Exhibit 99.B4
VICTORY ESTABLISHED VALUE FUND
VICTORY FUND FOR INCOME
VICTORY GOVERNMENT MORTGAGE FUND
VICTORY OHIO REGIONAL STOCK FUND
AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
("Agreement") is made as of December __, 1999, between The Victory Portfolios, a
Delaware business trust ("Victory"), on behalf of Fund for Income and
Established Value Fund, segregated portfolios of assets ("series") thereof
(each, an "Acquiring Fund"), and Victory, on behalf of Government Mortgage Fund
and Ohio Regional Stock Fund, segregated portfolios of assets ("series") thereof
(each, a "Target"). (Each Acquiring Fund and Target are sometimes referred to
herein individually as a "Fund" and collectively as the "Funds," and Victory is
sometimes referred to herein as the "Investment Company.")
All agreements, representations, and obligations described herein
made or to be taken or undertaken by any Fund are made or shall be taken or
undertaken by Victory on the Fund's behalf.
Government Mortgage Fund and Fund for Income are corresponding Target
and Acquiring Funds, respectively, with respect to each other and Ohio Regional
Stock Fund and Established Value Fund are corresponding Target and Acquiring
Funds, respectively, with respect to each other.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that each Target transfer its assets to the
corresponding Acquiring Fund in exchange solely for voting shares of beneficial
interest of each comparable Class in the corresponding Acquiring Fund,
("Acquiring Fund's Shares") and the assumption by the corresponding Acquiring
Fund of the Target's liabilities, and that each Target distribute the
corresponding Acquiring Fund's Shares pro rata to the holders of shares of
beneficial interest in Target ("Target's Shares") in liquidation of Target. All
such transactions with respect to a Target and its corresponding Acquiring Fund
are referred to herein collectively as a "Reorganization."
It is intended by the parties hereto that each Reorganization
constitute a reorganization within the meaning of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code"). The parties hereto
hereby adopt this Agreement as a "plan of reorganization" within the meaning of
Treasury Regulation Sections 1.368-2(g) and 1.368-3(a).
Shares of Fund for Income are currently divided into two classes,
designated Class A Shares and Class G Shares. Government Mortgage Fund currently
has only one class of shares, designated Class A Shares. Established Value Fund
currently has only one class of shares, designated Class G Shares. An amendment
to Victory's registration statement on Form N-1A will be filed to register Class
A Shares for Established Value Fund. Shares of Ohio Regional Stock Fund are
currently divided into two classes, designated Class A Shares and Class B
Shares. Class A Shares of Fund for Income will be distributed to holder of Class
A Shares of Government Mortgage Fund in the Reorganization of that Fund. Class A
Shares of Established
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Value Fund will be distributed to holders of Class A and Class B Shares of Ohio
Regional Stock Fund in the Reorganization of those Funds.
In consideration of the mutual promises herein, the parties covenant
and agree as follows:
1. PLAN OF REORGANIZATION AND TERMINATION OF TARGETS
1.1. At the Effective Time (as defined in paragraph 3.1), each Target
agrees to assign, sell, convey, transfer, and deliver all of its
assets described in paragraph 1.2 ("Assets") to the
corresponding Acquiring Fund. Each Acquiring Fund agrees in
exchange therefor
(a) to issue and deliver to its corresponding Target the number of
full and fractional Acquiring Fund's Shares determined by
dividing the net value of such Target (computed as set forth in
paragraph 2.1) by the NAV (computed as set forth in paragraph
2.2) of the Acquiring Fund's Shares; and
(b) to assume all of such Target's liabilities described in
paragraph 1.3 ("Liabilities").
1.2. Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and
dividends receivable), claims and rights of action, rights to
register shares under applicable securities laws, books and
records, deferred and prepaid expenses shown as assets on
Target's books, and other property owned by Target at the
Effective Time.
1.3. Liabilities shall include (except as otherwise provided herein)
all of Target's liabilities, debts, obligations, and duties of
whatever kind or nature, whether absolute, accrued, contingent,
or otherwise, whether or not arising in the ordinary course of
business, whether or not determinable at the Effective Time, and
whether or not specifically referred to in this Agreement,
including without limitation Target's share of the expenses
described in paragraph 7.2 and the liabilities to which the
transferred Assets are subject. Notwithstanding the foregoing,
each Target agrees to use its best efforts to discharge all of
its known Liabilities prior to the Effective Time.
1.4. At or immediately before the Effective Time, each Target shall
declare and pay to its shareholders a dividend and/or other
distribution in an amount large enough so that it will have
distributed substantially all (and in any event not less than
90%) of its investment company taxable income (computed without
regard to any deduction for dividends paid) and substantially
all of its realized net capital gain, if any, for the current
taxable year through the Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), each Target shall distribute the corresponding
Acquiring Fund's Shares received by it pursuant to paragraph 1.1 to
such Target's shareholders of record, determined as of the Effective
Time (collectively "Shareholders" and individually a "Shareholder"),
in exchange for such Target's Shares and in liquidation of such
Target. To accomplish this distribution, the corresponding Acquiring
Fund's transfer agent ("Transfer Agent") shall open accounts on such
Acquiring Fund's share transfer books in the
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Shareholders' names and transfer such Acquiring Fund's Shares
thereto. Each Shareholder's account shall be credited with the pro
rata number of full and fractional (rounded to the third decimal
place) Acquiring Fund's Shares due that Shareholder. All outstanding
Shares of such Target, including any represented by certificates,
shall simultaneously be canceled on such Target's share transfer
books. An Acquiring Fund shall not issue certificates representing
such Acquiring Fund's Shares in connection with its Reorganization.
However, certificates representing each Target's Shares shall
represent the corresponding Acquiring Fund's Shares after each
Reorganization.
1.6. As soon as reasonably practicable after distribution of an Acquiring
Fund's Shares pursuant to paragraph 1.5, the corresponding Target
shall be terminated and any further actions shall be taken in
connection therewith as required by applicable law. Each Target shall
file such instruments and shall take all other steps necessary to
effect a complete liquidation and dissolution of such Target.
1.7. Any reporting responsibility of a Target to a public authority is and
shall remain its responsibility up to and including the date on which
it is terminated.
1.8. Any transfer taxes payable upon issuance of an Acquiring Fund's
Shares in a name other than that of the registered holder on the
corresponding Target's books of such Target's Shares exchanged
therefor shall be paid by the person to whom such Acquiring Fund's
Shares are to be issued, as a condition of such transfer.
2. VALUATION
2.1. For purposes of paragraph 1.1(a), each Target's net value shall be
(a) the value of the Assets computed as of the close of regular
trading on the New York Stock Exchange ("NYSE") on the date of the
Closing ("Valuation Time"), using the valuation procedures set forth
in such Target's then current prospectus and statement of additional
information less (b) the amount of the Liabilities as of the
Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of each Acquiring Fund's
Shares shall be computed as of the Valuation Time, using the
valuation procedures set forth in Acquiring Fund's then current
prospectus and statement of additional information.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by
or under the direction of Key Asset Management Inc.
3. CLOSING AND EFFECTIVE TIME
3.1. Each Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal
offices on _____________, 2000, or at such other place and/or on such
other date upon which the parties may agree. All acts taking place at
the Closing shall be deemed to take place simultaneously as of the
close of business on the date thereof or at such other time upon
which the parties may agree ("Effective Time"). If, immediately
before the Valuation Time, (a) the NYSE is closed to trading or
trading thereon is restricted or (b) trading or the reporting of
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trading on the NYSE or elsewhere is disrupted, so that accurate
appraisal of the net value of each Target and the NAV per share for
each Acquiring Fund is impracticable, the Effective Time shall be
postponed until the first business day after the day when such
trading shall have been fully resumed and such reporting shall have
been restored.
3.2. Each Target shall deliver to Victory at the Closing a schedule of its
Assets as of the Effective Time, which shall set forth for all
portfolio securities included therein their adjusted tax bases and
holding periods by lot. Each Target's custodian shall deliver at the
Closing a certificate of an authorized officer stating that (a) the
Assets held by the custodian will be transferred to the corresponding
Acquiring Fund at the Effective Time and (b) all necessary taxes in
conjunction with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made.
3.3. The Transfer Agent shall deliver at the Closing a certificate as to
the opening on each Acquiring Fund's share transfer books of accounts
in the names of the corresponding Target's Shareholders. Victory
shall issue and deliver a confirmation to each Target evidencing the
Acquiring Fund's Shares to be credited to such Target at the
Effective Time or provide evidence satisfactory to such Target that
the corresponding Acquiring Fund's Shares have been credited to such
Target's account on such Acquiring Fund's books. At the Closing, each
party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts, or other documents as the
other party or its counsel may reasonably request.
3.4. Victory, on behalf of each Target and Acquiring Fund, respectively,
shall deliver at the Closing a certificate executed in its name by
its President or a Vice President and dated as of the Effective Time,
to the effect that the representations and warranties it made in this
Agreement are true and correct in all material respects at the
Effective Time, with the same force and effect as if made at and as
of the Effective Time, except as they may be affected by the
transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1. Each Target represents and warrants as follows:
4.1.1. At the Closing, Target will have good and marketable title to its
Assets and full right, power, and authority to sell, assign,
transfer, and deliver its Assets free of any liens or other
encumbrances; and upon delivery and payment for the Assets, the
corresponding Acquiring Fund will acquire good and marketable title
thereto;
4.1.2. The corresponding Acquiring Fund's Shares are not being acquired for
the purpose of making any distribution thereof, other than in
accordance with the terms hereof;
4.1.3. Target's current prospectus and statement of additional information
conform in all material respects to the applicable requirements of
the Securities Act of 1933, as amended ("1933 Act"), and the 1940 Act
and the rules and regulations thereunder
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and do not include any untrue statement of a material fact or omit
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading;
4.1.4. Target is not in violation of, and the execution and delivery of this
Agreement and consummation of the transactions contemplated hereby
will not (a) conflict with or violate, Delaware law or any provision
of Victory's Certificate of Declaration of Trust or Trust Instrument
or By-laws or of any agreement, instrument, lease, or other
undertaking to which Target is a party or by which it is bound or (b)
result in the acceleration of any obligation, or the imposition of
any penalty, under any agreement, judgment, or decree to which Target
is a party or by which it is bound, except as previously disclosed in
writing to and accepted by Victory;
4.1.5. Except as otherwise disclosed in writing to and accepted by Victory,
all material contracts and other commitments of or applicable to
Target (other than this Agreement and investment contracts, including
options and futures) will be terminated, or provision for discharge
of any liabilities of Target thereunder will be made, at or prior to
the Effective Time, without Target incurring any liability or penalty
with respect thereto and without diminishing or releasing any rights
Target may have had with respect to actions taken or not taken by any
other party thereto prior to the Closing;
4.1.6. Except as otherwise disclosed in writing to and accepted by Victory
on behalf of the corresponding Acquiring Fund, no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is presently pending or (to Target's knowledge)
threatened against Target or any of its properties or assets that, if
adversely determined, would materially and adversely affect Target's
financial condition or the conduct of its business; Target knows of
no facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and is not a party to or
subject to the provisions of any order, decree, or judgment of any
court or governmental body that materially or adversely affects its
business or its ability to consummate the transactions contemplated
hereby;
4.1.7. The execution, delivery, and performance of this Agreement has been
duly authorized as of the date hereof by all necessary action on the
part of Victory's board of trustees on behalf of Target, which has
made the determinations required by Rule 17a-8(a) under the 1940 Act;
and, subject to approval by Target's shareholders and receipt of any
necessary exemptive relief or no-action assurances requested from the
Securities and Exchange Commission ("SEC") or its staff with respect
to Sections 17(a) and 17(d) of the 1940 Act, this Agreement will
constitute a valid and legally binding obligation of Target,
enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
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4.1.8. At the Effective Time, the performance of this Agreement shall have
been duly authorized by all necessary action by Target's
shareholders;
4.1.9. No governmental consents, approvals, authorizations, or filings are
required under the 1933 Act, the Securities Exchange Act of 1934, as
amended ("1934 Act"), or the 1940 Act for the execution or
performance of this Agreement by Target, except for (a) the filing
with the SEC of a registration statement by Victory on Form N-14
relating to the corresponding Acquiring Fund's Shares issuable
hereunder, and any supplement or amendment thereto ("Registration
Statement"), including therein a prospectus/proxy statement ("Proxy
Statement"), (b) receipt of the exemptive relief or no-action
assurances referenced in subparagraph 4.1.7, and (c) such consents,
approvals, authorizations, and filings as have been made or received
or as may be required subsequent to the Effective Time;
4.1.10. On the effective date of the Registration Statement, at the time of
the shareholders' meeting referred to in paragraph 5.2, and at the
Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934
Act, and the 1940 Act and the rules and regulations thereunder and
(b) not contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading. This provision shall not apply
to statements in or omissions from the Proxy Statement made in
reliance on and in conformity with information furnished by Victory
for use therein;
4.2. Each Acquiring Fund represents and warrants as follows:
4.2.1. No consideration other than Acquiring Fund's Shares (and Acquiring
Fund's assumption of the Liabilities) will be issued in exchange for
the corresponding Target's Assets in the Reorganization;
4.2.2. Acquiring Fund's Shares to be issued and delivered to the
corresponding Target hereunder will, at the Effective Time, have been
duly authorized and, when issued and delivered as provided herein,
will be duly and validly issued and outstanding shares of Acquiring
Fund, fully paid and nonassessable by Victory (except as disclosed in
Victory's then current prospectus and statement of additional
information). Except as contemplated by this Agreement, Acquiring
Fund does not have outstanding any options, warrants, or other rights
to subscribe for or purchase any of its shares, nor is there
outstanding any security convertible into any of its shares;
4.2.3. Acquiring Fund's current prospectus and statement of additional
information 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 any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
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4.2.4. Acquiring Fund is not in violation of, and the execution and delivery
of this Agreement and consummation of the transactions contemplated
hereby (a) will not conflict with or violate, Delaware law or any
provision of Victory's Certificate of Trust or Trust Instrument or
By-laws or any provision of any agreement, instrument, lease, or
other undertaking to which Acquiring Fund is a party or by which it
is bound or (b) result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, judgment, or decree
to which Acquiring Fund is a party or by which it is bound, except as
previously disclosed in writing to and accepted by Victory;
4.2.5. Except as otherwise disclosed in writing to and accepted by Victory
on behalf of its corresponding Target, no litigation, administrative
proceeding, or investigation of or before any court or governmental
body is presently pending or (to Acquiring Fund's knowledge)
threatened against Victory with respect to Acquiring Fund or any of
its properties or assets that, if adversely determined, would
materially and adversely affect Acquiring Fund's financial condition
or the conduct of its business; Acquiring Fund knows of no facts that
might form the basis for the institution of any such litigation,
proceeding, or investigation and is not a party to or subject to the
provisions of any order, decree, or judgment of any court or
governmental body that materially or adversely affects its business
or its ability to consummate the transactions contemplated hereby;
4.2.6. The execution, delivery, and performance of this Agreement has been
duly authorized as of the date hereof by all necessary action on the
part of Victory's board of trustees on behalf of Acquiring Fund,
which has made the determinations required by Rule 17a-8(a) under the
1940 Act; and, subject to receipt of any necessary exemptive relief
or no-action assurances requested from the SEC or its staff with
respect to Sections 17(a) and 17(d) of the 1940 Act, this Agreement
will constitute a valid and legally binding obligation of Acquiring
Fund, enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
4.2.7. No governmental consents, approvals, authorizations, or filings are
required under the 1933 Act, the 1934 Act, or the 1940 Act for the
execution or performance of this Agreement by Victory, except for (a)
the filing with the SEC of the Registration Statement and a
post-effective amendment to Victory's registration statement on Form
N-1A, (b) receipt of the exemptive relief or no-action assurances
referenced in subparagraph 4.2.6, and (c) such consents, approvals,
authorizations, and filings as have been made or received or as may
be required subsequent to the Effective Time;
4.2.8. On the effective date of the Registration Statement, at the time of
the shareholders' meeting referred to in paragraph 5.2, and at the
Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934
Act, and the 1940 Act and the rules and regulations thereunder and
(b) not contain any untrue statement of a material fact
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or omit any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which such statements were made, not misleading; provided that the
foregoing shall not apply to statements in or omissions from the
Proxy Statement made in reliance on and in conformity with
information furnished by the corresponding Target for use therein;
4.3. Victory, on behalf of each Fund, represents and warrants as follows:
4.3.1. Victory is a business trust that is duly organized, validly existing,
and in good standing under the laws of the State of Delaware; and a
copy of its Certificate of Trust is on file with the Secretary of the
State of Delaware;
4.3.2. Victory is duly registered as an open-end management investment
company under the 1940 Act, and such registration will be in full
force and effect at the Effective Time;
4.3.3. Each Fund is a duly established and designated series of Victory.
5. COVENANTS
5.1. Each Fund covenants to operate its respective business in the
ordinary course between the date hereof and the Closing, it being
understood that (a) such ordinary course will include declaring and
paying customary dividends and other distributions and such changes
in operations as are contemplated by each Fund's normal business
activities and (b) each Fund will retain exclusive control of the
composition of its portfolio until the Closing; provided that no
Target shall dispose of more than an insignificant portion of its
historic business assets during such period without the corresponding
Acquiring Fund's prior consent.
5.2. Each Target covenants to call a special meeting of shareholders to
consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated hereby.
5.3. Each Target covenants that its corresponding Acquiring Fund's Shares
to be delivered hereunder are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the
terms hereof.
5.4. Each Target covenants that it will assist Victory in obtaining such
information as Victory reasonably requests concerning the beneficial
ownership of its Shares.
5.5. Each Target covenants that its books and records (including all books
and records required to be maintained under the 1940 Act and the
rules and regulations thereunder) will be turned over to Victory at
the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy Statement in
compliance with applicable federal securities laws.
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5.7. Each Fund covenants that it will, from time to time, as and when
requested by the corresponding Fund, 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
corresponding Fund may deem necessary or desirable in order to vest
in, and confirm to, (a) each Acquiring Fund, title to and possession
of all corresponding Target's Assets, and (b) each Target, title to,
and possession of the corresponding Acquiring Fund's Shares to be
delivered hereunder, and otherwise to carry out the intent and
purpose hereof.
5.8. Each Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940
Act, and such state securities laws as it may deem appropriate in
order to continue its operations after the Effective Time.
5.9. Subject to this Agreement, each Fund covenants to take or cause to be
taken all actions, and to do or cause to be done all things,
reasonably necessary, proper, or advisable to consummate and
effectuate the transactions contemplated hereby.
5.10. Victory covenants to file an amendment to its registration statement
on Form N-1A to register Class A Shares of Established Value Fund.
5.11. Victory, on behalf of Ohio Regional Stock Fund, covenants that it
will take all reasonable action to ensure that comparable classes of
shares exist between it and Established Value Fund.
6. CONDITIONS PRECEDENT
6.1. Each Fund's obligations hereunder shall be subject to (a) performance
by its corresponding Fund of all the obligations to be performed
hereunder at or before the Effective Time, (b) all representations
and warranties of the corresponding Fund contained herein being true
and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as
if made at and as of the Effective Time, and (c) the following
further conditions that, at or before the Effective Time:
6.1.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by Victory's board of trustees on
behalf of Target and Acquiring Fund and shall have been approved by
each Target's shareholders in accordance with applicable law.
6.1.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been
received that any other or further action is required to permit the
parties to carry out the transactions contemplated hereby. The
Registration Statement shall have become effective under the 1933
Act, no stop orders suspending the effectiveness thereof shall have
been issued, and the SEC shall not have issued an unfavorable report
with respect to the Reorganization under section 25(b) of the 1940
Act nor instituted any proceedings seeking to enjoin consummation of
the transactions contemplated
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hereby under section 25(c) of the 1940 Act. All consents, orders, and
permits of federal, state, and local regulatory authorities
(including the SEC and state securities authorities) deemed necessary
by any Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except
where failure to obtain the same would not involve a risk of a
material adverse effect on the assets or properties of any Fund,
provided that any Fund may for itself waive any of such conditions.
6.1.3. At the Effective Time, no action, suit, or other proceeding shall be
pending before any court or governmental agency in which it is sought
to restrain or prohibit, or to obtain damages or other relief in
connection with, the transactions contemplated hereby.
6.1.4. The amendment to the Fund's registration statement on Form N-1A filed
by Victory on behalf of Established Value Fund registering Class A
Shares shall have become effective.
6.1.5. Each Target shall have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel to Victory, substantially to the effect that:
6.1.5.1. Its corresponding acquiring Fund is a duly established series of
Victory, a business trust duly organized and validly existing under
the laws of the State of Delaware with the power under its Trust
Instrument to own all of its properties and assets and, to the
knowledge of such counsel, to carry on its business as presently
conducted;
6.1.5.2. This Agreement (a) has been duly authorized, executed, and delivered
by Victory on behalf of its corresponding Acquiring Fund and (b)
assuming due authorization, execution, and delivery of this Agreement
by Target, is a valid and legally binding obligation of Victory with
respect to the corresponding Acquiring Fund, enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting creditors'
rights and remedies, by general principles of equity, and principles
of course of dealing or course of performance and standards of good
faith, fair dealing, materiality or reasonableness that may be
applied by a court to the exercise of rights and remedies;
6.1.5.3. Each Acquiring Fund's Shares to be issued and distributed to the
Shareholders under this Agreement, assuming their due delivery as
contemplated by this Agreement, will be duly authorized and validly
issued and outstanding and fully paid and nonassessable (except as
disclosed in Victory's then current prospectus and statement of
additional information);
6.1.5.4. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
materially violate Victory's Trust Instrument or By-laws or any
provision of any agreement (known to such counsel, without any
independent inquiry or investigation) to which Victory (with respect
to the corresponding Acquiring Fund) is a party or by which it is
bound or (to the knowledge of such counsel, without any independent
inquiry or investigation) result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree to which Victory (with respect to the
corresponding
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Acquiring Fund) is a party or by which it (with respect to the
corresponding Acquiring Fund) is bound, except as set forth in such
opinion or as previously disclosed in writing to and accepted by
Victory;
6.1.5.5. To the knowledge of such counsel (without any independent inquiry or
investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Victory on behalf of the corresponding Acquiring Fund of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act, and the 1940 Act and such as may be
required under state securities laws;
6.1.5.6. Victory is registered with the SEC as an investment company, and to
the knowledge of such counsel no order has been issued or proceeding
instituted to suspend such registration; and
6.1.5.7. To the knowledge of such counsel (without any independent inquiry or
investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending
or threatened as to Victory (with respect to the corresponding
Acquiring Fund) or any of its properties or assets attributable or
allocable to the corresponding Acquiring Fund and (b) Victory (with
respect to the corresponding Acquiring Fund) is not a party to or
subject to the provisions of any order, decree, or judgment of any
court or governmental body that materially and adversely affects the
corresponding Acquiring Fund's business, except as set forth in such
opinion or as otherwise disclosed in writing to and accepted by
Victory.
In rendering such opinion, such counsel may (i) rely, as to matters
governed by the laws of the State of Delaware, on an opinion of
competent Delaware counsel, (ii) make assumptions regarding the
authenticity, genuineness, and/or conformity of documents and copies
thereof without independent verification thereof, (iii) limit such
opinion to applicable federal and state law, (iv) define the word
"knowledge" and related terms to mean the knowledge of attorneys then
with such firm who have devoted substantive attention to matters
directly related to this Agreement and each Reorganization; and (v)
rely on certificates of officers or trustees of Victory, in each case
reasonably acceptable to Victory.
6.1.6. Each Acquiring Fund shall have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to Victory, substantially to the
effect that:
6.1.6.1. Its corresponding Target is an established series of Victory, a
business trust duly organized and validly existing under the laws of
the State of
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Delaware with power under its Trust Instrument to own all of its
properties and assets and, to the knowledge of such counsel, to carry
on its business as presently conducted;
6.1.6.2. This Agreement (a) has been duly authorized, executed, and delivered
by Victory on behalf of its corresponding Target and (b) assuming due
authorization, execution, and delivery of this Agreement by Victory
on behalf of the Acquiring Fund, is a valid and legally binding
obligation of each corresponding Target, enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws relating to or affecting creditors' rights and remedies,
by general principles of equity, and principles of course of dealing
or course of performance and standards of good faith, fair dealing,
materiality or reasonableness that may be applied by a court to the
exercise of rights and remedies.
6.1.6.3. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, (a)
materially violate Victory's Trust Instrument or By-laws or any
provision of any agreement (known to such counsel, without any
independent inquiry or investigation) to which Victory (with respect
to the corresponding Target) is a party or by which it is bound or
(b) (to the knowledge of such counsel, without any independent
inquiry or investigation) result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree to which Victory (with respect to the
corresponding Target) is a party or by which it (with respect to the
corresponding Target) is bound, except as set forth in such opinion
or as previously disclosed in writing to and accepted by Victory;
6.1.6.4. To the knowledge of such counsel (without any independent inquiry or
investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Victory on behalf of the corresponding Target of the transactions
contemplated hereby, except such as have been obtained under the 1933
Act, the 1934 Act, and the 1940 Act and such as may be required under
state securities laws;
6.1.6.5. Victory is registered with the SEC as an investment company, and to
the knowledge of such counsel no order has been issued or proceeding
instituted to suspend such registration; and
6.1.6.6. To the knowledge of such counsel (without any independent inquiry or
investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending
or threatened as to Victory (with respect to the corresponding
Target) or any of its properties or assets attributable or allocable
to the corresponding Target and (b) Victory (with respect to the
corresponding
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Target) is not a party to or subject to the provisions of any order,
decree, or judgment of any court or governmental body that materially
and adversely affects the corresponding Target's business, except as
set forth in such opinion or as otherwise disclosed in writing to and
accepted by Victory.
In rendering such opinion, such counsel may (i) rely, as to matters
governed by the laws of the State of Delaware, on an opinion of
competent Delaware counsel, (ii) make assumptions regarding the
authenticity, genuineness, and/or conformity of documents and copies
thereof without independent verification thereof, (iii) limit such
opinion to applicable federal and state law, (iv) define the word
"knowledge" and related terms to mean the knowledge of attorneys then
with such firm who have devoted substantive attention to matters
directly related to this Agreement and each Reorganization, and (v)
rely on certificates of officers or trustees of Target; in each case
reasonably acceptable to Victory.
6.1.7. Victory, on behalf of each Target and its corresponding Acquiring
Fund, shall have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP addressed to and in form and substance reasonably
satisfactory to it, as to the federal income tax consequences of each
Reorganization ("Tax Opinion"). In rendering the Tax Opinion, such
counsel may rely as to factual matters, exclusively and without
independent verification, on the representations made in this
Agreement (and/or in separate letters addressed to such counsel) and
each Fund's separate covenants. Each party agrees to make reasonable
covenants and representations as to factual matters as of the
Effective Time in connection with the rendering of such opinion. The
Tax Opinion shall be substantially to the effect that, based on the
facts and assumptions stated therein and conditioned on consummation
of each Reorganization in accordance with this Agreement, for federal
income tax purposes:
6.1.7.1. Each Reorganization will constitute a reorganization within the
meaning of section 368(a)(1) of the Code, and each Fund will be "a
party to a reorganization" within the meaning of section 368(b) of
the Code;
6.1.7.2. No gain or loss will be recognized by Target on the transfer to the
corresponding Acquiring Fund of Assets in exchange solely for the
Acquiring Fund's Shares and Acquiring Fund's assumption of
Liabilities or on the subsequent distribution of those shares to the
Shareholders in liquidation of such Target;
6.1.7.3. No gain or loss will be recognized by the Acquiring Fund on its
receipt of Assets in exchange solely for Acquiring Fund's Shares and
its assumption of Liabilities;
6.1.7.4. Each Acquiring Fund's adjusted tax basis in the Assets acquired will
be equal to the basis thereof in the corresponding Target's hands
immediately before such Reorganization, and each Acquiring Fund's
holding period for the Assets will include the corresponding Target's
holding period therefor;
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6.1.7.5. A Shareholder will recognize no gain or loss on the exchange of its
Target Shares solely for the corresponding Acquiring Fund's Shares
pursuant to a Reorganization; and
6.1.7.6. A Shareholder's aggregate tax basis in any Acquiring Fund's Shares
received by it in a Reorganization will equal its aggregate tax basis
in its Target Shares surrendered in exchange therefor, and its
holding period for such Acquiring Fund Shares will include its
holding period for such Target Shares, provided such Target Shares
are held as capital assets by the Shareholder at the Effective Time.
6.2. At any time before the Closing, each Fund may waive any of the
foregoing conditions if, in the judgment of Victory's board of
trustees, such waiver will not have a material adverse effect on its
shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
7.1. Victory, on behalf of each Fund, represents and warrants that there
are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
7.2. Each Fund will be responsible for its own expenses incurred in
connection with each Reorganization, as agreed to by the parties.
8. ENTIRE AGREEMENT; SURVIVAL
8.1. Neither party has made any representation, warranty, or covenant not
set forth herein, and this Agreement constitutes the entire agreement
between the parties. The representations, warranties, and covenants
contained herein or in any document delivered pursuant hereto or in
connection herewith shall survive the Closing.
9. TERMINATION OF AGREEMENT
9.1. This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by each Target's
Shareholders:
9.1.1. By any Fund (a) in the event of a material breach of any
representation, warranty, or covenant contained herein to be
performed at or prior to the Effective Time, (b) if a condition to
its obligations has not been met and it reasonably appears that such
condition will not or cannot be met, or (c) if the Closing has not
occurred on or before March 30, 2000; or
9.1.2. By the parties' mutual agreement.
9.2. In the event of termination under paragraphs 9.1.1(c) or 9.1.2, there
shall be no liability for damages on the part of either Fund affected
by the termination, or the trustees or officers of Victory, to its
corresponding Fund.
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10. AMENDMENT
10.1. This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by each Target's Shareholders, in
such manner as may be mutually agreed upon in writing by the parties;
provided that following such approval no such amendment shall have a
material adverse effect on such Shareholders' interests.
11. MISCELLANEOUS
11.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the
case of any conflict between such laws and the federal securities
laws, the latter shall govern.
11.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
11.3. The parties acknowledge that Victory is a business trust. Notice is
hereby given that this instrument is executed on behalf of Victory's
trustees solely in their capacity as trustees, and not individually,
and that Victory's obligations under this instrument on behalf of
each Fund are not binding on or enforceable against any of its
trustees, officers, or shareholders, but are only binding on and
enforceable against the respective Funds' assets and property. Each
Fund agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the corresponding Fund's assets and
property in settlement of such rights or claims and not to such
trustees or shareholders.
11.4. Victory agrees to indemnify and hold harmless each trustee of Victory
at the time of the execution of this Agreement against expenses,
including reasonable attorneys' fees, judgments, fines and amounts
paid in settlement, actually and reasonably incurred by such trustee
in connection with any claim that is asserted against such trustee
arising out of such person's service as a trustee of Victory,
provided that such indemnification shall be limited to the full
extent of the indemnification that is available to the trustees of
Victory pursuant to the provisions of Victory's Trust Instrument and
applicable law.
11.5. For the period beginning at the time of the Reorganization and ending
not less than three years thereafter, Victory shall provide for
liability coverage for the actions of each trustee of Victory on
behalf of each Target at the time of the execution of this Agreement
for the period they served as such.
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IN WITNESS WHEREOF, each party has caused this Agreement to be
executed by its duly authorized officer.
ATTEST: THE VICTORY PORTFOLIOS, on behalf
of its series:
Fund for Income
Established Value Fund
___________________________________ _____________________________________
___________________________________ By: ________________________________
Secretary Vice President
ATTEST: THE VICTORY PORTFOLIOS, on behalf
of its series:
Government Mortgage Fund
Ohio Regional Stock Fund
___________________________________ _____________________________________
___________________________________ By: ________________________________
Secretary Vice President
