EXECUTION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this 9th day
of May, 2005, by and between Xxxx Xxxxxxx Equity Trust, a Massachusetts business
trust (the "Acquiring Trust"), on behalf of Xxxx Xxxxxxx Technology Leaders Fund
(the "Acquiring Fund"), a series of the Acquiring Trust with its principal place
of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and Light
Revolution, Inc., (hereinafter "Light, Inc."), on behalf of its series Light
Revolution Fund (the "Acquired Fund") with its principal place of business at
000 Xxxxx X, Xxxxxx, Xxxxxxxxxx 00000. The Acquiring Fund and the Acquired Fund
are sometimes referred to collectively herein as the "Funds" and each
individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of "reorganization" as
such term is defined in Section 368(a)(1)(F) of the United States Internal
Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of (1) the transfer of all of the assets of the
Acquired Fund (other than Excluded Assets as defined in Section 1.1) to the
Acquiring Fund in exchange solely for (A) the issuance of Class A 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 (i) the liabilities of the Acquired Fund
that are included in the calculation of net asset value ("NAV") on the Closing
Date set forth below (the "Closing Date") (collectively, the "Assumed
Liabilities"), and (2) the distribution by the Acquired Fund, on or promptly
after the Closing Date as provided herein, of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation and termination of the Acquired
Fund, all upon the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, Acquiring Trust and the Light Inc. are each registered investment
companies classified as management companies of the open-end type, and the
Acquired Fund owns securities that are generally assets of the character in
which the Acquiring Fund is permitted to invest.
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Trustees of the Acquiring Trust has determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares,
and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquiring Fund shareholders.
WHEREAS, the Board of Directors of the Light Inc. has determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares,
and the assumption of the Assumed Liabilities of the Acquired Fund by the
Acquiring Fund are in the best interests of the Acquired Fund 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 (other than Excluded 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, determined in
the manner set forth in Paragraph 2.2; and (ii) to assume the Assumed
Liabilities, as set forth in Paragraph 1.3. As used herein, "Excluded Assets"
means (i) any "tail" or "run off" insurance acquired in connection with the
Reorganization, (ii) the rights of the Acquired Fund under this Agreement; (iii)
the rights of the Acquired Fund under agreements entered into with service
providers solely to facilitate the termination of the Acquired Fund in
accordance with this Agreement; and (iv) the rights of the Acquired Fund under
the expense undertakings referred to in Section 9.2. Such transactions shall
take place at the Closing (as defined in Paragraph 3.1 below). Prior to the
Closing, the Acquired Fund shall estimate and accrue the expenses that the
Acquired Fund anticipates that it will incur subsequent to the Closing in
connection with the deregistration and termination of the Acquired Fund (other
than expenses to be assumed as provided in Section 9.2) and the Acquiring Fund
shall pay after the Closing Date any expense for which such an accrual has been
made, up to the amount of such accrual.
1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's property
(other than the Excluded Assets), including, without limitation, all portfolio
securities and instruments, dividends and interest receivables, cash, goodwill,
contractual rights of the Acquired Fund or Light Inc. with respect to the
Acquired Fund, all other intangible property owned by the Acquired Fund, 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 Acquired Fund and the
Acquiring Trust, be provided access to) copies of all books and records that the
Acquired Fund 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.
(b) The Acquired Fund has caused its custodian to provide the Acquiring Fund
with a list of all of the Acquired Fund's securities and other assets as of the
date immediately preceding 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), but will not, without the prior approval of the
Acquiring Fund, acquire any additional securities of the type in which the
Acquiring Fund is not permitted to invest in accordance with its fundamental
investment policies and restrictions that have been provided to the Acquired
Fund in writing or any securities that are valued at "fair value" under the
valuation procedures of either the Acquired Fund or the Acquiring Fund.
1.3 The Acquired Fund will use commercially reasonable efforts to discharge all
the Acquired Fund's known liabilities and obligations that are or will become
due prior to the Closing. The Acquiring Fund shall assume all of the Assumed
Liabilities at Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Acquired Fund shall be liquidated and the Acquired Fund
shall distribute pro rata to its shareholders of record (the "Acquired Fund
Shareholders"), determined as of the close of regular trading on the New York
Stock Exchange on the Closing Date, the Acquiring Fund Shares received by the
Acquired Fund pursuant to Paragraph 1.1 hereof. Such liquidation and
distribution will be accomplished by the Acquired Fund instructing the Acquiring
Fund to transfer the Acquiring Fund Shares then credited to the account of the
Acquired Fund on the share records of the Acquiring Fund to open accounts on
such share records in the names of the Acquired Fund Shareholders and
representing the respective pro rata number of Acquiring Fund Shares due to each
such Shareholder. The Acquired Fund shall promptly provide the Acquiring Fund
with evidence of such liquidation and distribution. All issued and outstanding
shares of the Acquired Fund will simultaneously be cancelled on the books of the
Acquired Fund. 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 Class A shares. If any Acquired Fund
Shareholders holding certificates representing their ownership of shares of
beneficial interest of the Acquired Fund do not surrender such certificates or
deliver an affidavit with respect to lost certificates in such form and
accompanied by such surety bonds as the Acquired Fund may require (collectively,
an "Affidavit"), to Xxxx Xxxxxxx Signature Services, Inc. on or prior to the
Closing Date, then unless and until any such certificate shall be so surrendered
or an Affidavit relating thereto shall be delivered by an Acquired Fund
Shareholder, dividends and other distributions payable by the Acquiring Fund
subsequent to the Closing Date with respect to Acquiring Fund Shares shall be
paid to such Acquired Fund Shareholder, but such Acquired Fund Shareholder may
not redeem or transfer Acquiring Fund Shares received in the Reorganization. The
Acquiring Fund will not issue share certificates in the Reorganization.
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 The Acquired Fund shall effect, following the Closing Date, the transfer of
the Acquired Assets by the Acquired Fund to the Acquiring Fund, and the
distribution of the Acquiring Fund Shares by the Acquired Fund to the Acquired
Fund Shareholders pursuant to Paragraph 1.5, and the Acquired Fund's existence
as a management investment company organized as a corporation under the laws of
the State of Maryland shall be terminated in accordance with the Acquired Fund's
Certificate of Incorporation and By-Laws.
1.8 Any reporting responsibility of Acquired Fund, 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
Acquired Fund.
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2. VALUATION
2.1 The NAV of the Acquiring Fund Shares and the NAV of the Acquired Assets
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 computed by The Bank of New York (the "Acquiring
Fund Custodian") in the manner set forth in the Acquiring Trust's Declaration of
Trust as amended and restated (the "Declaration") or By-Laws, and the Acquiring
Fund's then-current prospectus and statement of additional information;
provided, however, if the Acquiring Fund has no assets as of the Closing Date
(other than a nominal amount of assets represented by shares issued to the
Acquiring Fund Adviser, or its affiliate, as the initial shareholder of the
Acquiring Fund), the NAV of each Acquiring Fund Share shall be the same as the
NAV of each share of the Acquired Fund. The NAV of the Acquired Assets shall be
computed by Xxxxx XxXxxxx, Ltd. (the "Acquired Fund Accountant") 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 face of 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. The Acquiring Fund
Custodian shall confirm the NAV of the Acquired Assets.
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 the Acquiring Fund Custodian by
dividing the NAV of the Acquired Assets, 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 Acquiring Fund and the Acquired Fund shall cause the Acquiring Fund
Custodian and the Acquired Fund Accountant, respectively, to deliver a copy of
its valuation report, reviewed by the Acquiring Fund's independent accountants,
to the other party at Closing. All computations of value shall be made by the
Acquiring Fund Custodian and the Acquired Fund Accountant in accordance with its
regular practice as custodian and pricing agent for the Acquiring Fund and the
Acquired Fund, respectively.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be June 17, 2005 or such later date as the parties
may agree to in writing. All acts taking place at 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"). The Closing shall be held at the
offices of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, or at such other place as the parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the name of
U.S. Bank, N.A. (the "Acquired Fund Custodian"), as custodian of the Acquired
Fund and as record holder for the Acquired Fund, shall be presented by the
Acquired Fund to the Acquiring Fund Custodian for examination no later than
three business days preceding the Closing Date. Portfolio securities which are
not held in book-entry form 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 to the Acquiring Fund by the Acquired Fund
Custodian by recording the transfer of beneficial ownership thereof on the
Acquired Fund Custodian's records.
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
shall have been made in conjunction with the delivery of portfolio securities as
part of the Acquired Assets. Any cash delivered shall be in the form of currency
or by the Acquired Fund Custodian crediting the Acquiring Fund's account
maintained with the Acquiring Fund Custodian with immediately available funds by
wire transfer pursuant to instructions delivered prior to Closing.
3.4 In the event that on the Closing Date (a) the New York Stock Exchange is
closed to trading or trading thereon is 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 Acquiring Fund Shares or the Acquired Assets
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 cause its transfer agent to deliver at the Closing a
list of the names, addresses, federal taxpayer identification numbers and backup
withholding and nonresident alien withholding status of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding shares of
beneficial interest of the Acquired Fund owned by each such Acquired Fund
Shareholder as of the Valuation Time, certified by the President or a Secretary
of the Acquired Fund 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 Acquired Fund's records by such officers or
one of the Acquired Fund's service providers. The Acquiring Fund shall issue and
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deliver to the Acquired Fund at the Closing (i) an instrument of assumption
satisfactory to the Acquired Fund assuming all the Assumed Liabilities and (ii)
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.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on Schedule 4.1 hereto, the Acquired Fund represents and
warrants and to the Acquiring Fund, which representations and warranties will be
true and correct on the date hereof and at the time of the Closing on the
Closing Date as though made on and as of the time of the Closing on the Closing
Date, as follows:
(a) Light Inc. is a corporation validly existing and in good standing under the
laws of the State of Maryland and has the corporate power to own all of its
properties and assets and, subject to approval by the Acquired Fund
Shareholders, to perform its obligations under this Agreement. The Acquired
Fund is the sole series of Light Inc. 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. 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) Light Inc. 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. Light Inc is a diversified investment company under the Investment
Company Act;
(c) Neither Light Inc nor the Acquired Fund is in violation in any material
respect of, and the execution, delivery of this Agreement and performance
of its obligations under this Agreement will not result in a violation in
any material respect of, any provision of Light Inc.'s Articles of
Incorporation or By-Laws or any material agreement, indenture, instrument,
contract, lease or other undertaking with respect to the Acquired Fund to
which either Light Inc. or the Acquired Fund is a party or by which either
Light Inc. or the Acquired Fund or their respective 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 either Light Inc. or the Acquired Fund or any of Light
Inc.'s or the Acquired Fund's properties or assets, which if adversely
determined, would materially and adversely affect its or the Acquiring
Fund's financial condition, the conduct of its business or the ability of
the Acquired Fund to carry out the transactions contemplated by this
Agreement. The Acquired Fund knows of no facts which might form the basis
for the institution of such proceedings. Neither Light Inc. 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 and
adversely affects the Acquired Fund's business or the ability of either
Light Inc., or the Acquired Fund to consummate the transactions herein
contemplated 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 or agreements with service providers
solely for the purpose of facilitating the termination of the Acquired
Fund) which will not be terminated at or prior to the Closing Date, and no
such termination will result in liability (including any termination fees
or charges) 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 net asset value as of and for
the period ended October 31, 2004, have been audited by XxXxxxx &
Associates, independent auditors, and are in accordance with GAAP
consistently applied and fairly present, in all material respects, the
financial condition of the Acquired Fund as of such dates and the results
of its operations for the periods then ended, and all known liabilities,
whether actual or contingent, of the Acquired Fund required to be disclosed
therein as of the respective dates thereof are disclosed therein. The
Statement of Assets and Liabilities of the Acquired Fund to be delivered as
of the Closing Date pursuant to Paragraph 5.7 will be in accordance with
GAAP consistently applied and will fairly present, 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 and subject to the undertakings referenced in Section
9.2, 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 in the Acquired
Fund's reports on Form N-SAR or 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 in the
Acquired Fund's internal controls that would require the Acquiring Fund to
make any such disclosure in the Acquiring Fund's Form N-CSR after the
Closing Date;
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(g) Since October 31, 2004, except as specifically disclosed in the Acquired
Fund's prospectus or statement of additional information as in effect on
the date of this Agreement, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities, 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), a decline in NAV per
share of the Acquired Fund 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 (including
the current taxable year), the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company and has elected to be treated as such 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 that it was
required to file, and all such Tax Returns were complete and accurate in
all material 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 that 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 (or adequate provision for such payment has been made in
its financial statements in accordance with GAAP);
(D) All Tax Returns filed by the Acquired Fund constitute complete and
accurate reports of the respective Tax liabilities in all material respects
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 in all material respects;
(E) Except as set forth on the Disclosure Schedule, 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 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 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
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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 that
would prevent the Reorganization from constituting a reorganization
qualifying under Section 368(a)(1)(F) of the Code. The Acquired Fund is not
aware of any agreement, plan or other circumstance that would prevent the
Reorganization from qualifying as a reorganization under Section
368(a)(1)(F) of the Code;
(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 and those that are being
contested in good faith;
(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, and will not be
limited as a result of the Reorganization, 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" 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) The authorized capital of the Acquired Fund consists of 500 million shares
of common stock, at $0.0001 par value, all of a single class. All issued
and outstanding shares of common stock of the Acquired Fund 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
shares of common stock of the Acquired Fund 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 Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of its shares of common
stock of the Acquired Fund, nor is there outstanding any security
convertible into any of its shares of common stock of the Acquired Fund;
(j) At the Closing Date, the Acquired Fund will have good and marketable title
to the Acquired Assets, and subject to the approval of Acquired Fund
Shareholders, 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 Acquired Fund has the corporate power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Acquired Fund has been duly authorized
by all necessary action on the part of Light Inc.'s Board of Directors,
and, subject to the approval of the Acquired Fund 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;
6
(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 in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto;
(m) The information included in the proxy statement (the "Proxy Statement")
forming part of the Acquiring Trust's Registration Statement on Form N-14
filed in connection with this Agreement (the "Registration Statement") that
has been furnished 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 and
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, in light of the circumstances under which such statements were
made, 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
on the part of the Acquired Fund for the consummation by the Acquired Fund
of the transactions contemplated by this Agreement;
(o) All issued and outstanding common stock of the Acquired Fund has been (i)
duly and validly issued and outstanding, fully paid and non-assessable and
(ii) offered for sale and sold in all material respects in accordance with
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, each dated February 25, 2005 (collectively, the "Acquired Fund
Prospectus"), and any amendments or supplements thereto, furnished to the
Acquiring Fund, 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 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, to
the knowledge of the Acquired Fund, 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 and state "Blue Sky" laws. 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 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 and to the knowledge of the
Acquired Fund, the Conduct Rules of the National Association of Securities
Dealers, Inc. (the "NASD"). 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
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 applicable federal securities laws 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 regulation thereunder
and, to the knowledge of the Acquired Fund, 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
or 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 Adviser 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 Acquired Fund Tax Representation Certificate to be delivered by the
Acquired Fund to the Acquiring Fund and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and
Xxxx LLP at the Closing pursuant to Paragraph 7.4 (the "Acquired Fund Tax
7
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, in light of the circumstances in
which they were made, not misleading. The Acquired Fund does not know as of
the date of this Agreement of any redemption that would be required to be
disclosed on a schedule to the Acquired Fund Tax Representation
Certificate.
4.2 Except as set forth on Schedule 4.2 hereto, the Acquiring Trust, for itself
and on behalf of the Acquiring Fund represents and warrants to the Acquired
Fund, which representations and warranties 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 Trust is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts
and has the power to own all of its properties and assets and to perform
the obligations under this Agreement. Neither the Acquiring Trust nor the
Acquiring Fund is 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. The Acquiring Trust and the
Acquiring Fund have 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. The Acquiring Fund is a series of the Acquiring Trust and
will have no issued or outstanding shares prior to the Closing Date other
than those issued to Xxxx Xxxxxxx Advisers, LLC (or one of its affiliates);
(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 Trust's post-effective amendment to its 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 its
date 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;
(d) The Registration Statement, the Proxy Statement, prospectus and statement
of additional information with respect to the Acquiring Fund, each dated
May 9, 2005, and any amendments or supplements thereto 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, the Exchange Act and the Investment Company Act and the
rules and regulations of the Commission thereunder. Neither the
Registration Statement nor the Proxy Statement nor the prospectus and
statement of additional information with respect to the Acquiring Fund (any
amendments or supplements thereto 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) includes, or as of the Closing Date
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 and the Acquiring Fund are not in violation of, and the
execution and delivery of this Agreement and performance of their
obligations under this Agreement will not result in a violation of, any
provisions of the Acquiring Trust's Declaration or By-Laws or any material
agreement, indenture, instrument, contract, lease or other undertaking with
respect to which the Acquiring Trust or the Acquiring Fund is a party or by
which the Acquiring Trust or the Acquiring Fund or any of their 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 Trust or the Acquiring Fund or any of the Acquiring Fund's
properties or assets, which if adversely determined, would materially and
adversely affect its financial condition, the conduct of its business or
the ability of the Acquired Fund to carry out the transactions contemplated
by this Agreement. The Acquiring Trust 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 intends to qualify as a regulated investment company
under Section 851 of the Code. The Acquiring Fund is and as of and after
the Closing will be a "fund" as defined in Section 851(g)(2) of the Code.
The Acquiring 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 and state "Blue Sky"
laws. 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 Acquired
Fund complies in all material respects with and has complied in all
material respects with the applicable requirements of the Securities Act,
8
the Investment Company Act, the rules and regulations of the Commission,
and, to the extent applicable and to the knowledge of the Acquiring Fund,
the Conduct Rules of the NASD. 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 federal securities laws
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;
(h) The authorized capital of the Acquiring Trust 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 issued in compliance with all applicable
federal and sate securities laws and will be duly and 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 of the Acquiring Fund Shares;
(i) 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 by the Acquiring Trust and/or the Acquiring
Fund has been duly authorized by all necessary action on the part of the
Acquiring Trust, the Acquiring Fund and their 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 Trust and 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;
(j) The information to be furnished by the Acquiring Trust, the Acquiring Fund
or Xxxx Xxxxxxx Advisers, LLC 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;
(k) 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 or the Acquiring Trust, except for the registration of the
Acquiring Fund Shares under the Securities Act and the Investment Company
Act;
(l) 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
(m) The Acquiring Fund Tax Representation Certificate to be delivered by the
Acquiring Fund to the Acquired Fund 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, in light of the circumstances in
which they were made, not misleading.
(n) Neither the Acquiring Trust nor the Acquiring Fund has taken, or caused to
be taken, or agreed to take, or caused to be taken, any action that would
prevent the Reorganization from constituting a reorganization qualifying
under Section 368(a) of the Code. The Acquiring Trust is not aware of any
agreement, plan or other circumstance that would prevent the Reorganization
from qualifying as a reorganization under Section 368(a) of the Code.
(o) Prior to the Closing, the Acquiring Fund shall not have commenced
investment operations and shall not have conducted any business, except for
business in connection with its organization or incidental to the
performance of its obligations under this Agreement.
9
(p) The Statement of Assets and Liabilities of the Acquiring Fund delivered
pursuant to Section 5.8 will fairly present in all material respects the
financial condition of the Acquiring Fund as of that date.
5. COVENANTS OF EACH OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 Except as contemplated by this Agreement, the Acquired Fund will operate the
Acquired Fund's business in the ordinary course between the date hereof and the
Closing Date. It is understood that such ordinary course of business will
include the declaration and payment of dividends and distributions determined by
the Acquired Fund to be necessary or advisable (except to the extent dividends
or 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.
5.2 Light Inc. on behalf of the Acquired Fund will call a special meeting of
Acquired Fund Shareholders to consider approval of this Agreement and act upon
the matters set forth in the Proxy Statement.
5.3 The Acquiring Trust 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 on Form N-14 relating to the Reorganization. The Proxy
Materials and Registration Statement shall be prepared in accordance with the
requirements of the Securities Act, Exchange Act and Investment Company Act, as
applicable. The Acquiring Fund shall provide the Acquired Fund copies of the
Proxy Materials and Registration Statement and all amendments or supplements
thereto prior to filing and incorporate any Acquired Fund comments prior to
filing. The Acquired Fund will provide the Acquiring Trust with information
reasonably necessary for the preparation of the Registration Statement in
compliance with the Securities Act, the Exchange Act, and the Investment Company
Act. The Acquiring Trust and Acquiring Fund will provide the Acquired Fund and
its counsel with the substance of communications received from the staff of the
Commission with regard to the Registration Statement, and the parties will
cooperate in revising, if necessary, the Registration Statement to comply with
such comments.
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, and the Acquired Fund is
lawfully permitted to provide, concerning the beneficial ownership of the
Acquired Fund's shares.
5.6 Subject to the provisions of this Agreement, each of the Acquired Fund and
the Acquiring 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
the Statement of Assets and Liabilities of the Acquired Fund as of the Closing
Date setting forth the NAV of the Acquired Assets and the Assumed Liabilities as
of the Valuation Time, which statement shall be prepared in accordance with GAAP
consistently applied and certified by the Acquired Fund's Treasurer or Assistant
Treasurer. As promptly as practicable, but in any case within 60 days after the
Closing Date, the Acquired Fund shall furnish to the Acquiring Fund, in such
form as is reasonably satisfactory to the Acquiring Fund, 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
President of the Acquired Fund.
5.8 The Acquiring Fund shall furnish to the Acquired Fund on the Closing Date
the Statement of Assets and Liabilities of the Acquiring Fund as of the Closing
Date setting forth the NAV of the Acquiring Fund's assets and liabilities as of
the Valuation Time, which statement shall be certified by the Acquiring Trust's
Treasurer or Assistant Treasurer
5.9 Neither the Acquired Fund nor the Acquiring 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.
5.10 Light Inc. shall cause Light Index Investment Company to maintain errors
and omissions insurance covering management to the Acquired Fund prior to and
including the Closing Date.
5.11 From and after the date of this Agreement, each of the Funds and the
Acquiring Trust and Light Inc. 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 hereto 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,
10
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.
5.12 From and after the date of this Agreement and through the time of the
Closing on the Closing Date, Light Inc. shall use its commercially reasonable
efforts to cause the Acquired Fund 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
Acquired Fund from qualifying as a regulated investment company under the
provisions of Subchapter M of the Code. From and after the date of this
Agreement, the Acquiring Trust shall use its commercially reasonable efforts to
cause the Acquiring Fund 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 Acquiring Fund
from qualifying, as a regulated investment company under the provisions of
Subchapter M of the Code.
5.13 Acquired Fund shall prepare, or cause to be prepared, any Tax Returns of
the Acquired Fund for its taxable year that ends on or before the Closing Date
and shall timely file, or cause to be timely filed, such Tax Returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
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 and the Acquiring Trust of all the obligations to be performed by them
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 or on behalf of the Acquiring Trust
and the Acquiring Fund contained in this Agreement shall be true and correct in
all material respects (without giving effect to any materiality qualification
included in such representation and warranties) 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 Fund shall have delivered to the Acquired Fund a certificate
executed in its name by the Acquiring Trust's President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Trust on behalf of the Acquiring
Fund made in this Agreement are true and correct in all material respects
(without giving effect to any materiality qualification included in such
representation and warranties) 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 Section 6 have been met, and as to such other
matters as the Acquired Fund shall reasonably request;
6.3 The Acquiring Fund shall have delivered to the Acquired Fund and Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP an Acquiring Fund Tax Representation
Certificate, satisfactory to the Acquired Fund, substantially in the form
attached to this Agreement as Annex A, concerning certain tax-related matters
with respect to the Acquiring Fund; and
6.4 The Board of Trustees of the Acquiring Trust shall have determined that the
Reorganization is in the best interests of the Acquiring Fund and that the
interests of the existing shareholders of the Acquiring Fund would not be
diluted as a result of the Reorganization.
6.5 The Acquired Fund shall have received an opinion of counsel, who may be an
employee or officer of Xxxx Xxxxxxx Advisers, LLC, dated as of the Closing Date
in form and substance reasonably satisfactory to the Acquired Fund to the effect
that (a) the Acquiring Trust is a business trust validly existing under the laws
of Massachusetts, (b) the Acquiring Fund is a legally designated, separate
series of the Acquiring Trust, (c) the Acquiring Fund Shares to be issued to the
Acquired Fund and credited to the accounts of the Acquired Fund Shareholders
pursuant to this Agreement are duly registered under the Securities Act on the
appropriate form and are duly authorized and upon issuance will be validly
issued and outstanding in fully paid and non-assessable and (d) each of the
Registration Statement and Acquiring Trust's post-effective amendment to its
registration statement on Form N-1A reflecting the creation of the Acquiring
Fund has become effective with the Commission and, to the best of such counsel's
knowledge, no stop order suspending the effectiveness thereof has been issued
and no proceedings for that purpose have been instituted or are pending or
threatened.
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 Light Inc. and
the Acquired Fund of all the obligations to be performed by them 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 by Light Inc. and the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
(without giving effect to any materiality qualification included in such
representations and warranties) as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement or set forth in
11
writing in a disclosure schedule delivered to the Acquiring Fund prior to the
execution of this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2 The Acquired Fund 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 Light Inc.'s President;
7.3 The Acquired Fund, shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in the name of the Acquired Fund by Light Inc.'s
President or Secretary, in form and substance reasonably satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of Light Inc. and the Acquired Fund contained in
this Agreement are true and correct in all material respects (without giving
effect to any materiality qualification included in such representation and
warranties) at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement or set forth in writing in a
disclosure schedule delivered to the Acquiring Fund prior to the execution of
this Agreement, that each of the conditions to closing in this Section 7 have
been met, and as to such other matters as the Acquiring Fund shall reasonably
request;
7.4 The Acquired Fund shall have delivered to the Acquiring Fund and Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP an Acquired Fund Tax Representation
Certificate, satisfactory to the Acquiring Fund, 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 Board of Directors of the Light Inc. shall have determined that the
Reorganization is in the best interests of the Acquired Fund and that the
interests of the existing the Acquired Fund Shareholders would not be diluted as
a result of the Reorganization; and
7.6 The Acquiring Fund shall have received an opinion of counsel from Xxxxxxx,
LLP, special Maryland counsel, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Acquiring Fund to the effect that (a)
Light Inc. is a corporation validly existing under the laws of the State of
Maryland, (b) the Acquired Fund is a legally designated, separate series of
Light Inc., and (c) this Agreement has been duly authorized by all required
corporate action on the part of Light Inc. and the Acquired Fund and constitutes
a legal and binding obligation of Light Inc. on behalf of the Acquired Fund,
enforceable in accordance with its terms.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below are not satisfied as of 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 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the Acquired Fund Shareholders in accordance
with the provisions of Light Inc.'s Articles of Incorporation 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 Each of the Acquiring Trust's Registration Statement on Form N-14 and the
post-effective amendment to the Acquiring Trust's Registration Statement on Form
N-1A adding the Acquiring Fund as a series of the Acquiring Trust (and
reflecting the Acquiring Fund as the accounting successor of the Acquired Fund)
shall have become effective under the Securities Act and no stop orders
suspending the effectiveness of either of such Registration Statements 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;
8.5 The parties shall have received an opinion of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx
and Xxxx LLP, satisfactory to the Acquired Fund and the Acquiring Trust,
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
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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 shares of beneficial interest
of the Acquired Fund and the termination of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code.
Notwithstanding anything herein to the contrary, neither of the Acquiring Trust
and the Acquired Fund may waive the conditions set forth in this Paragraph 8.5.
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.
9.2 The parties have been informed by Xxxx Xxxxxxx Advisers, LLC that it will
pay the expenses, including the cost of "tail" directors and officers insurance
coverage, of the Acquired Fund incurred by or on behalf of the Acquired Fund in
connection with the Reorganization whether or not the Reorganization is
completed; provided, that Xxxx Xxxxxxx Advisers, LLC will not pay for any such
expenses beyond the aggregate amount of $200,000. The parties have been informed
by Light Index Investment Company that it will pay any expenses incurred by or
on behalf of the Acquired Fund in connection with the Reorganization in excess
of $200,000.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund 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 and consequently,
after the Closing, no party shall have recourse against any other party (or Xxxx
Xxxxxxx Advisers, LLC) with respect to a breach of such representation and
warranties.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring
Fund and the Acquired Fund. 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 that has not been cured within ten (10) business days after
written notice thereof;
(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, including a
majority of the Trustees who are not affiliated with Xxxx Xxxxxxx Advisers,
LLC, 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 Light Inc.'s Board of Directors 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 or the
Acquired Fund Shareholders; or
(e) if the transactions contemplated by this Agreement shall not have occurred
on or prior to June 30, 2005 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 Trust, the Acquiring Fund, or the Acquired
Fund, or the Trustees, directors or officers of the Acquiring Trust or Light
Inc., 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 Acquired Fund
and the Acquiring Trust; provided, however, that following the meeting of the
Acquired Fund Shareholders called by the Acquired Fund pursuant to Paragraph 5.2
of this Agreement, no such amendment may have the effect of changing the
provisions regarding the method for determining the number of Acquiring Fund
Shares to be received by the Acquired Fund Shareholders under this Agreement to
the detriment of the Acquired Fund Shareholders without their further approval;
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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 (i) the Acquired Fund, c/o Xxxxx Xxxxxx,
with copies to Light Index Investment Company, 000 Xxxxx X, Xxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx Xxxxxx, and Xxxxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxx , and (ii) the
Acquiring Fund c/o Xxxx Xxxxxxx Advisers, LLC, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, 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
laws of the Commonwealth of Massachusetts.
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 or Light
Inc. shall not be binding upon any of their respective trustees, directors,
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 instruments governing the Acquiring Trust and the Acquired
Fund, respectively. The execution and delivery of this Agreement have been
authorized by the trustees of the Acquiring Trust and the directors of Light
Inc., and this Agreement has been executed by the authorized officers of the
Acquiring Trust and Light Inc, and neither such authorization by such trustees
and directors nor the execution and delivery by such officers shall be deemed to
have been made by any of them individually or shall impose 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 instruments governing
the Acquiring Trust and Light Inc., respectively.
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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, Assistant Secretary or other authorized
officer.
LIGHT REVOLUTION FUND Inc., on behalf
of its Series, LIGHT REVOLUTION FUND
By: /s/Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
Attest: XXXX XXXXXXX EQUITY TRUST, on behalf of
XXXX XXXXXXX TECHNOLOGY LEADERS FUND
By: /s/Xxxxxx X. Xxxxxxxxx By: /s/Xxxxx X. Xxxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxx X. Xxxxxxxxxxx
Title: Assistant Vice President Title: President and Chief Executive Office
and Assistant Secretary
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