Exhibit 77 Q1(g)
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION dated as of
November 2, 1998 between Alliance Balanced Shares, Inc., a Maryland
corporation ("Balanced Shares"), and Alliance Income Builder Fund, Inc., a
Maryland corporation ("Income Builder").
In consideration of the mutual promises herein contained, the parties
hereto agree as follows:
1. Shareholder Approval
Approval by the shareholders of Income Builder of this Agreement and
the transactions contemplated herein shall, to the extent necessary to
permit the consummation of the transactions contemplated herein without
violating any investment objective, policy or restriction of Income
Builder, be deemed to constitute approval by the shareholders of a
temporary amendment of any investment objective, policy or restriction
that would otherwise be inconsistent with or violated upon the
consummation of such transactions solely for the purpose of consummating
such transactions.
2. Reorganization
The transactions described in this section are hereinafter collectively
referred to as the "Reorganization."
(a) Plan of Reorganization and Liquidation.
(i) Income Builder agrees to and will grant, bargain, sell, convey,
assign, transfer and deliver to Balanced Shares at the closing provided
for in Section 2(b) (the "Closing") all of the assets, rights, claims
and businesses of every kind, character and description (whether
tangible or intangible, whether real, personal or mixed, whether
absolute, accrued, contingent or otherwise, whether or not determinable
at the time of the Closing, and wherever located) of Income Builder to
the extent they exist on or after the Closing. In consideration
thereof, at the Closing, Balanced Shares agrees to and will (A) assume
and pay, to the extent that they exist on the Closing, all liabilities
of Income Builder and (B) deliver to Income Builder the number of full
and fractional Class A shares, Class B shares, Class C shares and
Advisor Class shares of Balanced Shares, par value $.01 per share (the
"Balanced Shares shares"), equal to the number of full and fractional
Class A shares, Class B shares, Class C shares and Advisor Class shares
of Income Builder (the "Income Builder shares") determined by
multiplying the number of Income Builder shares of that class by the
exchange ratio as computed as set forth below, the product of such
multiplication to be carried to the third decimal place. For purposes
of this section, Class A, Class B, Class C and Advisor Class Income
Builder shares will correspond to Class A, Class B, Class C and Advisor
Class shares, respectively, of Balanced Shares. The exchange ratio for
each class of Income Builder shares shall be the number determined by
dividing the net asset value per share of that class of Income Builder
shares by the net asset value per share of the corresponding class of
the Balanced Shares shares. In each case, such net asset values are to
be determined on a consistent basis by the appropriate officers of
Income Builder or Balanced Shares, as the case may be, as of the close
of regular trading on the New York Stock Exchange, Inc. (the
"Exchange") next preceding the Closing. The exchange ratio shall be
carried to the fourth decimal place.
(ii) At the Closing, Income Builder will liquidate and distribute
pro rata to the holders of record of each class of Income Builder
shares as of the Closing the Balanced Shares shares of the
corresponding class received by Income Builder pursuant to this Section
2(a). Such liquidation and distribution will be accompanied by the
establishment of an open account on the share records of Balanced
Shares in the name of each holder of a class of Income Builder shares
and representing the number of Balanced Shares shares of the
corresponding class due such shareholder. Fractional Balanced Shares
shares will be carried to the third decimal place. Simultaneously with
such crediting of the Balanced Shares shares to the shareholders, the
Income Builder shares held by such shareholders shall be canceled.
Certificates representing Balanced Shares shares will be issued in
accordance with the then-current Balanced Shares prospectus; provided,
however, that any certificate representing Balanced Shares shares to be
issued in replacement of a certificate representing the Income Builder
shares shall be issued only upon the surrender of such latter
certificate.
(iii) Following the Closing, Income Builder will dissolve.
(b) Closing. The Closing shall occur at the later of (i) the final
adjournment of the meeting of the holders of Income Builder shares at
which this Agreement and the transactions contemplated hereby will be
considered and (ii) such later time as the parties hereto may mutually
agree.
3. Articles of Incorporation; By-Laws; Board of Directors; Officers
Balanced Shares hereby covenants and agrees as follows:
(a) Charter. The Charter of Balanced Shares in effect at the Closing
shall continue to be the Charter of Balanced Shares until altered,
amended or repealed as provided by law.
(b) By-Laws. The By-laws of Balanced Shares in effect at the Closing
shall continue to be the By-laws of Balanced Shares until the same
shall thereafter be altered, amended or repealed in accordance with the
Articles of Incorporation or By-laws of Balanced Shares.
(c) Directors. The directors of Balanced Shares at the Closing shall
continue to be the directors of Balanced Shares until they resign or
their successors shall have been elected and qualified.
(d) Officers. Subject to the provisions of the By-laws of Balanced
Shares, the officers of Balanced Shares at the Closing shall continue
to be the officers of Balanced Shares until they resign or their
successors shall have been elected and qualified.
(e) Vacancies. If at the Closing a vacancy shall exist on the Board
of Directors or in any of the offices of Balanced Shares, such vacancy
may thereafter be filled in the manner provided by the By-laws of
Balanced Shares, consistent with the provisions of Section 16 of the
Investment Company Act of 1940, as amended (the "Act").
4. Representations, Warranties and Covenants of Balanced Shares
Balanced Shares represents and warrants to, and covenants with, Income
Builder as follows:
(a) Organization, Existence, Etc. Balanced Shares is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Maryland and has the power to carry on its business as it
is now being conducted and as described in its currently effective
Registration Statement on Form N-1A. Balanced Shares is qualified to do
business under the laws of every jurisdiction in which such
qualification is required, except where the failure to so qualify would
not have a material adverse effect on Balanced Shares. Balanced Shares
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 and as described in its currently effective Registration
Statement on Form N-1A.
(b) Registration as Investment Company. Balanced Shares is
registered under the Act as an open-end investment company of the
management type; such registration has not been revoked or rescinded
and is in full force and effect.
(c) Capitalization. The authorized capital stock of Balanced Shares
consists of 3,000,000,000 shares of Class A Common Stock, 3,000,000,000
shares of Class B Common Stock, 3,000,000,000 shares of Class C Common
Stock, and 3,000,000,000 shares of Advisor Class Common Stock, each
having a par value $.01 per share. As of June 30, 1998, there were
outstanding 7,716,831 shares of Class A Common Stock, 2,852,858 shares
of Class B Common Stock, 650,928 shares of Class C Common Stock and
131,958 shares of Advisor Class Common Stock of Balanced Shares. All of
the outstanding shares of common stock of Balanced Shares have been
duly authorized and are validly issued, fully paid and nonassessable.
Because Balanced Shares is an open-end investment company engaged in
the continuous offering and redemption of its shares, the number of
outstanding Balanced Shares shares may change prior to the Closing.
(d) Financial Statements. The financial statements of Balanced
Shares for the year ended July 31, 1998, which are audited (the
"Balanced Shares Financial Statements"), previously delivered to Income
Builder, fairly present the financial position of Balanced Shares as of
the dates thereof and the results of its operations and changes in its
net assets for the periods indicated.
(e) Shares to be Issued Upon Reorganization. The Balanced Shares
shares to be issued in connection with the Reorganization have been
duly authorized and upon consummation of the Reorganization will be
validly issued, fully paid and nonassessable, and no shareholder of
Balanced Shares has any preemptive right to subscribe or purchase in
respect thereof.
(f) Authority Relative to this Agreement. Balanced Shares has the
power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by Balanced Shares' Board of Directors and no other action
by Balanced Shares is necessary to authorize its officers to effectuate
this Agreement and the transactions contemplated hereby. Balanced
Shares is not subject to any provision of its Charter or By-laws, nor
is Balanced Shares a party to or obligated under any charter, by-law,
indenture or contract provision or any other commitment or obligation,
or subject to any order or decree, that would be violated by its
executing and carrying out this Agreement and the transactions
contemplated hereby.
(g) Liabilities. There are no liabilities of Balanced Shares,
whether or not determined or determinable, other than liabilities
disclosed or provided for in the Balanced Shares Financial Statements
and liabilities incurred in the ordinary course of business subsequent
to July 31, 1998 or otherwise previously disclosed in writing to Income
Builder.
(h) Litigation. To the knowledge of Balanced Shares, there are no
claims, actions, suits or proceedings pending against Balanced Shares.
In addition, to the knowledge of Balanced Shares, there are no claims,
actions, suits or proceedings threatened against Balanced Shares that
would materially adversely affect Balanced Shares or its assets or
business or which would prevent or hinder consummation of the
transactions contemplated hereby.
(i) Contracts. Except for contracts, agreements, franchises,
licenses or permits entered into or granted in the ordinary course of
its business or disclosed in its current Registration Statement on Form
N-1A filed under the Act, in each case under which no default exists,
Balanced Shares is not a party to or subject to any material contract,
debt instrument, employee benefit plan, lease, franchise, license or
permit of any kind or nature whatsoever.
(j) Taxes. The federal income tax returns of Balanced Shares have
been filed for all taxable years to and including the taxable year
ended July 31, 1997 and all taxes payable pursuant to such returns have
been paid. The federal income tax return of Balanced Shares for the
taxable year ending July 31, 1998 will be filed, and any taxes payable
pursuant thereto will be paid, prior to their due date. Balanced Shares
has qualified as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), in respect of each
taxable year since the commencement of its operations and has no reason
to believe that it will not so qualify in respect of its current fiscal
year.
(k) Registration Statement. Balanced Shares shall file with the
Securities and Exchange Commission (the "Commission") a Registration
Statement on Form N-14 (the "Registration Statement") under the
Securities Act of 1933 (the "Securities Act") relating to the Balanced
Shares shares issuable hereunder. At the time it becomes effective, the
Registration Statement (i) will comply in all material respects with
the provisions of the Securities Act and the rules and regulations of
the Commission thereunder (the "Regulations") and (ii) will not contain
an 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; and at the time the Registration Statement
becomes effective, at the time of the shareholders' meeting referred to
in Section 1 hereof and at the Closing, the prospectus (the
"Prospectus") and statement of additional information included therein
(the "Statement of Additional Information"), as amended or supplemented
by any amendments or supplements filed with the Commission by Balanced
Shares and delivered to Income Builder, will not contain an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that none of
the representations and warranties in this subsection (k) shall apply
to statements in or omissions from the Registration Statement,
Prospectus or Statement of Additional Information made in reliance upon
and in conformity with information furnished by Income Builder for use
in the Registration Statement, Prospectus or Statement of Additional
Information as provided in Section 5(k).
(l) No Material Adverse Change. Since July 31, 1998, there has been
no material adverse change in the financial condition, results of
operations, business, properties or assets of Balanced Shares.
(m) Operations in the Ordinary Course. Except as otherwise
contemplated by this Agreement, Balanced Shares will conduct its
business in the ordinary course.
5. Representations, Warranties and Covenants of Income Builder
Income Builder represents and warrants to, and covenants with, Balanced
Shares as follows:
(a) Organization, Existence, Etc. Income Builder is a corporation
duly organized and validly existing under the laws of the State of
Maryland and has the power to carry on its business as it is now being
conducted and as described in its current effective Registration
Statement on Form N-1A. Income Builder is qualified to do business
under the laws of every jurisdiction in which such qualification is
required, except where the failure to so qualify would not have a
material adverse effect on Income Builder. Income Builder 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 and as described in its current effective Registration
Statement on Form N-1A.
(b) Registration as Investment Company. Income Builder is registered
under the Act as an open-end investment company of the management type;
such registration has not been revoked or rescinded and is in full
force and effect.
(c) Capitalization. The authorized capital stock of Income Builder
consists of 2,000,000,000 shares of Class A Common Stock, 2,000,000,000
shares of Class B Common Stock, 2,000,000,000 shares of Class C Common
Stock and 2,000,000,000 shares of Advisor Class Common Stock, par value
$.001. As of June 30, 1998, there were outstanding 251,034 shares of
Class A Common Stock, 906,041 shares of Class B Common Stock, 3,598,409
shares of Class C Common Stock and 7,924 shares of Advisor Class Common
Stock of Income Builder. All of the outstanding shares of Income
Builder have been duly authorized and are validly issued, fully paid
and nonassessable. Because Income Builder is an open-end investment
company engaged in the continuous offering and redemption of its
shares, the number of outstanding shares of Income Builder may change
prior to the Closing.
(d) Financial Statements. The financial statements of Income Builder
for the year ended October 31, 1997, which are audited, and for the six
months ended April 30, 1998, which are unaudited (the "Income Builder
Financial Statements"), previously delivered to Balanced Shares, fairly
present the financial position of Income Builder as of the date thereof
and the results of its operations and changes in its net assets for the
periods indicated.
(e) Authority Relative to this Agreement. Income Builder has the
power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Income Builder and, except for
approval by the shareholders of Income Builder, no other action by
Income Builder is necessary to authorize its officers to effectuate
this Agreement and the transactions contemplated hereby. Income Builder
is not subject to any provision of its Articles of Incorporation or its
By-laws, nor is Income Builder a party to or obligated under any
charter, by-law, indenture or contract provision or any other
commitment or obligation, or subject to any order or decree, that would
be violated by its executing and carrying out this Agreement and the
transactions contemplated hereby.
(f) Liabilities. There are no liabilities of Income Builder, whether
or not determined or determinable, other than liabilities disclosed or
provided for in the Income Builder Financial Statements and liabilities
incurred in the ordinary course of business subsequent to April 30,
1998 or otherwise previously disclosed in writing to Balanced Shares.
(g) Litigation. To the knowledge of Income Builder there are no
claims, actions, suits or proceedings pending against Income Builder.
In addition, to the knowledge of Income Builder, there are no claims,
actions, suits or proceedings threatened against Income Builder that
would materially adversely affect Income Builder or its assets or
business or which would prevent or hinder consummation of the
transactions contemplated hereby.
(h) Contracts. Except for contracts, agreements, franchises,
licenses or permits entered into or granted in the ordinary course of
its business, in each case under which no default exists, Income
Builder is not a party to or subject to any material contract, debt
instrument, employee benefit plan, lease, franchise, license or permit
of any kind or nature whatsoever.
(i) Taxes. The federal income tax returns of Income Builder,
previously delivered to Balanced Shares, have been filed for all
taxable years to and including the taxable year ended October 31, 1997
and all taxes payable pursuant to such returns have been paid. The
federal income tax return of Income Builder for the taxable year ending
October 31, 1998 will be filed, and any taxes payable pursuant thereto
will be paid, prior to their due date. Income Builder has qualified as
a regulated investment company under the Code in respect of each
taxable year since the commencement of its operations and has no reason
to believe that it will not so qualify in respect of its current fiscal
year.
(j) Portfolio Securities. Income Builder will prepare and deliver to
Balanced Shares at the Closing a Schedule of Investments (the
"Schedule") listing all the assets owned by Income Builder as of the
Closing. All assets to be listed on the Schedule as of the Closing will
be owned by Income Builder free and clear of any liens, claims,
charges, options and encumbrances, except as indicated in the Schedule,
and, except as so indicated, none of such assets is or, after the
Reorganization as contemplated hereby, will be subject to any
restrictions, legal or contractual, on the disposition thereof
(including restrictions as to the public offering or sale thereof under
the Securities Act) and, except as so indicated, all such assets are or
will be readily marketable.
(k) Registration Statement. In connection with the Registration
Statement, Income Builder will cooperate with Balanced Shares and will
furnish to Balanced Shares, as reasonably requested by Balanced Shares,
the information relating to Income Builder required by the Securities
Act and the Regulations to be set forth in the Registration Statement
(including the Prospectus and Statement of Additional Information). At
the time the Registration Statement becomes effective, the Registration
Statement, insofar as it relates to Income Builder, (i) will comply in
all material respects with the provisions of the Securities Act and the
Regulations and (ii) will not contain an 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; and at the
time the Registration Statement becomes effective, at the time of the
shareholders' meeting referred to in Section 1 hereof and at the
Closing, the Prospectus and Statement of Additional Information, as
amended or supplemented by any amendments or supplements filed with the
Commission by Balanced Shares and delivered to Income Builder, insofar
as they relate to Income Builder, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the
representations and warranties in this subsection (k) shall apply only
to statements in or omissions from the Registration Statement,
Prospectus or Statement of Additional Information made in reliance upon
and in conformity with information furnished by Income Builder for use
in the Registration Statement, Prospectus or Statement of Additional
Information as provided in this subsection (k).
(l) No Material Adverse Change. Since October 31, 1997 there has
been no material adverse change in the financial condition, results of
operations, business, properties or assets of Income Builder.
(m) Operations in the Ordinary Course. Except as otherwise
contemplated by this Agreement, Income Builder will conduct its
business in the ordinary course.
6. Conditions to Obligations of Income Builder
The obligations of Income Builder hereunder with respect to the
consummation of the Reorganization as it relates to Income Builder are
subject to the satisfaction of the following conditions:
(a) Approval by Shareholders. This Agreement and the transactions
contemplated by the Reorganization shall have been approved by the
affirmative vote of a majority of the outstanding shares of Income
Builder entitled to be voted with respect thereto.
(b) Covenants, Warranties and Representations. Balanced Shares shall
have complied with each of its covenants contained herein. Each of the
representations and warranties of Balanced Shares contained herein
shall be true in all material respects as of the Closing, there shall
have been no material adverse change in the financial condition,
results of operations, business, properties or assets of Balanced
Shares since July 31, 1998, and Income Builder shall have received a
certificate of the President of Balanced Shares satisfactory in form
and substance to Income Builder so stating.
(c) Regulatory Approval. The Registration Statement shall have been
declared effective by the Commission and no stop order under the
Securities Act pertaining thereto shall have been issued; all necessary
orders or exemptions under the Act with respect to the transactions
contemplated hereby shall have been granted by the Commission; and all
necessary approvals, registrations, and exemptions under federal and
state laws shall have been obtained.
(d) Tax Opinion. Income Builder shall have received the opinion of
Xxxxxx & Xxxxxx, dated as of the Closing, addressed to it and in form
and substance satisfactory to Income Builder, as to certain of the
federal income tax consequences of the Reorganization under the Code to
Balanced Shares, Income Builder and the shareholders of Income Builder.
For purposes of rendering the opinion, Xxxxxx & Xxxxxx may rely
exclusively and without independent verification as to factual matters
upon the statements made in this Agreement and the Registration
Statement, and upon such other written representations as to matters of
fact as an executive officer of each of Income Builder and Balanced
Shares will have verified as of the Closing. The opinion of Xxxxxx &
Xxxxxx will be to the effect that, based on the facts and assumptions
stated therein, for federal income tax purposes: (i) the Reorganization
will constitute a reorganization within the meaning of section 368(a)
of the Code and that Income Builder and Balanced Shares will each be "a
party to a reorganization" within the meaning of section 368(b) of the
Code; (ii) Income Builder or Balanced Shares will not recognize any
gain or loss upon the transfer of all the assets of Income Builder to
Balanced Shares in exchange for Balanced Shares shares and the
assumption by Balanced Shares of the liabilities of Income Builder
pursuant to this Agreement or upon distribution of Balanced Shares
shares to shareholders of Income Builder in exchange for their Income
Builder shares; (iii) the shareholders of Income Builder who receive
Balanced Shares shares pursuant to the Reorganization will not
recognize any gain or loss upon the exchange of their Income Builder
shares for Balanced Shares shares (including any fractional share
interests they are deemed to have received) in the Reorganization; (iv)
the aggregate tax basis of the Balanced Shares shares received by each
shareholder of Income Builder will be the same as the aggregate tax
basis of the Income Builder shares surrendered in the exchange; (v) the
holding period of Balanced Shares shares received by each shareholder
of Income Builder will include the holding period of the Income Builder
shares that are surrendered in exchange therefor, provided that the
Income Builder shares constitute capital assets of such shareholder at
the Closing; (vi) the holding period and tax basis of the assets of
Income Builder acquired by Balanced Shares will be the same as the
holding period and tax basis that Income Builder had in such assets
immediately prior to the Reorganization; and (vii) Balanced Shares will
succeed to the capital loss carryovers of Income Builder, if any,
pursuant to section 381 of the Code, but the use by Balanced Shares of
any such capital loss carryovers may be subject to limitation under
section 383 of the Code.
(e) Opinion of Counsel. Income Builder shall have received the
opinion of Xxxxxx & Xxxxxx, as counsel for Balanced Shares, dated as of
the Closing, addressed to and in form and substance satisfactory to
Income Builder, to the effect that: (i) Balanced Shares is a
corporation duly organized and validly existing under the laws of the
State of Maryland; (ii) Balanced Shares is a diversified, open-end
investment company of the management type registered under the Act;
(iii) this Agreement and the Reorganization provided for herein and the
execution of this Agreement have been duly authorized and approved by
requisite action of Balanced Shares, and this Agreement has been duly
executed and delivered by Balanced Shares and is a valid and binding
obligation of Balanced Shares, subject to applicable bankruptcy,
insolvency, fraudulent conveyance and similar laws or court decisions
regarding enforcement of creditors' rights generally, and to general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); (iv) the Registration
Statement has been declared effective under the Securities Act and to
Xxxxxx & Kissel's knowledge no stop order has been issued or threatened
suspending its effectiveness; (v) to Xxxxxx & Kissel's knowledge, no
consent, approval, order or other authorization of any federal or state
court or administrative or regulatory agency, other than the acceptance
of Articles of Transfer by the Maryland State Department of Assessments
and Taxation, is required for Balanced Shares to enter into this
Agreement or carry out its terms that will not have been obtained by
the Closing, other than as may be required under the securities or
"blue sky" laws of any state and other than where the failure to obtain
any such consent, approval, order or authorization would not have a
material adverse effect on the operations of Balanced Shares; and (vi)
the Class A, Class B, Class C and Advisor Class shares of Balanced
Shares to be issued in the Reorganization have been duly authorized and
upon issuance thereof in accordance with this Agreement will be validly
issued, fully paid and nonassessable, and no shareholder of Balanced
Shares has any preemptive right to subscribe or purchase in respect
thereof.
(f) Non-Termination. The parties shall not have terminated this
Agreement pursuant to Section 8(c) hereof.
(g) Further Assurances. Income Builder shall have received such
further assurances, including, but not limited to, further assurances
from Balanced Shares or any other person, concerning the performance of
its obligations hereunder and the consummation of the Reorganization as
it shall deem necessary, advisable or appropriate.
7. Conditions to Obligations of Balanced Shares
The obligations of Balanced Shares hereunder with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) Approval by Shareholders. This Agreement and the transactions
contemplated by the Reorganization shall have been approved by the
affirmative vote of a majority of the outstanding shares of Income
Builder entitled to be voted with respect thereto.
(b) Covenants, Warranties and Representations. Income Builder shall
have complied with each of its covenants contained herein. Each of the
representations and warranties of Income Builder contained herein shall
be true in all material respects as of the Closing, there shall have
been no material adverse change in the financial condition, results of
operations, business, properties or assets of Income Builder since
October 31, 1997, and Balanced Shares shall have received a certificate
of the President of Income Builder satisfactory in form and substance
to Balanced Shares so stating.
(c) Portfolio Securities. All securities and other assets to be
acquired by Balanced Shares in the Reorganization shall have been
approved for acquisition by the investment adviser of Balanced Shares
as consistent with the investment policies of Balanced Shares, and all
such securities and other assets on the books of Income Builder that
are not readily marketable shall be valued on the basis of an
evaluation acceptable to Income Builder and Balanced Shares at the
expense of Income Builder.
(d) Regulatory Approval. The Registration Statement shall have been
declared effective by the Commission and no stop order under the
Securities Act pertaining thereto shall have been issued; all necessary
orders of exemption under the Act with respect to the transactions
contemplated hereby shall have been granted by the Commission, and all
necessary approvals, registrations, and exemptions under federal and
state laws shall have been obtained.
(e) Tax Opinion. Balanced Shares shall have received the opinion of
Xxxxxx & Xxxxxx, counsel to Income Builder, dated as of the Closing,
addressed to and in form and substance satisfactory to Balanced Shares,
as to certain of the federal income tax consequences of the
Reorganization under the Code to Balanced Shares, Income Builder and
the shareholders of Income Builder. For purposes of rendering the
opinion, Xxxxxx & Xxxxxx may rely exclusively and without independent
verification as to factual matters upon the statements made in this
Agreement and the Registration Statement, and upon such other written
representations as to matters of fact as an executive officer of each
of Income Builder and Balanced Shares will have verified as of the
Closing. The opinion of Xxxxxx & Xxxxxx will be to the effect that,
based on the facts and assumptions stated therein, for federal income
tax purposes: (i) the Reorganization will constitute a reorganization
within the meaning of section 368(a) of the Code and that Income
Builder and Balanced Shares will each be "a party to a reorganization"
within the meaning of section 368(b) of the Code; (ii) neither Income
Builder nor Balanced Shares recognize any gain or loss upon the
transfer of all the assets of Income Builder to Balanced Shares in
exchange for Balanced Shares shares and the assumption by Balanced
Shares of the liabilities of Income Builder pursuant to this Agreement
or upon the distribution of Balanced Shares shares to shareholders of
Income Builder in exchange for their respective Income Builder shares;
(iii) the holding period and tax basis of the assets of Income Builder
acquired by Balanced Shares will be the same as the holding period and
tax basis that Income Builder had in such assets immediately prior to
the Reorganization; and (iv) Balanced Shares will succeed to the
capital loss carryovers of Income Builder, if any, pursuant to section
381 of the Code, but the use by Balanced Shares of any such capital
loss carryovers may be subject to limitation under section 383 of the
Code.
(f) Opinion of Counsel. Balanced Shares shall have received the
opinion of Xxxxxx & Xxxxxx, as counsel for Income Builder, dated as of
the Closing, addressed to and in form and substance satisfactory to
Balanced Shares, to the effect that (i) Income Builder is a corporation
duly organized and validly existing under the laws of the State of
Maryland; (ii) Income Builder is a non-diversified, open-end investment
company of the management type registered under the Act; (iii) this
Agreement and the Reorganization provided for herein and the execution
of this Agreement have been duly authorized and approved by requisite
action of Income Builder and this Agreement has been duly executed and
delivered by Income Builder and is a valid and binding obligation of
Income Builder, subject to applicable bankruptcy, insolvency,
fraudulent conveyance and similar laws or court decisions regarding
enforcement of creditors' rights generally, and to general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity); (iv) the Reorganization has been
approved by the requisite vote of the shareholders of Income Builder;
and (v) to Xxxxxx & Kissel's knowledge, no consent, approval, order or
other authorization of any federal or state court or administrative or
regulatory agency, other than the acceptance of Articles of Transfer by
the Maryland State Department of Assessments and Taxation, is required
for Income Builder to enter into this Agreement or carry out its terms
that will not have been obtained by the Closing other than where the
failure to obtain any such consent, approval, order or authorization
would not have a material adverse effect on the operations of Income
Builder.
(g) Non-Termination. The parties shall not have terminated this
Agreement pursuant to Section 8(c) hereof.
(h) Further Assurances. Balanced Shares shall have received such
further assurances, including, but not limited to, further assurances
from Income Builder or any other person, concerning the performance of
their obligations hereunder and the consummation of the Reorganization
as it shall deem necessary, advisable or appropriate.
8. Amendments; Waivers; Termination; Survival; Cooperation
(a) Amendments. Income Builder and Balanced Shares may, by agreement
in writing authorized by their respective Boards of Directors, amend this
Agreement at any time before or after approval hereof by the shareholders
of Income Builder, but after such approval, no amendment shall be made
that materially alters the obligations of any party hereto.
(b) Waivers. At any time prior to the Closing, any party may by written
instrument signed by it (i) waive the effect of any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
(c) Termination. Each party may terminate this Agreement at any time
prior to the Closing by notice to the other party if (i) a material
condition to its performance hereunder or a material covenant of the other
party contained herein shall not be fulfilled on or before the date
specified for the fulfillment thereof or (ii) a material default or
material breach of this Agreement shall be made by the other party. This
Agreement may be terminated at any time prior to the Closing, whether
before or after approval by the shareholders of Income Builder, without
liability on the part of either party hereto or its respective Board of
Directors, officers or shareholders, by any party on notice to the other
party in the event that the Board of Directors of the party giving such
notice determines that proceeding with this Agreement is not in the best
interest of that party's shareholders. Unless the parties hereto shall
otherwise agree in writing, this Agreement shall terminate, without
liability to any party, as of the close of business on October 31, 1999 if
the Closing is not held on or prior to such date.
(d) Survival. No representations, warranties or covenants in or
pursuant to this Agreement (including certificates of officers) shall
survive the Reorganization.
(e) Cooperation. Each of the parties hereto will cooperate with the
other in fulfilling its obligations under this Agreement and will provide
such information and documentation as is reasonably requested by the other
in carrying out the terms hereof.
9. Expenses
Alliance Capital Management L.P., the investment adviser to each party
hereto, will bear all expenses incurred in connection with this Agreement,
and all transactions contemplated hereby, whether or not the
Reorganization is consummated; provided, however, that Income Builder
shall bear any cost or expense incurred through the time of the Closing
for purposes of satisfying the conditions set forth in Section 7(c) above.
10. General
This Agreement supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement of
the terms of the Agreement between the parties and may not be changed or
terminated orally. This Agreement may be executed in counterparts, which
shall be considered one and the same agreement, and shall become effective
when the counterparts have been executed by Income Builder and Balanced
Shares and delivered to each of the parties hereto. The headings contained
in this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Nothing in this
Agreement, expressed or implied, is intended to confer upon any other
person any rights or remedies under or by reason of this Agreement. This
Agreement shall be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and to be performed
in New York.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
ALLIANCE INCOME BUILDER FUND, INC.
By: /s/ Xxxxxxx Xxxxx-Xxxx
Xxxxxxx Xxxxx-Xxxx
Vice President
ALLIANCE BALANCED SHARES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Vice President
Accepted and agreed to as to Section 9:
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Senior Vice President and Chief Financial Officer
