or other act wrongfully done or attempted to be committed by
the Acquiring Entity or the members of the Acquiring Entity
Board or its officers prior to the Closing Date, provided that
such indemnification by the Acquiring Entity is not (i) in
violation of any applicable law or (ii) otherwise prohibited
as a result of any applicable order or decree issued by any
governing regulatory authority or court of competent
jurisdiction.
9.2 The Acquired Entity, out of the Acquired Funds assets
and property (including any amounts paid to the Acquired Fund
pursuant to any applicable liability insurance policies or
indemnification agreements) agrees to indemnify and hold
harmless the Acquiring Entity and the members of the Acquiring
Entity Board and its officers from and against any and all
losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which the Acquiring
Entity and those board members and officers may become
subject, insofar as such loss, claim, damage, liability or
expense (or actions with respect thereto) arises out of or is
based on (a) any breach by the Acquired Entity, on behalf of
the Acquired Fund, of any of its representations, warranties,
covenants or agreements set forth in this Agreement or (b) any
act, error, omission, neglect, misstatement, materially
misleading statement, breach of duty or other act wrongfully
done or attempted to be committed by the Acquired Entity or
the members of the Acquired Entity Board or its officers prior
to the Closing Date, provided that such indemnification by the
Acquired Entity is not (i) in violation of any applicable law
or (ii) otherwise prohibited as a result of any applicable
order or decree issued by any governing regulatory authority
or court of competent jurisdiction.
10. BROKER FEES AND EXPENSES
10.1 The Acquiring Entity, on behalf of the Acquiring
Fund, and the Acquired Entity, on behalf of the Acquired Fund,
represent and warrant to each other that there are no brokers
or finders entitled to receive any payments in connection with
the transactions provided for herein.
10.2 ▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC will pay the
printing, proxy solicitation, mailing and postage costs of the
Reorganization. Additional costs, including expenses related
to the preparation and filing of the Registration Statement,
legal fees and auditor fees, shall be divided equally between
▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC, on the one hand, and
the Acquiring Entity and the Acquired Entity, on the other
hand. Notwithstanding any of the foregoing, expenses will in
any event be paid by the party directly incurring such
expenses if and to the extent that the payment by another
person of such expenses would result in the disqualification
of such party as a regulated investment company within the
meaning of Section 851 of the Code or would prevent the
Reorganization from qualifying as a tax-free reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The Acquiring Entity and the Acquired Entity agree
that neither party has made any representation, warranty or
covenant, on behalf of either the Acquiring Fund or the
Acquired Fund, respectively, not set forth herein and that
this Agreement constitutes the entire agreement between the
parties.
11.2 The covenants to be performed after the Closing by
both the Acquiring Entity and the Acquired Entity, and the
obligations of the Acquiring Entity, on behalf of the
Acquiring Fund, in Article 9, shall survive the Closing. All
other representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or
in connection herewith shall not survive the consummation of
the transactions contemplated hereunder and shall terminate on
the Closing.
12. TERMINATION
This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the
Closing Date by resolution of either the Acquiring Entity
Board or the Acquired Entity Board, if circumstances should
develop that, in the opinion of that Board, make proceeding
with the Agreement inadvisable with respect to the Acquiring
Fund or the Acquired Fund, respectively. Any such termination
resolution to be effective shall be promptly communicated to
the other party and, in any event, prior to the Closing Date.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in
such manner as may be deemed necessary or advisable by the
authorized officers of the Acquired Entity and the Acquiring
Entity; provided, however, that following the meeting of the
Acquired Fund shareholders called by the Acquired 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 Acquired
Fund shareholders under this Agreement to the detriment of
such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or
permitted by any provisions of this Agreement shall be in
writing and shall be given by facsimile, electronic delivery
(i.e., e-mail), personal service or prepaid or certified mail
addressed to the Acquiring Entity or the Acquired Entity, at
its address set forth in the preamble to this Agreement, in
each case to the attention of its President.
15.
HEADINGS; COUNTERPARTS; GOVERNING LAW; SEVERABILITY;
ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article headings contained in this Agreement are
for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed and
interpreted in accordance with the internal laws of the State
of New York.
15.4 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and
assigns, but no assignment or transfer hereof or of any rights
or obligations hereunder shall be made by any party without
the written consent of the other parties. 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.
15.5 The Acquiring Entity Charter is on file with the
Secretary of State of the Commonwealth of Massachusetts.
Consistent with the Acquiring Entity Charter, the obligations
of the Acquiring Entity with respect to the Acquiring Fund
entered into in the name or on behalf of the Acquiring Entity
by any of its Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or
shareholders of the Acquiring Entity, personally, but bind
only the assets of the Acquiring Entity belonging to the
Acquiring Fund, and all persons dealing with any series or
funds of the Acquiring Entity must look solely to the assets
of the Acquiring Entity belonging to such series or fund for
the enforcement of any claims against the Acquiring Entity.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its duly authorized officer.
▇▇▇▇ ▇▇▇▇▇ PARTNERS VARIABLE
PORTFOLIOS II, on behalf of its series
▇▇▇▇ ▇▇▇▇▇ PARTNERS VARIABLE
FUNDAMENTAL VALUE PORTFOLIO
▇▇▇▇ ▇▇▇▇▇ PARTNERS VARIABLE
PORTFOLIOS I, INC., on behalf of its
series ▇▇▇▇ ▇▇▇▇▇ PARTNERS VARIABLE
ALL CAP PORTFOLIO
By:
_________________________________
By:
__________________________________
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Solely for purposes of paragraph 10.2 of this Agreement:
▇▇▇▇ ▇▇▇▇▇ PARTNERS FUND ADVISOR, LLC
By:
__________________________________________
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
SCHEDULE 4.1
NONE
SCHEDULE 4.2
NONE
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