AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 29th day of October, 2004, by and between Pioneer Series Trust II, a
Delaware statutory trust (the "Acquiring Trust"), on behalf of its series
Pioneer California Tax Free Income Fund (the "Acquiring Fund"), with its
principal place of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and
Safeco Tax-Exempt Bond Trust, a Delaware statutory trust (the "Safeco Trust"),
on behalf of its series Safeco California Tax-Free Income Fund (the "Acquired
Fund"), with its principal place of business at 0000 000xx Xxxxx X.X., Xxxxxxx,
Xxxxxxxxxx 00000. The Acquiring Fund and the Acquired Fund are sometimes
referred to collectively herein as the "Funds" and individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of a
"reorganization" as defined in Section 368(a)(1)(F) of the United States
Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations thereunder. The reorganization (the "Reorganization") will consist
of (1) the transfer of all of the assets of the Acquired Fund to the Acquiring
Fund in exchange solely for (A) the issuance of Investor Class shares of
beneficial interest of the Acquiring Fund (collectively, the "Acquiring Fund
Shares" and each, an "Acquiring Fund Share") to the Acquired Fund, and (B) the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund
(collectively, the "Assumed Liabilities"), and (2) the distribution by the
Acquired Fund, on or promptly after the closing date of the Reorganization (the
"Closing Date") as provided herein, of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation and dissolution of the Acquired
Fund, all upon the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquiring Trust and the Safeco Trust are each registered
investment companies classified as management companies of the open-end type.
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Trustees of the Safeco Trust has determined that
the Reorganization is in the best interests of the Acquired Fund shareholders
and is not dilutive of the interests of those shareholders.
NOW, THEREFORE, in consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES; LIQUIDATION AND
TERMINATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund will
transfer all of its assets as set forth in Paragraph 1.2 (the "Acquired Assets")
to the Acquiring Fund free and clear of all liens and encumbrances (other than
those arising under the Securities Act of 1933, as amended (the "Securities
Act"), liens for taxes not yet due and contractual restrictions on the transfer
of the Acquired Assets) and the Acquiring Fund agrees in exchange therefor: (i)
to issue to the Acquired Fund the number of Acquiring Fund Shares, including
fractional Acquiring Fund Shares, with an aggregate net asset value ("NAV")
equal to the NAV of the Acquired Fund, as determined in the manner set forth in
Paragraphs 2.1 and 2.2; and (ii) to assume the Assumed Liabilities. Such
transactions shall take place at the Closing (as defined in Paragraph 3.1
below).
1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's
property, including, without limitation, all portfolio securities and
instruments, dividends and interest receivables, cash, goodwill, contractual
rights of the Acquired Fund or the Safeco Trust in respect of the Acquired Fund,
all other intangible property owned by the Acquired Fund, originals or copies of
all books and records of the Acquired Fund, and all other assets of the Acquired
Fund on the Closing Date. The Acquiring Fund shall also be entitled to receive
(or, to the extent agreed upon between the Safeco Trust and the Acquiring Trust,
be provided access to) copies of all records that the Safeco Trust is required
to maintain under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules of the Securities and Exchange
Commission (the "Commission") thereunder to the extent such records pertain to
the Acquired Fund.
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(b) The Acquired Fund has provided the Acquiring Fund with a list of
all of the Acquired Fund's securities and other assets as of the date of
execution of this Agreement, and the Acquiring Fund has provided the Acquired
Fund with a copy of the current fundamental investment policies and restrictions
and fair value procedures applicable to the Acquiring Fund. The Acquired Fund
reserves the right to sell any of such securities or other assets before the
Closing Date (except to the extent sales may be limited by representations of
the Acquired Fund contained herein and made in connection with the issuance of
the tax opinion provided for in Paragraph 8.5 hereof).
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations that are or will become due prior to the Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Safeco Trust shall liquidate the Acquired Fund and
distribute pro rata to its shareholders of record, determined as of the close of
regular trading on the New York Stock Exchange on the Closing Date (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Each Acquired Fund Shareholder
shall receive the number of Acquiring Fund Shares that have an aggregate NAV
equal to the aggregate NAV of the shares of beneficial interest of the Acquired
Fund ("Acquired Fund Shares") held of record by such Acquired Fund Shareholder
on the Closing Date. Such liquidation and distribution will be accomplished by
the Safeco Trust instructing the Acquiring Trust to transfer the 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
established and maintained by the Acquiring Fund's transfer agent in the names
of the Acquired Fund Shareholders and representing the respective pro rata
number of the Acquiring Fund Shares due the Acquired Fund Shareholders. The
Safeco Trust shall promptly provide the Acquiring Trust with evidence of such
liquidation and distribution. All issued and outstanding Acquired Fund Shares
will simultaneously be cancelled on the books of the Acquired Fund, and the
Acquired Fund will be dissolved. The Acquiring Fund shall not issue certificates
representing the Acquiring Fund Shares in connection with such exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent for its Investor Class shares. Any certificates
representing ownership of Acquired Fund Shares that remain outstanding on the
Closing Date shall be deemed to be cancelled and shall no longer evidence
ownership of Acquired Fund Shares.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.7 Any reporting responsibility of the Safeco Trust with respect to the
Acquired Fund for taxable periods ending on or before the Closing Date,
including, but not limited to, the responsibility for filing of regulatory
reports, Tax Returns (as defined in Paragraph 4.1), or other documents with the
Commission, any state securities commissions, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Safeco Trust.
2. VALUATION
2.1 The NAV of the Acquiring Fund Shares and the NAV of the Acquired Fund
shall, in each case, be determined as of the close of business (4:00 p.m.,
Boston time) on the Closing Date (the "Valuation Time"). The NAV of each
Acquiring Fund Share shall be equal of the NAV of an Investor Class share of the
Acquired Fund as of the Valuation Time. The NAV of the Acquired Fund and of each
Investor Class share thereof shall be computed by Symetra Asset Management
Company (the "Acquired Fund Administrator") by calculating the value of the
Acquired Assets and by subtracting therefrom the amount of the liabilities of
the Acquired Fund on the Closing Date included on the Statement of Assets and
Liabilities of the Acquired Fund delivered pursuant to Paragraph 5.7 (the
"Statement of Assets and Liabilities"), said assets and liabilities to be valued
in the manner set forth in the Acquired Fund's then current prospectus and
statement of additional information. Pioneer Investment Management, Inc. (the
"Acquiring Fund Adviser") shall confirm to the Acquiring Fund the NAV of the
Acquired Fund.
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2.2 The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Acquired Assets and the assumption of the
Assumed Liabilities shall be determined by Acquiring Fund Adviser by dividing
the NAV of the Acquired Fund, as determined in accordance with Paragraph 2.1, by
the NAV of each Acquiring Fund Share, as determined in accordance with Paragraph
2.1.
2.3 The Acquired Fund shall cause the Acquired Fund Administrator to
deliver a copy of its valuation report to the Acquiring Fund at Closing. All
computations of value shall be made by the Acquired Fund Administrator in
accordance with its regular practice as pricing agent for the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be December 10, 2004, or such later date as the
parties may agree to in writing. All acts necessary to consummation the
Reorganization (the "Closing") shall be deemed to take place simultaneously as
of 5:00 p.m. (Eastern time) on the Closing Date unless otherwise provided. The
Closing shall be held at the offices of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx
LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, or at such other place as the
parties may agree.
3.2 Portfolio securities that are held other than in book-entry form in the
name of State Street Bank and Trust Company (the "Acquired Fund Custodian") as
record holder for the Acquired Fund shall be presented by the Acquired Fund to
Xxxxx Brothers Xxxxxxxx & Co. (the "Acquiring Fund Custodian") for examination
no later than three business days preceding the Closing Date. Such portfolio
securities shall be delivered by the Acquired Fund to the Acquiring Fund
Custodian for the account of the Acquiring Fund on the Closing Date, duly
endorsed in proper form for transfer, in such condition as to constitute good
delivery thereof in accordance with the custom of brokers, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof. Portfolio securities held of record
by the Acquired Fund Custodian in book-entry form on behalf of the Acquired Fund
shall be delivered by the Acquired Fund Custodian through the Depository Trust
Company to the Acquiring Fund Custodian and by the Acquiring Fund Custodian
recording the beneficial ownership thereof by the Acquiring Fund on the
Acquiring Fund Custodian's records. Any cash shall be delivered by the Acquired
Fund Custodian transmitting immediately available funds by wire transfer to the
Acquiring Fund Custodian the cash balances maintained by the Acquired Fund
Custodian and the Acquiring Fund Custodian crediting such amount to the account
of the Acquiring Fund.
3.3 The Acquiring Fund Custodian shall deliver within one business day
after the Closing a certificate of an authorized officer stating that: (a) the
Acquired Assets have been delivered in proper form to the Acquiring Fund on the
Closing Date, and (b) all necessary transfer taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or provision
for payment has been made in conjunction with the delivery of portfolio
securities as part of the Acquired Assets.
3.4 If on the Closing Date (a) the New York Stock Exchange is closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or elsewhere is disrupted so that accurate appraisal
of the NAV of the Acquired Fund pursuant to Paragraph 2.1 is impracticable, the
Closing Date shall be postponed until the first business day after the day when
trading shall have been fully resumed and reporting shall have been restored.
3.5 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status and certificates of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding Acquired
Fund Shares owned by each Acquired Fund Shareholder as of the Valuation Time,
certified by the President or a Secretary of the Safeco Trust and its Treasurer,
Secretary or other authorized officer (the "Shareholder List") as being an
accurate record of the information (a) provided by the Acquired Fund
Shareholders, (b) provided by the Acquired Fund Custodian, or (c) derived from
the Safeco Trust's records by such officers or one of the Safeco Trust's service
providers. The Acquiring Fund shall issue and deliver to the Acquired Fund a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date, or provide evidence satisfactory to the Acquired Fund that such Acquiring
Fund Shares have been credited to the Acquired Fund's account on the books of
the Acquiring Fund. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, stock certificates, receipts or other
documents as such other party or its counsel may reasonably request.
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4. REPRESENTATIONS AND WARRANTIES
4.1 The Safeco Trust, on behalf of the Acquired Fund, represents, warrants
and covenants to the Acquiring Fund, which representations, warranties and
covenants will be true and correct on the date hereof and on the Closing Date as
though made on and as of the Closing Date, as follows:
(a) The Acquired Fund is a series of the Safeco Trust. The Safeco Trus
is a statutory trust validly existing and in good standing under the laws of the
State of Delaware and has the power to own all of its properties and assets and,
subject to approval by the Acquired Fund's shareholders, to perform its
obligations under this Agreement. The Acquired Fund is not required to qualify
to do business in any jurisdiction in which it is not so qualified or where
failure to qualify would subject it to any material liability or disability.
Each of the Safeco Trust and the Acquired Fund has all necessary federal, state
and local authorizations to own all of its properties and assets and to carry on
its business as now being conducted;
(b) The Safeco Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in full
force and effect;
(c) The Safeco Trust is not in violation of, and the execution and
delivery of this Agreement and the performance of its obligations under this
Agreement in respect of the Acquired Fund will not result in a violation of, any
provision of the Safeco Trust's Trust Instrument or By-Laws or any material
agreement, indenture, instrument, contract, lease or other undertaking with
respect to the Acquired Fund to which the Safeco Trust is a party or by which
the Acquired Fund or any of its assets are bound;
(d) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or to its knowledge
threatened against the Acquired Fund or any of the Acquired Fund's properties or
assets. The Acquired Fund knows of no facts which might form the basis for the
institution of such proceedings. Neither the Safeco Trust nor the Acquired Fund
is a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially adversely affects the Acquired
Fund's business or its ability to consummate the transactions contemplated
herein or would be binding upon the Acquiring Fund as the successor to the
Acquired Fund;
(e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement or agreements for the purchase and sale of securities
entered into in the ordinary course of business and consistent with its
obligations under this Agreement) which will not be terminated at or prior to
the Closing Date and no such termination will result in liability to the
Acquired Fund (or the Acquiring Fund);
(f) The statement of assets and liabilities of the Acquired Fund, and
the related statements of income and changes in NAV, as of and for the fiscal
year ended December 31, 2003 have been audited by Ernst & Young LLP, independent
registered public accounting firm, and are in accordance with generally accepted
accounting principles ("GAAP") consistently applied and fairly reflect, in all
material respects, the financial condition of the Acquired Fund as of such date
and the results of its operations for the period then ended, and all known
liabilities, whether actual or contingent, of the Acquired Fund as of the date
thereof are disclosed therein. The Statement of Assets and Liabilities will be
in accordance with GAAP consistently applied and will fairly reflect, in all
material respects, the financial condition of the Acquired Fund as of such date
and the results of its operations for the period then ended. Except for the
Assumed Liabilities, the Acquired Fund will not have any known or contingent
liabilities on the Closing Date. No significant deficiency, material weakness,
fraud, significant change or other factor that could significantly affect the
internal controls of the Acquired Fund has been disclosed or is required to be
disclosed in the Acquired Fund's reports on Form N-CSR to enable the chief
executive officer and chief financial officer or other officers of the Acquired
Fund to make the certifications required by the Xxxxxxxx-Xxxxx Act, and no
deficiency, weakness, fraud, change, event or other factor exists that will be
required to be disclosed in the Acquiring Fund's Form N-CSR after the Closing
Date;
(g) Since the most recent fiscal year end, except as specifically
disclosed in the Acquired Fund's prospectus, its statement of additional
information as in effect on the date of this Agreement, or its semi-annual
report for the period ended June 30, 2004, there has not been any material
adverse change in the Acquired
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Fund's financial condition, assets, liabilities, business or prospects, or any
incurrence by the Acquired Fund of indebtedness, except for normal contractual
obligations incurred in the ordinary course of business or in connection with
the settlement of purchases and sales of portfolio securities. For the purposes
of this subparagraph (g) (but not for any other purpose of this Agreement), a
decline in NAV per Acquired Fund Share arising out of its normal investment
operations or a decline in market values of securities in the Acquired Fund's
portfolio or a decline in net assets of the Acquired Fund as a result of
redemptions shall not constitute a material adverse change;
(h) (A) For each taxable year of its operation since its inception, the
Acquired Fund has met, and for the current taxable year it will meet, the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company and will qualify as such as of the Closing Date and
will satisfy the diversification requirements of Section 851(b)(3) of the Code
without regard to the last sentence of Section 851(d) of the Code. The Acquired
Fund has not taken any action, caused any action to be taken or caused any
action to fail to be taken which action or failure could cause the Acquired Fund
to fail to qualify as a regulated investment company under the Code;
(B) Within the times and in the manner prescribed by law, the
Acquired Fund has properly filed on a timely basis all Tax Returns (as defined
below) that it was required to file, and all such Tax Returns were complete and
accurate in all respects. The Acquired Fund has not been informed by any
jurisdiction that the jurisdiction believes that the Acquired Fund was required
to file any Tax Return that was not filed; and the Acquired Fund does not know
of any basis upon which a jurisdiction could assert such a position;
(C) The Acquired Fund has timely paid, in the manner prescribed by
law, all Taxes (as defined below), which were due and payable or which were
claimed to be due;
(D) All Tax Returns filed by the Acquired Fund constitute complete
and accurate reports of the respective Tax liabilities and all attributes of the
Acquired Fund or, in the case of information returns and payee statements, the
amounts required to be reported, and accurately set forth all items required to
be included or reflected in such returns;
(E) The Acquired Fund has not waived or extended any applicable
statute of limitations relating to the assessment or collection of Taxes;
(F) The Acquired Fund has not been notified that any examinations
of the Tax Returns of the Acquired Fund are currently in progress or threatened,
and no deficiencies have been asserted or assessed against the Acquired Fund as
a result of any audit by the Internal Revenue Service or any state, local or
foreign taxing authority, and, to its knowledge, no such deficiency has been
proposed or threatened;
(G) The Acquired Fund has no actual or potential liability for any
Tax obligation of any taxpayer other than itself. The Acquired Fund is not and
has never been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns. The
Acquired Fund is not a party to any Tax allocation, sharing, or indemnification
agreement;
(H) The unpaid Taxes of the Acquired Fund for tax periods through
the Closing Date do not exceed the accruals and reserves for Taxes (excluding
accruals and reserves for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Statement of Assets
and Liabilities, rather than in any notes thereto (the "Tax Reserves"). All
Taxes that the Acquired Fund is or was required by law to withhold or collect
have been duly withheld or collected and, to the extent required, have been
timely paid to the proper governmental agency;
(I) The Acquired Fund has delivered to the Acquiring Fund or made
available to the Acquiring Fund complete and accurate copies of all Tax Returns
of the Acquired Fund, together with all related examination reports and
statements of deficiency for all periods not closed under the applicable
statutes of limitations and complete and correct copies of all private letter
rulings, revenue agent reports, information document requests, notices of
proposed deficiencies, deficiency notices, protests, petitions, closing
agreements, settlement agreements, pending ruling requests and any similar
documents submitted by, received by or agreed to by or on
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behalf of the Acquired Fund. The Acquired Fund has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code;
(J) The Acquired Fund has not undergone, has not agreed to undergo,
and is not required to undergo (nor will it be required as a result of the
transactions contemplated in this Agreement to undergo) a change in its method
of accounting resulting in an adjustment to its taxable income pursuant to
Section 481 of the Code. The Acquired Fund will not be required to include any
item of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date under Section 481(c) of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law); (ii) "closing
agreement" as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date; (iii) installment sale or open transaction
disposition made on or prior to the Closing Date; or (iv) prepaid amount
received on or prior to the Closing Date;
(K) The Acquired Fund has not taken or agreed to take any action,
and is not aware of any agreement, plan or other circumstance, that is
inconsistent with the representations set forth in Annex B;
(L) There are (and as of immediately following the Closing there
will be) no liens on the assets of the Acquired Fund relating to or attributable
to Taxes, except for Taxes not yet due and payable;
(M) The Tax bases of the assets of the Acquired Fund are accurately
reflected on the Acquired Fund's Tax books and records;
(N) The Acquired Fund has not incurred (or been allocated) an
"overall foreign loss" as defined in Section 904(f)(2) of the Code which has not
been previously recaptured in full as provided in Sections 904(f)(2) and/or
904(f)(3) of the Code;
(O) The Acquired Fund is not a party to a gain recognition
agreement under Section 367 of the Code;
(P) The Acquired Fund does not own any interest in an entity that
is characterized as a partnership for income tax purposes;
(Q) The Acquired Fund's Tax attributes are not limited under the
Code (including but not limited to any capital loss carry forward limitations
under Sections 382 or 383 of the Code and the Treasury Regulations thereunder)
or comparable provisions of state law; and
(R) For purposes of this Agreement, "Taxes" or "Tax" shall mean all
taxes, charges, fees, levies or other similar assessments or liabilities,
including without limitation income, gross receipts, ad valorem, premium,
value-added, excise, real property, personal property, sales, use, transfer,
withholding, employment, unemployment, insurance, social security, business
license, business organization, environmental, workers compensation, payroll,
profits, license, lease, service, service use, severance, stamp, occupation,
windfall profits, customs, duties, franchise and other taxes imposed by the
United States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof; and "Tax Returns" shall mean all reports, returns,
declarations, statements or other information required to be supplied to a
governmental or regulatory authority or agency, or to any other person, in
connection with Taxes and any associated schedules or work papers produced in
connection with such items;
(i) All issued and outstanding Acquired Fund Shares are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
nonassessable by the Acquired Fund. All of the issued and outstanding Acquired
Fund Shares will, at the time of Closing, be held of record by the persons and
in the amounts set forth in the Shareholder List submitted to the Acquiring Fund
pursuant to Paragraph 3.5 hereof. The Acquired
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Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any Acquired Fund Shares, nor is there outstanding any
security convertible into any Acquired Fund Shares;
(j) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Assets, and full right, power and authority to
sell, assign, transfer and deliver the Acquired Assets to the Acquiring Fund,
and, upon delivery and payment for the Acquired Assets, the Acquiring Fund will
acquire good and marketable title thereto, subject to no restrictions on the
full transfer thereof, except such restrictions as might arise under the
Securities Act;
(k) The Safeco Trust has the trust power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement have been duly authorized by all necessary
action on the part of the Safeco Trust's Board of Trustees, and, subject to the
approval of the Acquired Fund's shareholders, assuming due authorization,
execution and delivery by the Acquiring Fund, this Agreement will constitute a
valid and binding obligation 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;
(l) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection with
the transactions contemplated hereby and any information necessary to compute
the total return of the Acquired Fund shall be accurate and complete and shall
comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(m) The information included in the proxy statement (the "Proxy
Statement") forming part of the Acquiring Fund's Registration Statement on Form
N-14 filed in connection with this Agreement (the "Registration Statement") that
has been furnished in writing by the Acquired Fund to the Acquiring Fund for
inclusion in the Registration Statement, on the effective date of that
Registration Statement and on the Closing Date, will conform in all material
respects to the applicable requirements of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Investment
Company Act and the rules and regulations of the Commission thereunder and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(n) Upon the effectiveness of the Registration Statement, no
consent, approval, authorization or order of any court or governmental authority
is required for the consummation by the Safeco Trust or the Acquired Fund of the
transactions contemplated by this Agreement;
(o) All of the issued and outstanding Acquired Fund Shares have
been offered for sale and sold in conformity with all applicable federal and
state securities laws, except as may have been previously disclosed in writing
to the Acquiring Fund;
(p) The prospectus and statement of additional information of the
Acquired Fund, and any amendments or supplements thereto, furnished to the
Acquiring Fund, did not as of their dates or the dates of their distribution to
the public contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which such statements were made, not
misleading;
(q) The Acquired Fund currently complies in all material respects
with, and since its organization has complied in all material respects with, the
requirements of, and the rules and regulations under, the Investment Company
Act, the Securities Act, the Exchange Act, state "Blue Sky" laws and all other
applicable federal and state laws or regulations. The Acquired Fund currently
complies in all material respects with, and since its organization has complied
in all material respects with, all investment objectives, policies, guidelines
and restrictions and any compliance procedures established by the Safeco Trust
with respect to the Acquired Fund. All advertising and sales material used by
the Acquired Fund complies in all material respects with and has complied in all
material respects with the applicable requirements of the Securities Act, the
Investment Company Act, the rules and regulations of the Commission, and, to the
extent applicable, the Conduct Rules of the National Association of Securities
Dealers, Inc. (the "NASD") and any applicable state regulatory authority. All
registration statements,
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prospectuses, reports, proxy materials or other filings required to be made or
filed with the Commission, the NASD or any state securities authorities by the
Acquired Fund have been duly filed and have been approved or declared effective,
if such approval or declaration of effectiveness is required by law. Such
registration statements, prospectuses, reports, proxy materials and other
filings under the Securities Act, the Exchange Act and the Investment Company
Act (i) are or were in compliance in all material respects with the requirements
of all applicable statutes and the rules and regulations thereunder and (ii) do
not or did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
false or misleading;
(r) The Acquired Fund has previously provided to the Acquiring
Fund (and at the Closing will provide an update through the Closing Date of such
information) data which supports a calculation of the Acquired Fund's total
return for all periods since the organization of the Acquired Fund. Such data
has been prepared in accordance in all material respects with the requirements
of the Investment Company Act and the regulations thereunder and the rules of
the NASD;
(s) Neither the Acquired Fund nor, to the knowledge of the Acquired
Fund, any "affiliated person" of the Acquired Fund has been convicted of any
felony or misdemeanor, described in Section 9(a)(1) of the Investment Company
Act, nor, to the knowledge of the Acquired Fund, has any affiliated person of
the Acquired Fund been the subject, or presently is the subject, of any
proceeding or investigation with respect to any disqualification that would be a
basis for denial, suspension or revocation of registration as an investment
adviser under Section 203(e) of the Investment Advisers Act of 1940, as amended
(the "Investment Advisers Act"), or Rule 206(4)-4(b) thereunder or of a
broker-dealer under Section 15 of the Exchange Act, or for disqualification as
an investment adviser, employee, officer or director of an investment company
under Section 9 of the Investment Company Act; and
(t) The tax representation certificate to be delivered by Safeco
Trust on behalf of the Acquired Fund to the Acquiring Trust and Xxxxxx Xxxxxx
Xxxxxxxxx Xxxx and Xxxx LLP at the Closing pursuant to Paragraph 7.4 (the
"Acquired Fund Tax Representation Certificate") will not on the Closing Date
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
4.2 The Acquiring Trust, on behalf of the Acquiring Fund, represents,
warrants and covenants to the Acquired Fund, which representations, warranties
and covenants will be true and correct on the date hereof and on the Closing
Date as though made on and as of the Closing Date, as follows:
(a) The Acquiring Fund is a series of the Acquiring Trust. The
Acquiring Fund has not commenced operations and will not do so until the
Closing. The Acquiring Trust is a statutory trust duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Acquiring Trust has the power to own all of its properties and assets and to
perform the obligations under this Agreement. The Acquiring Fund is not required
to qualify to do business in any jurisdiction in which it is not so qualified or
where failure to qualify would subject it to any material liability or
disability. Each of the Acquiring Trust and the Acquiring Fund has all necessary
federal, state and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted;
(b) The Acquiring Trust is a registered investment company
classified as a management company of the open-end type, and its registration
with the Commission as an investment company under the Investment Company Act is
in full force and effect;
(c) The Acquiring Fund's registration statement on Form N-1A that
will be in effect on the Closing Date, and the prospectus and statement of
additional information of the Acquiring Fund included therein, will conform in
all material respects with the applicable requirements of the Securities Act and
the Investment Company Act and the rules and regulations of the Commission
thereunder, and did not as of the effective date thereof and will not as of the
Closing Date contain 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 in which they were made, not
misleading;
8
(d) The Registration Statement, the Proxy Statement and statement
of additional information with respect to the Acquiring Fund and any amendments
or supplements thereto in effect on or prior to the Closing Date included in the
Registration Statement (other than written information furnished by the Acquired
Fund for inclusion therein, as covered by the Acquired Fund's warranty in
Paragraph 4.1(m) hereof) will conform in all material respects to the applicable
requirements of the Securities Act and the Investment Company Act and the rules
and regulations of the Commission thereunder. Neither the Registration Statement
nor the Proxy Statement (other than written information furnished by the
Acquired Fund for inclusion therein, as covered by the Acquired Fund's warranty
in Paragraph 4.1(m) hereof) includes or will include any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(e) The Acquiring Trust is not in violation of, and the execution
and delivery of this Agreement and performance of its obligations under this
Agreement will not result in a violation of, any provisions of the Declaration
of Trust or by-laws of the Acquiring Trust or any material agreement, indenture,
instrument, contract, lease or other undertaking with respect to the Acquiring
Fund to which the Acquiring Trust is a party or by which the Acquiring Fund or
any of its assets is bound;
(f) No litigation or administrative proceeding or investigation of
or before any court or governmental body is currently pending or threatened
against the Acquiring Fund or any of the Acquiring Fund's properties or assets.
The Acquiring Fund knows of no facts which might form the basis for the
institution of such proceedings. Neither the Acquiring Trust nor the Acquiring
Fund is a party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially adversely affects the
Acquiring Fund's business or its ability to consummate the transactions
contemplated herein;
(g) The Acquiring Fund has no actual or potential liability for any
Tax obligation of any taxpayer other than itself. Acquiring Fund is not and has
never been a member of a group of corporations with which it has filed (or been
required to file) consolidated, combined or unitary Tax Returns. The Acquiring
Fund is not a party to any Tax allocation, sharing, or indemnification
agreement;
(h) The Acquiring Fund has not taken or agreed to take any action,
and is not aware of any agreement, plan or other circumstance, that is
inconsistent with the representations set forth in Annex A;
(i) The Acquiring Fund currently complies, and at all times since
its organization has complied, in all material respects with the requirements
of, and the rules and regulations under, the Investment Company Act, the
Securities Act, the Exchange Act, state "Blue Sky" laws and all other applicable
federal and state laws or regulations. The Acquiring Fund currently complies in
all material respects with, and since its organization has complied in all
material respects with, all investment objectives, policies, guidelines and
restrictions and any compliance procedures established by the Acquiring Trust
with respect to the Acquiring Fund. All advertising and sales material used by
the Acquiring Fund complies in all material respects with and has complied in
all material respects with the applicable requirements of the Securities Act,
the Investment Company Act, the rules and regulations of the Commission, and, to
the extent applicable, the Conduct Rules of the NASD and any applicable state
regulatory authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the Commission, the
NASD or any state securities authorities by the Acquiring Fund have been duly
filed and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration statements,
prospectuses, reports, proxy materials and other filings under the Securities
Act, the Exchange Act and the Investment Company Act (i) are or were in
compliance in all material respects with the requirements of all applicable
statutes and the rules and regulations thereunder and (ii) do not or did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not false or misleading;
(j) The authorized capital of the Acquiring Fund consists of an
unlimited number of shares of beneficial interest, no par value per share. As of
the Closing Date, the Acquiring Fund will be authorized to issue an unlimited
number of shares of beneficial interest, no par value per share. The Acquiring
Fund Shares to be issued and delivered to the Acquired Fund for the account of
the Acquired Fund Shareholders pursuant to the terms of this Agreement will have
been duly authorized on the Closing Date and, when so issued and delivered, will
be duly and
9
validly issued, fully paid and non-assessable. 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, nor will the Acquiring Fund have any issued or
outstanding shares on or before the Closing Date other than those issued to the
Acquiring Fund Adviser or one of its affiliates, which shares shall be redeemed,
for an amount equal to the price paid therefor, at or before the Closing;
(k) The Acquiring Trust has the trust power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement have been duly authorized by all necessary
action on the part of the Acquiring Trust's Board of Trustees, and, assuming due
authorization, execution and delivery by the Acquired Fund, this Agreement will
constitute a valid and binding obligation of the Acquiring Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(l) The information to be furnished in writing by the Acquiring
Fund or the Acquiring Fund Adviser for use in applications for orders,
registration statements, proxy materials and other documents 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 or the requirements of any form for which its use is intended, and shall
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the information provided not misleading;
(m) No consent, approval, authorization or order of or filing with
any court or governmental authority is required for the execution of this
Agreement or the consummation of the transactions contemplated by the Agreement
by the Acquiring Fund, except for the registration of the Acquiring Fund Shares
under the Securities Act and the Investment Company Act;
(n) The prospectus and statement of additional information of the
Acquiring Fund, and any amendments or supplements thereto, furnished to the
Acquired Fund, did not as of their dates or the dates of their distribution to
the public contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which such statements were made, not
misleading;
(o) Neither the Acquiring Fund nor, to the knowledge of the
Acquiring Fund, any "affiliated person" of the Acquiring Fund has been convicted
of any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquiring Fund, has any affiliated
person of the Acquiring Fund been the subject, or presently is the subject, of
any proceeding or investigation with respect to any disqualification that would
be a basis for denial, suspension or revocation of registration as an investment
adviser under Section 203(e) of the Investment Advisers Act or Rule 206(4)-4(b)
thereunder or of a broker-dealer under Section 15 of the Exchange Act, or for
disqualification as an investment adviser, employee, officer or director of an
investment company under Section 9 of the Investment Company Act; and
(p) The tax representation certificate to be delivered by the
cquiring Trust on behalf of the Acquiring Fund to the Safeco Trust and Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP at Closing pursuant to Section 6.3 (the
"Acquiring Fund Tax Representation Certificate") will not on the Closing Date
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
5. COVENANTS OF THE FUNDS
5.1 The Acquired Fund will operate the Acquired Fund's business in the
ordinary course of business between the date hereof and the Closing Date. It is
understood that such ordinary course of business will include the declaration
and payment of customary dividends and other distributions and any other
dividends and other distributions necessary or advisable (except to the extent
dividends or other distributions that are not customary may be limited by
representations made in connection with the issuance of the tax opinion
described in Paragraph 8.5 hereof), in each case payable either in cash or in
additional shares.
10
5.2 The Safeco Trust will call a special meeting of the Acquired Fund's
shareholders to consider approval of this Agreement and act upon the matters set
forth in the Proxy Statement.
5.3 The Acquiring Fund will prepare the notice of meeting, form of proxy
and Proxy Statement (collectively, "Proxy Materials") to be used in connection
with such meeting, and will promptly prepare and file with the Commission the
Registration Statement. The Safeco Trust will provide the Acquiring Fund with
information reasonably requested for the preparation of the Registration
Statement in compliance with the Securities Act, the Exchange Act, and the
Investment Company Act.
5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be issued
hereunder are not being acquired by the Acquired Fund for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agreement.
5.5 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requires concerning the beneficial
ownership of the Acquired Fund Shares.
5.6 Subject to the provisions of this Agreement, each Fund will take, or
cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
5.7 The Acquired Fund shall furnish to the Acquiring Fund on the Closing
Date a Statement of Assets and Liabilities of the Acquired Fund as of the
Closing Date setting forth the NAV of the Acquired Fund as of the Valuation
Time, which statement shall be prepared in accordance with GAAP consistently
applied and certified by the Safeco Trust's Treasurer or Assistant Treasurer. As
promptly as practicable, but in any case within 30 days after the Closing Date,
the Safeco Trust shall furnish to the Acquiring Trust, in such form as is
reasonably satisfactory to the Acquiring Trust, a statement of the earnings and
profits of the Acquired Fund for federal income tax purposes, and of any capital
loss carryovers and other items that will be carried over to the Acquiring Fund
under the Code, and which statement will be certified by the Treasurer of the
Safeco Trust.
5.8 Neither Fund shall take any action that is inconsistent with the
representations set forth in, with respect to the Acquired Fund, the Acquired
Fund Tax Representation Certificate and, with respect to the Acquiring Fund, the
Acquiring Fund Tax Representation Certificate.
5.9 From and after the date of this Agreement and until the Closing Date,
each of the Funds and the Safeco Trust and the Acquiring Trust shall use its
commercially reasonable efforts to cause the Reorganization to qualify, and will
not knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken, which action or failure to act
could prevent the Reorganization from qualifying, as a reorganization under the
provisions of Section 368(a) of the Code. The parties hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the income tax regulations promulgated under the
Code. Unless otherwise required pursuant to a "determination" within the meaning
of Section 1313(a) of the Code, the parties hereto shall treat and report the
transactions contemplated hereby as a reorganization within the meaning of
Section 368(a)(1)(F) of the Code and shall not take any position inconsistent
with such treatment.
5.10 From and after the date of this Agreement and through the time of the
Closing, each Fund shall use its commercially reasonable efforts to cause it to
qualify, and will not knowingly take any action, cause any action to be taken,
fail to take any action or cause any action to fail to be taken, which action or
failure to act could prevent it from qualifying, as a regulated investment
company under the provisions of Subchapter M of the Code.
5.11 The Acquired Fund shall prepare, or cause to be prepared, all Tax
Returns of the Acquired Fund for taxable periods that end on or before the
Closing Date and shall timely file, or cause to be timely filed, all such Tax
Returns. The Acquired Fund shall make any payments of Taxes required to be made
by such Fund with respect to any such Tax Returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
11
The obligations of the Acquired Fund to complete the transactions provided
for herein shall be, at its election, subject to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions, unless waived by the Acquired Fund in writing:
6.1 All representations and warranties by the Acquiring Trust on behalf of
the Acquiring Fund contained in this Agreement shall be true and correct 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 Trust shall have delivered to the Safeco Trust on the
Closing Date a certificate of the Acquiring Trust on behalf of the Acquiring
Fund executed in its name by its President or Vice President and its Treasurer
or Assistant Treasurer, in form and substance satisfactory to the Safeco Trust
and dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Trust made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 6 have been met, and as to such other matters as the Safeco Trust shall
reasonably request;
6.3 The Acquiring Trust on behalf of the Acquiring Fund shall have
delivered to the Safeco Trust and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP an
Acquiring Fund Tax Representation Certificate, satisfactory to the Safeco Trust
and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, substantially in the form
attached to this Agreement as Annex A, concerning certain tax-related matters
with respect to the Acquiring Fund;
6.4 With respect to the Acquiring Fund, the Board of Trustees of the
Acquiring Trust shall have determined that the Reorganization is in the best
interests of the Acquiring Fund and, based upon such determination, shall have
approved this Agreement and the transactions contemplated hereby; and
6.5 The Safeco Trust shall have received at the Closing a favorable opinion
as to the due authorization of this Agreement by the Acquiring Trust and related
matters of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, dated as of the Closing
Date, in a form reasonably satisfactory to the Safeco Trust.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be, at its election, subject to the performance by the
Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquiring Fund in writing:
7.1 All representations and warranties of the Safeco Trust on behalf of the
Acquired Fund contained in this Agreement shall be true and correct 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 Safeco Trust shall have delivered to the Acquiring Fund the
Statement of Assets and Liabilities of the Acquired Fund pursuant to Paragraph
5.7, together with a list of its portfolio securities showing the federal income
tax bases and holding periods of such securities, as of the Closing Date,
certified by the Safeco Trust's Treasurer or Assistant Treasurer;
7.3 The Safeco Trust shall have delivered to the Acquiring Trust on the
Closing Date a certificate of the Safeco Trust on behalf of the Acquired Fund
executed in its name by its President or Vice President and a Treasurer or
Assistant Treasurer, in form and substance reasonably satisfactory to the
Acquiring Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Safeco Trust contained in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, that each of the
conditions to closing in this Article 7 have been met, and as to such other
matters as the Acquiring Trust shall reasonably request;
12
7.4 The Safeco Trust on behalf of the Acquired Fund shall have delivered to
the Acquiring Trust and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP an Acquired
Fund Tax Representation Certificate, satisfactory to the Acquiring Trust and
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, substantially in the form attached to
this Agreement as Annex B, concerning certain tax-related matters with respect
to the Acquired Fund;
7.5 The Acquiring Trust shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the Safeco Trust and
related matters of Xxxxxxxxxxx & Xxxxxxxx LLP, dated as of the Closing Date, in
a form reasonably satisfactory to the Acquiring Trust; and
7.6 With respect to the Acquired Fund, the Board of Trustees of the Safeco
Trust shall have determined that the Reorganization is in the best interests of
the Acquired Fund and, based upon such determination, shall have approved this
Agreement and the transactions contemplated hereby.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below does not exist on or before
the Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the Acquired Fund's shareholders in accordance
with the provisions of the Safeco Trust's Trust Instrument and By-Laws, and
certified copies of the resolutions evidencing such approval by the Acquired
Fund's shareholders shall have been delivered by the Acquired Fund to the
Acquiring Fund. Notwithstanding anything herein to the contrary, neither party
hereto may waive the conditions set forth in this Paragraph 8.1;
8.2 On the Closing Date, 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 obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto 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
either party hereto, provided that either party may waive any such conditions
for itself;
8.4 The Acquiring Trust's Registration Statement on Form N-14 shall have
become effective under the Securities Act and no stop orders suspending the
effectiveness of such Registration Statement 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, threatened or contemplated
under the Securities Act; and
8.5 The parties shall have received an opinion of Xxxxxx Xxxxxx Xxxxxxxxx
Xxxx and Xxxx LLP, satisfactory to the Safeco Trust and the Acquiring Trust and
subject to customary assumptions and qualifications, substantially to the effect
that for federal income tax purposes the acquisition by the Acquiring Fund of
the Acquired Assets solely in exchange for the issuance of Acquiring Fund Shares
to the Acquired Fund and the assumption of the Assumed Liabilities by the
Acquiring Fund, followed by the distribution by the Acquired Fund, in
liquidation of the Acquired Fund, of Acquiring Fund Shares to the Acquired Fund
Shareholders in exchange for their Acquired Fund Shares and the termination of
the Acquired Fund, will constitute a "reorganization" within the meaning of
Section 368(a) of the Code
9. BROKERAGE FEES AND EXPENSES
9.1 Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
13
9.2 The parties have been informed by Symetra Financial Corporation and the
Acquiring Fund Adviser -- and the parties have entered into this Agreement in
reliance on such information -- that such non-parties will pay (with each of
Symetra Financial Corporation and the Acquiring Fund Adviser being responsible
for 50% of such amounts) all expenses of the Funds associated with the
Reorganization including, but not limited to, the expenses associated with the
preparation, printing and mailing of any and all shareholder notices,
communications, proxy statements, and necessary filings with the SEC or any
other governmental authority in connection with the transactions contemplated by
this Agreement, the fees and expenses of any proxy solicitation firm retained in
connection with the Reorganization, the fees and expenses of counsel to the
independent trustees of the Safeco Trust in connection with the Reorganization,
and the trustees' fees and expenses as a result of the Reorganization. Except
for the foregoing, the Acquiring Fund and the Acquired Fund shall each bear its
own expenses in connection with the transactions contemplated by this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Trust and the Safeco Trust each agree that neither party
has made any representation, warranty or covenant not set forth herein or
referred to in Paragraphs 4.1 or 4.2 hereof and that this Agreement constitutes
the entire agreement between the parties.
10.2 The representations and warranties 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.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Trust and the Safeco Trust. In addition, either party may at its
option terminate this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or prior to
the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which reasonably
appears will not or cannot be met;
(c) by resolution of the Acquiring Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquiring Fund's
shareholders;
(d) by resolution of the Safeco Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquired Fund's
shareholders; or
(e) if the transactions contemplated by this Agreement shall not have
occurred on or prior to December 31, 2004 or such other date as the parties may
mutually agree upon in writing.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Acquiring Fund, the Acquiring Trust, the Safeco Trust
or the Acquired Fund, or the trustees or officers of the Safeco Trust, or the
Acquiring Trust, but, subject to Paragraph 9.2, each party shall bear the
expenses incurred by it incidental to the preparation and carrying out of this
Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Safeco Trust and the Acquiring Trust; provided, however, that following the
meeting of the Acquired Fund's shareholders called by the Safeco Trust pursuant
to Paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions regarding the method for
14
determining the number of Acquiring Fund Shares to be received by the Acquired
Fund Shareholders under this Agreement to their detriment without their further
approval; provided that nothing contained in this Section 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing Date.
13. 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 prepaid
telegraph, telecopy or certified mail addressed to the Acquired Fund, c/o
Symetra Financial Corporation, 0000 000xx Xxxxx, X.X., Xxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx X. Xxxxxx, with copies to R. Xxxxxxx Xxxxxx, Xxxxxxxxxxx
& Xxxxxxxx LLP, 0000 Xxxxxxxxxxxxx Xxxxxx, X.X., Xxxxxx Xxxxx, Xxxxxxxxxx, XX
00000-0000, and to the Acquiring Fund, c/o Pioneer Investment Management, Inc.,
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx,
Esq., with copies to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware, without giving effect to conflict of
laws principles (other than Delaware Code Title 6 ss. 2708); provided that, in
the case of any conflict between those laws and the federal securities laws, the
latter shall govern.
14.4 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
either party without the prior written consent of the other party hereto.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person, firm or corporation, or other entity, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
14.5 It is expressly agreed that the obligations of the Acquiring Trust and
the Safeco Trust shall not be binding upon any of their respective trustees,
shareholders, nominees, officers, agents or employees personally, but bind only
to the property of the Acquiring Fund or the Acquired Fund, as the case may be,
as provided in the trust instruments of the Acquiring Trust and the Instrument
of Trust of the Safeco Trust, respectively. The execution and delivery of this
Agreement have been authorized by the trustees of the Acquiring Trust and of the
Safeco Trust and this Agreement has been executed by authorized officers of the
Acquiring Trust and the Safeco Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to imposed any
liability on any of them personally, but shall bind only the property of the
Acquiring Fund and the Acquired Fund, as the case may be, as provided in the
trust instruments of the Acquiring Trust and the Instrument of Trust of the
Safeco Trust, respectively.
* * * * *
15
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first set forth above by its President
or Vice President and attested by its Secretary or Assistant Secretary.
Attest: SAFECO TAX-EXEMPT BOND TRUST
on behalf of
SAFECO CALIFORNIA TAX-FREE INCOME FUND
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------- -------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxx
Title: Secretary Title: President
Attest: PIONEER SERIES TRUST II
on behalf of
PIONEER CALIFORNIA TAX FREE INCOME FUND
By: /s/ Xxxxxxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx
------------------------- ------------------
Name: Xxxxxxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxx
Title: Assistant Secretary Title: Executive Vice President
16
Annex A
TAX REPRESENTATION CERTIFICATE OF
PIONEER SERIES TRUST II
ON BEHALF OF PIONEER CALIFORNIA TAX FREE INCOME FUND
This certificate is being delivered in connection with the transactions to
be effected pursuant to the Agreement and Plan of Reorganization made as of
October 29, 2004 between Pioneer Series Trust II, a Delaware statutory trust
(the "Acquiring Trust"), on behalf of its series Pioneer California Tax Free
Income Fund ("Acquiring Fund"), and Safeco Tax-Exempt Bond Trust, a Delaware
statutory trust, on behalf of its series Safeco California Tax-Free Income Fund
("Acquired Fund") (the "Agreement"). Pursuant to the Agreement, Acquiring Fund
will acquire all of the assets of Acquired Fund in exchange solely for (i) the
assumption by Acquiring Fund of the Assumed Liabilities of Acquired Fund, and
(ii) the issuance of Investor Class shares of beneficial interest of Acquiring
Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of the Acquiring
Fund Shares to the shareholders of Acquired Fund and the termination of Acquired
Fund (the foregoing together constituting the "transaction").
The undersigned officer of Acquiring Trust, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations, on behalf of Acquiring Fund, hereby certifies
and represents that the following statements are true, complete and correct and
will be true, complete and correct on the date of the transaction and thereafter
as relevant. Unless otherwise indicated, all capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Agreement.
1. Acquiring Fund is a series of Acquiring Trust, a statutory trust
organized under the laws of the State of Delaware, and Acquiring Fund will be
treated after the Closing as a separate corporation for federal tax purposes.
Acquiring Fund was newly organized solely for the purpose of effecting the
transaction and continuing thereafter to operate as a regulated investment
company. Prior to the transaction, Acquiring Fund did not and will not engage in
any business activities. There shall be no shares of Acquiring Fund issued and
outstanding prior to the Closing Date other than those issued to Pioneer
Investment Management, Inc. or one of its affiliates in connection with the
creation of Acquiring Fund, which shares shall be redeemed, for an amount equal
to the price paid therefor, at or before the Closing.
2. Neither Acquiring Fund nor any person "related" to Acquiring Fund (as
defined in Treasury Regulation Section 1.368-1(e)(3)), nor any partnership of
which Acquiring Fund or any such related person is a partner, has any plan or
intention to redeem or otherwise acquire any of the Acquiring Fund Shares
received by shareholders of Acquired Fund in the transaction except in the
ordinary course of Acquiring Fund's business in connection with its legal
obligation under Section 22(e) of the Investment Company Act of 1940, as amended
(the "1940 Act"), as a series of a registered open-end investment company to
redeem its own shares.
3. After the transaction, Acquiring Fund will continue the historic
business (as defined in Treasury Regulation Section 1.368-1(d)(2)) of Acquired
Fund or will use a significant portion of the historic business assets (as
defined in Treasury Regulation Section 1.368-1(d)(3)) of Acquired Fund in a
business.
4. Acquiring Fund has no plan or intention to sell or otherwise dispose of
any assets of Acquired Fund acquired in the transaction, except for dispositions
made in the ordinary course of its business or to maintain its qualification as
a regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code").
5. Any expenses of Acquired Fund incurred in connection with the
transaction which are paid or assumed by Acquiring Fund will be expenses of
Acquired Fund solely and directly related to the transaction in accordance with
Rev. Xxx. 00 00, 0000 0 X.X. 187. Acquiring Fund will not pay or assume the
expenses, if any, incurred by any Acquired Fund Shareholders in connection with
the transaction.
6. There is no, and never has been any, indebtedness between Acquiring Fund
and Acquired Fund.
A-1
7. Acquiring Fund will qualify for the special tax treatment afforded
regulated investment companies under Subchapter M of the Code for all taxable
years ending after the date of the transaction.
8. Acquiring Fund meets the requirements of an "investment company" in
Section 368(a)(2)(F) of the Code.
9. Acquiring Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
10. Acquiring Fund does not now own and has never owned, directly or
indirectly, any shares of Acquired Fund.
11. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund will be approximately equal to the
fair market value of the Acquired Assets minus the Assumed Liabilities.
Acquiring Fund will not furnish any consideration in connection with the
acquisition of the Acquired Assets other than the assumption of the Assumed
Liabilities and the issuance of such Acquiring Fund Shares.
12. Immediately following the transaction, the Acquired Fund Shareholders
will own all of the outstanding Acquiring Fund Shares and will own such shares
solely by reason of their ownership of the Acquired Fund Shares immediately
prior to the transaction. Acquiring Fund has no plan or intention to issue as
part of the transaction any shares of Acquiring Fund other than the Acquiring
Fund Shares issued in exchange for the Acquired Assets.
13. The transaction is being undertaken for valid and substantial business
purposes, including facilitating Acquired Fund's becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
14. No Acquired Fund shareholder is acting as agent for Acquiring Fund in
connection with the transaction or approval thereof. Acquiring Fund will not
reimburse any Acquired Fund shareholder for Acquired Fund Shares such
shareholder may have purchased or for other obligations such shareholder may
have incurred.
15. Acquiring Fund has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in Acquiring Fund.
* * * * *
The undersigned officer of Acquiring Trust is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquiring Fund. The undersigned recognizes that
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction and rendering its opinion pursuant to Section 8.5 of the
Agreement. If, prior to the date of the transaction, any of the representations
set forth herein ceases to be accurate, the undersigned agrees to deliver
immediately to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP a written notice to
that effect.
PIONEER SERIES TRUST II on behalf of
PIONEER CALIFORNIA TAX FREE INCOME FUND
By: /s/ Xxxxxxx Xxxx
--------------------------
Name: Xxxxxxx Xxxx
Title: Treasurer
Dated: December 10, 2004
A-2
Annex B
TAX REPRESENTATION CERTIFICATE OF
SAFECO TAX-EXEMPT BOND TRUST
ON BEHALF OF SAFECO CALIFORNIA TAX-FREE INCOME FUND
This certificate is being delivered in connection with the transactions to
be effected pursuant to the Agreement and Plan of Reorganization made as of
October 29, 2004 between Pioneer Series Trust II, a Delaware statutory trust, on
behalf of its series Pioneer California Tax Free Income Fund ("Acquiring Fund"),
and Safeco Tax-Exempt Bond Trust, a Delaware statutory trust ("Safeco Trust"),
on behalf of its series Safeco California Tax-Free Income Fund ("Acquired Fund")
(the "Agreement"). Pursuant to the Agreement, Acquiring Fund will acquire all of
the assets of Acquired Fund in exchange solely for (i) the assumption by
Acquiring Fund of the Assumed Liabilities of Acquired Fund and (ii) the issuance
of Investor Class shares of beneficial interest of Acquiring Fund (the
"Acquiring Fund Shares") to Acquired Fund, followed by the distribution by
Acquired Fund, in liquidation of Acquired Fund, of the Acquiring Fund Shares to
the shareholders of Acquired Fund and the termination of Acquired Fund (the
foregoing together constituting the "transaction").
The undersigned officer of Safeco Trust, after consulting with its counsel,
auditors and tax advisers regarding the meaning of and factual support for the
following representations, on behalf of Acquired Fund, hereby certifies and
represents that the following statements are true, complete and correct and will
be true, complete and correct on the date of the transaction and thereafter as
relevant. Unless otherwise indicated, all capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Agreement.
1. Acquired Fund is a series of Safeco Trust, a statutory trust organized
under the laws of the State of Delaware, and Acquired Fund is, and has been at
all times, treated as a separate corporation for federal tax purposes.
2. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares received by each shareholder that holds shares of Acquired
Fund (the "Acquired Fund Shares") will be approximately equal to the fair market
value of the Acquired Fund Shares with respect to which such Acquiring Fund
Shares are received, and the aggregate consideration received by Acquired Fund
shareholders in exchange for their Acquired Fund Shares will be approximately
equal to the fair market value of all of the outstanding Acquired Fund Shares
immediately prior to the transaction. No property other than Acquiring Fund
Shares will be distributed to shareholders of Acquired Fund in exchange for
their Acquired Fund Shares, nor will any such shareholder receive cash or other
property as part of the transaction.
3. Neither Acquired Fund nor any person "related" to Acquired Fund (as
defined in Treasury Regulation Section 1.368-1(e)(3)), nor any partnership in
which Acquired Fund or any such related person is a partner, has redeemed,
acquired or otherwise made any distributions with respect to any shares of
Acquired Fund as part of the transaction, or otherwise pursuant to a plan of
which the transaction is a part, other than redemptions and distributions made
in the ordinary course of Acquired Fund's business as a series of an open-end
investment company. To the best knowledge of management of Acquired Fund, there
is no plan or intention on the part of the shareholders of Acquired Fund to
engage in any transaction with Acquired Fund, Acquiring Fund, or any person
treated as related to Acquired Fund or Acquiring Fund under Treasury Regulation
Section 1.368-1(e)(3) or any partnership in which Acquired Fund, Acquiring Fund,
or any person treated as related to Acquired Fund or Acquiring Fund under
Treasury Regulation Section 1.368-1(e)(3) is a partner involving the sale,
redemption or exchange of any of the Acquired Fund Shares or any of the
Acquiring Fund Shares to be received in the transaction, as the case may be,
other than in the ordinary course of Acquired Fund's business as a series of an
open-end investment company.
4. In the transaction, Acquired Fund will transfer its assets to Acquiring
Fund, which will assume the Assumed Liabilities, such that immediately following
the transfer, Acquiring Fund will possess all of the same assets and liabilities
as were possessed by Acquired Fund immediately prior to the transaction, except
for assets used to pay expenses incurred in connection with the transaction and
assets distributed to shareholders in redemption of their shares immediately
preceding, or in contemplation of, the transaction (other than redemptions and
distributions
B-1
made in the ordinary course of Acquired Fund's business as an open-end
investment company) which assets constitute less than 1% of the net assets of
Acquired Fund.
5. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund will be approximately equal to the
fair market value of the Acquired Assets minus the Assumed Liabilities. Acquired
Fund will not receive any consideration from Acquiring Fund in connection with
the acquisition of the Acquired Assets other than the assumption of the Assumed
Liabilities and the issuance of such Acquiring Fund Shares.
6. The Assumed Liabilities assumed by Acquiring Fund plus the Assumed
Liabilities, if any, to which the transferred assets are subject were incurred
by Acquired Fund in the ordinary course of its business. Acquired Fund is not
aware of any liabilities of any kind other than the Assumed Liabilities.
7. As of the Closing Date, the adjusted basis and the fair market value of
the Acquired Assets will equal or exceed the Assumed Liabilities assumed for
purposes of Section 357(d) of the Code.
8. Acquired Fund currently conducts its historic business within the
meaning of Treasury Regulation Section 1.368-1(d)(2), which provides that, in
general, a corporation's historic business is the business it has conducted most
recently, but does not include a business that the corporation enters into as
part of a plan of reorganization. All of the assets held by Acquired Fund as of
the opening of business on August 2, 2004 (the date the Acquiring Fund Adviser
became the investment adviser to Acquired Fund) were Acquired Fund's historic
business assets within the meaning of Treasury Regulation Section 1.368-1(d)(3)
(which provides that a corporation's historic business assets are the assets
used in its historic business).
9. Acquired Fund will distribute to its shareholders the Acquiring Fund
Shares it receives pursuant to the transaction, and its other properties, if
any, and will be liquidated promptly thereafter.
10. The expenses of Acquired Fund incurred by it in connection with the
transaction, if any, will be only such expenses that are solely and directly
related to the transaction in accordance with Rev. Rul. 73-54, 1973-1 C.B. 187.
Acquired Fund will not pay any expenses incurred by its shareholders in
connection with the transaction.
11. There is no, and never has been any, indebtedness between Acquiring
Fund and Acquired Fund.
12. Acquired Fund has properly elected to be a regulated investment company
under Subchapter M of the Code, has qualified for the special tax treatment
afforded regulated investment companies under Subchapter M of the Code for each
taxable year since inception, and qualifies for such treatment as of the time of
the Closing.
13. Acquired Fund meets the requirements of an "investment company" in
Section 368(a)(2)(F) of the Code.
14. Acquired Fund is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
15. Acquired Fund does not pay compensation to any shareholder-employee.
16. Immediately following the transaction, the Acquired Fund Shareholders
will own all of the outstanding Acquiring Fund Shares and will own such shares
solely by reason of their ownership of the Acquired Fund Shares immediately
prior to the transaction.
17. Acquired Fund shareholders will not have dissenters' or appraisal
rights in the transaction.
18. The transaction is being undertaken for valid and substantial business
purposes, including facilitating Acquired Fund's becoming a member of the
Pioneer family of mutual funds, which, in the long term, is intended to result
in lower expenses and increased assets.
B-2
19. Acquired Fund has no outstanding warrants, options, convertible
securities or any other type of right pursuant to which any person could acquire
stock in Acquired Fund.
* * * * *
The undersigned officer of the Safeco Trust is authorized to make all of
the representations set forth herein, and the undersigned is authorized to
execute this certificate on behalf of Acquired Fund. The undersigned recognizes
that Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP will rely upon the foregoing
representations in evaluating the United States federal income tax consequences
of the transaction and rendering its opinion pursuant to Section 8.5 of the
Agreement. If, prior to the date of the transaction, any of the representations
set forth herein ceases to be accurate, the undersigned agrees to deliver
immediately to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP a written notice to
that effect.
SAFECO TAX EXEMPT BOND TRUST on behalf of
SAFECO CALIFORNIA TAX-FREE INCOME FUND
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
---------------------------
Title: Treasurer
--------------------------
Dated: December 10, 2004
B-3
