AGREEMENT AND PLAN OF REORGANIZATION (WMVT)
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 1st day of December, 2006, by and among Principal Variable Contracts
Fund, Inc. ("PVC"), a Maryland corporation, on behalf of its separate series
listed below (the "Acquiring Funds") and WM Variable Trust ("WMVT"), a
Massachusetts business trust, on behalf of its separate series listed below (the
"Acquired Funds"), and for purposes of Section 7 of this Agreement only, by
Principal Management Corporation ("PMC"), an Iowa corporation, and New American
Capital, Inc. ("NAC"), a Delaware corporation.
Corresponding
Acquired Funds Acquiring Funds
-------------- ---------------
Equity Income Fund -- Equity Income Account I*
Growth Fund -- Growth Account
Growth & Income Fund -- LargeCap Blend Account
Income Fund -- Income Account*
International Growth Fund -- Diversified International Account
Mid Cap Stock Fund -- MidCap Stock Account*
Money Market Fund -- Money Market Account
REIT Fund -- Real Estate Securities Account
Short Term Income Fund -- Short Term Income Account*
Small Cap Growth Fund -- SmallCap Growth Account
Small Cap Value Fund -- SmallCap Value Account
Balanced Portfolio -- Balanced Portfolio*
Conservative Balanced Portfolio -- Conservative Balanced Portfolio*
Conservative Growth Portfolio -- Conservative Growth Portfolio*
Flexible Income Portfolio -- Flexible Income Portfolio*
Strategic Growth Portfolio -- Strategic Growth Portfolio*
U.S. Government Securities Fund -- Mortgage Securities Account*
West Coast Equity Fund -- West Coast Equity Account*
This Agreement shall be deemed to be a separate agreement between WMVT,
on behalf of each Acquired Fund, and PVC, on behalf of the corresponding
Acquiring Fund. As used herein, unless the context otherwise requires, each
Acquired Fund and its corresponding Acquiring Fund are, respectively, the
"Acquired Fund" and the "Acquiring Fund." Certain Acquiring Funds are new series
of PVC that are being organized in connection with the transactions contemplated
by this Agreement. These Acquiring Funds are indicated above by an asterisk.
They will not commence operations until the Closing. The provisions of this
Agreement that apply to such an Acquiring Fund are to be read with that
understanding. The remaining Acquiring Funds are referred to herein as the
"Existing Acquiring Funds.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"), and the
Treasury Regulations promulgated thereunder. The reorganization with respect to
each Acquired Fund and its corresponding Acquiring Fund will consist of: (i) the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund and the
assumption by the Acquiring Fund of the Stated Liabilities of the Acquired Fund
(as defined in Section 1.3) in exchange solely for Class 1 and Class 2 voting
shares of capital stock of the Acquiring Fund (the "Acquiring Fund Shares");
(ii) the distribution of the Acquiring Fund Shares to the shareholders of the
Acquired Fund according to their respective interests; and (iii) the
termination, dissolution and complete liquidation of the Acquired Fund as soon
as practicable thereafter, all upon the terms and conditions hereinafter set
forth (the "Reorganization").
WHEREAS, each of the Acquired Fund and the corresponding Acquiring Fund
is a separate series of an open-end, management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Acquired Fund owns securities and other investments which generally are assets
of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Board of Directors of PVC has determined that the
Reorganization is in the best interests of the Acquiring Fund; and
WHEREAS, the Board of Trustees of WMVT has determined that the
Reorganization is in the best interests of the Acquired Fund;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ACQUIRED FUND ASSETS IN EXCHANGE FOR ACQUIRING FUND SHARES AND
ASSUMPTION OF STATED LIABILITIES AND LIQUIDATION OF ACQUIRED FUND
1.1. The Exchange. Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained herein:
(a) The Acquired Fund will transfer and deliver to the Acquiring Fund,
and the Acquiring Fund will acquire, all the assets of the Acquired Fund as set
forth in Section 1.2;
(b) The Acquiring fund will assume the Stated Liabilities of the
Acquired Fund as set forth in Section 1.3; and
(c) the Acquiring Fund will issue and deliver to the Acquired Fund, the
number of full and fractional shares of each corresponding class of Acquiring
Fund Shares determined by dividing the aggregate value of the Acquired Fund's
assets, net of certain stated liabilities of the Acquired Fund, attributable to
each class of Acquired Fund Shares (as set forth below), computed in the manner
and as of the time and date set forth in Section 2.1, by the net asset value of
one Acquiring Fund Share of the corresponding class (as set forth below),
computed in the manner and as of the time and date set forth in Section 2.2.
Such transactions shall take place at the closing provided for in
Section 3.1 (the "Closing").
The classes of shares of the Acquiring Fund correspond to the classes
of shares of the Acquired Fund (the "Acquired Fund Shares") as follows: Class 1
shares of the Acquiring Fund correspond to Class 1 shares of the Acquired Fund;
and Class 2 shares of the Acquiring Fund correspond to Class 2 shares of the
Acquired Fund.
1.2. Assets to Be Acquired. The assets of the Acquired Fund to be
acquired by the Acquiring Fund shall consist of all property owned by the
Acquired Fund, including, without limitation, all cash, securities, commodities,
interests in futures and other financial instruments, claims, (whether absolute
or contingent, known or unknown), receivables (including dividends, interest,
principal, subscriptions and other receivables), goodwill and other intangible
property, all books and records belonging to the Acquired Fund, any deferred or
prepaid expenses shown as an asset on the books of the Acquired Fund on the
closing date provided for in Section 3.1 (the "Closing Date"), and all
interests, rights, privileges and powers, other than cash in an amount necessary
to pay dividends and distributions as provided in Section 6.2 (c) and other than
the Acquired Fund's rights under this Agreement (collectively, "Assets").
The Acquired Fund will, at least 7 days prior to the Closing Date,
furnish the Acquiring Fund with (a) a list of the Acquired Fund's portfolio
securities and other investments and (b) a list of the Acquired Fund's "historic
business assets," which are defined for this purpose as (i) those assets that
were acquired by the Acquired Fund prior to the date of the approval of the
Reorganization by the Board of Trustees of WMVT, and (ii) those assets that were
acquired subsequent to such Board approval but in accordance with the Acquired
Fund's investment objectives and not with a view to, or in anticipation or as
part of, the Reorganization. The Acquiring Fund will, at least 3 days prior to
the Closing Date, furnish the Acquired Fund with a list of the securities and
other instruments, if any, on the Acquired Fund's list referred to above that do
not conform to the Acquiring Fund's investment objectives, policies and
restrictions. If requested by the Acquiring Fund, the Acquired Fund will dispose
of securities and other instruments on the Acquiring Fund's list before the
Closing Date. In addition, if it is determined that the portfolios of the
Acquired Fund and the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the Acquiring Fund with
respect to such investments, the Acquired Fund, if requested by the Acquiring
Fund, will dispose of a sufficient amount of such investments as may be
necessary to avoid violating such limitations as of the Closing Date. After the
Acquired Fund furnishes the Acquiring Fund with the list described above, the
Acquired Fund will not, without the prior approval of the Acquiring Fund,
acquire any additional securities other than securities which the Acquiring Fund
is permitted to purchase, pursuant to its investment objectives, policies and
restrictions or otherwise (taking into consideration its own portfolio
composition as of such date). Notwithstanding the foregoing, (a) nothing herein
will require the Acquired Fund to dispose of any portfolio securities or other
investments, if, in the reasonable judgment of the Acquired Fund's trustees or
investment adviser, such disposition would adversely affect the tax-free nature
of the Reorganization for federal income tax purposes or would otherwise not be
in the best interests of the Acquired Fund and (b) nothing will permit the
Acquired Fund to dispose of any portfolio securities or other investments if, in
the reasonable judgment of the Acquiring Fund's directors or investment adviser,
such disposition would adversely affect the tax-free nature of the
Reorganization for federal income tax purposes or would otherwise not be in the
best interests of the Acquired Fund.
1.3. Liabilities to Be Assumed. The Acquired Fund will endeavor to
identify and discharge, to the extent practicable, all of its liabilities and
obligations, including all liabilities relating to operations, prior to the
Closing Date. The Acquiring Fund shall assume only those accrued and unpaid
liabilities of the Acquired Fund set forth in the Acquired Fund's statement of
assets and liabilities as of the Closing Date delivered by the Acquired Fund to
the Acquiring Fund pursuant to Section 3.2 (the "Stated Liabilities"). The
Acquiring Fund shall assume only the Stated Liabilities and shall not assume any
other debts, liabilities or obligations of the Acquired Fund. Notwithstanding
the foregoing, the Acquiring Fund agrees that all rights to indemnification and
all limitations of liability existing in favor of the Acquired Fund's current
and former Trustees and officers, acting in their capacities as such, under the
Acquired Fund's Declaration of Trust and Bylaws as in effect as of the date of
this Agreement shall survive the Reorganization as obligations of the Acquiring
Fund and shall continue in full force and effect, without any amendment thereto,
and shall constitute rights which may be asserted against the Acquired Fund, its
successors or assigns.
1.4. Liquidation and Distribution. Immediately after the transfer of
Assets provided for in Section 1.1, the Acquired Fund will distribute in
complete liquidation of the Acquired Fund to the shareholders of record of each
class of Acquired Fund Shares, determined as of the close of regular trading on
the New York Stock Exchange ("NYSE") on the Closing Date (the "Acquired Fund
Shareholders"), on a pro rata basis, all the Acquiring Fund Shares of the
corresponding class received by the Acquired Fund pursuant to Section 1.1. Such
distribution and liquidation will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders, and representing
the respective pro rata number of each class of Acquiring Fund Shares due
Acquired Fund Shareholders holding the corresponding class of Acquired Fund
Shares. All issued and outstanding shares of the Acquired Fund will
simultaneously be redeemed and cancelled on the books of the Acquired Fund and
will be null and void. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such exchange.
1.5. Ownership of Shares. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent.
1.6 Surrender of Certificates. With respect to Acquiring Fund Shares
distributable pursuant to Section 1.4 to an Acquired Fund Shareholder holding a
certificate or certificates for Acquired Fund Shares, if any, on the Closing
Date, the Acquiring Fund will not permit such shareholder to receive Acquiring
Fund Share certificates therefor, exchange such Acquiring Fund Shares for shares
of other investment companies, effect an account transfer of such Acquiring Fund
Shares, or pledge or redeem such Acquiring Fund Shares until the Acquiring Fund
has been notified by the Acquired Fund or its agent that such Acquired Fund
Shareholder has surrendered all his or her outstanding certificates for Acquired
Fund Shares or, in the event of lost certificates, posted adequate bond.
1.7. Transfer Taxes. Any transfer taxes payable upon the 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 transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.8. Reporting Responsibility. Any reporting responsibility of or with
respect to an Acquired Fund, including, but not limited to, the responsibility
for filing of regulatory reports, tax returns, or other documents with the
Securities and Exchange Commission (the "SEC"), any state securities commission,
and any federal, state or local tax authorities or any other relevant regulatory
authority, is and shall remain the responsibility of the Acquired Fund.
1.9 Termination and Dissolution. As soon as practicable after the
Closing Date, WMVT shall make all filings and take all other necessary steps to
effect the complete dissolution of the Acquired Fund, and after the dissolution
of all the Acquired Funds, to effect its complete dissolution and to terminate
its registration under the 1940 Act.
1.10 Books and Records. Immediately after the Closing Date, the share
transfer books relating to the Acquired Fund shall be closed, and no transfer of
shares shall thereafter be made on such books. All books and records of WMVT
relating to the Acquired Fund, including without limitation all books and
records required to be maintained under the 1940 Act and the rules and
regulations thereunder, shall be available to PVC from and after the Closing
Date and shall be turned over to PVC as soon as practicable after the Closing
Date. After delivery of such books and records to PIF, PIF shall be responsible
for the maintenance of such books and records in accordance with the 1940 Act
and the rules and regulations thereunder.
1.11 Action by PVC and WMVT. PVC shall take on behalf of the Acquiring
Fund all actions expressed herein as being the obligations of the Acquiring
Fund. WMVT shall take on behalf of the Acquired Fund all actions expressed
herein as being the obligations of the Acquired Fund.
2. VALUATION
2.1. Valuation of Assets. The value of the Assets to be transferred to
the Acquiring Fund shall be computed as of the close of regular trading on the
NYSE, and after the declaration of any dividends pursuant to Section 6.2 (c), on
the Closing Date, using the valuation procedures set forth in the Articles of
Incorporation and Bylaws of the Acquiring Fund and the then current prospectus
or prospectuses or statement or statements of additional information of the
Acquiring Fund (collectively, as amended or supplemented from time to time, the
"Acquiring Fund Prospectus"), and shall be certified by the Acquired Fund.
2.2. Valuation of Shares. The net asset value of a share of each class
of Acquiring Fund Shares shall be the net asset value per share computed with
respect to that class as of the close of regular trading on the NYSE on the
Closing Date, using the valuation procedures set forth in the Articles of
Incorporation and the Bylaws of the Acquiring Fund and the Acquiring Fund
Prospectus.
3. CLOSING AND CLOSING DATE
3.1. Closing Date. The Closing shall be held on January 5, 2007 (the
"Closing Date"), at the offices of Principal Management Corporation, 000 0xx
Xxxxxx, Xxx Xxxxxx, Xxxx 00000, or at such other time and place as PVC and WMVT
may agree. Unless otherwise provided, all acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of regular trading on the
NYSE on the Closing Date (the "Effective Time").
3.2 Statement of Assets and Stated Liabilities. WMVT will prepare and
deliver to the Acquiring Fund on the second business day prior to the Closing
Date a statement of the Assets and Stated Liabilities of the Acquired Fund as of
such date for review and agreement by the parties to determine that the Assets
and Stated Liabilities of the Acquired Fund are being correctly determined in
accordance with the terms of this Agreement. WMVT will deliver at the Closing
(i) an updated statement of Assets and Stated Liabilities of the Acquired Fund
and (ii) a list of the Acquired Fund's portfolio assets showing the tax costs of
each of its assets by lot and the holding periods of such assets, each of (i)
and (ii) as of the Closing Date, and certified by the principal accounting
officer of WMVT.
3.3. Custodian's Certificate. The Acquired Fund shall instruct its
custodian to deliver, at the Closing, a certificate of an authorized officer
stating that (i) the Assets have been delivered in proper form to the custodian
for the Acquiring Fund on the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets, including all applicable federal and
state stock transfer stamps, if any, have been paid or provision for payment has
been made. The Acquired Fund's portfolio securities represented by a certificate
or other written instrument shall be presented by the custodian for the Acquired
Fund to the custodian for the Acquiring Fund for examination no later than five
business days preceding the Closing Date, and shall be transferred and delivered
by the Acquired Fund as of the Closing Date for the account of the Acquiring
Fund duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof free and clear of all liens, encumbrances and
claims whatsoever. The Acquired Fund's portfolio securities and instruments
deposited with a securities depository, as defined in Rule 17f-4 under the 1940
Act, or other permitted counterparties or a futures commission merchant, as
defined in Rule 17f-6 under the 1940 Act, shall be delivered as of the Closing
Date by book entry, in accordance with the customary practices of such
depositories and future commission merchants and the custodian for the Acquiring
Fund. The cash to be transferred by the Acquired Fund shall be delivered in the
manner specified by the Acquiring Fund.
3.4. Transfer Agent's Certificate. The Acquired Fund shall instruct its
transfer agent to deliver at the Closing a certificate of an authorized officer
stating that its records contain the names and addresses of the Acquired Fund
Shareholders as of the Closing Date and the number and percentage ownership (to
four decimal places) of outstanding shares of each class of the Acquired Fund
owned by each such shareholder immediately prior to the Closing. The Acquiring
Fund shall issue and deliver, or instruct its transfer agent to issue and
deliver, a confirmation evidencing the Acquiring Fund Shares to be credited on
the Closing Date to the Acquired Fund, or provide evidence reasonably
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.
3.5 Failure to Deliver Assets. If the Acquired Fund is unable to make
delivery pursuant to Section 3.2 to the custodian for the Acquiring Fund of any
of the Assets of the Acquired Fund for the reason that any of such Assets have
not yet been delivered to it by the Acquired Fund's broker, dealer or other
counterparty, then, in lieu of such delivery, the Acquired Fund shall deliver,
with respect to those Assets, executed copies of an agreement of assignment and
due bills executed on behalf of the broker, dealer or other counterparty, or
such other documentation in lieu thereof as may be acceptable to the Acquiring
Fund, together with such other documents as may be required by the Acquiring
Fund or its custodian.
3.6 Delivery of Additional Items. At the Closing each party shall
deliver to the other such bills of sale, instruments of assumptions of
liabilities, checks, assignments, share certificates, receipts and other
documents, as such other party or its counsel may reasonably request in
connection with the transfer of assets, assumption of liabilities and
liquidation contemplated by Section 1.
3.7. Effect of Suspension in Trading. In the event that on the Closing
Date (a) the NYSE or another primary trading market for portfolio securities of
the Acquiring Fund or the Acquired Fund shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading on the
NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of
the net assets of the Acquired Fund or the Acquiring Fund is impracticable, 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 or
such other date to which PVC and WMVT may agree.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Acquired Fund. WMVT on behalf of the Acquired Fund represents
and warrants to PVC and the Acquiring Fund as follows:
(a) Organization, Existence, etc. WMVT is a voluntary association with
transferable shares commonly referred to as a Massachusetts business trust that
is duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has power to own all of its properties and
assets and to carry on its business as presently conducted. WMVT is duly
authorized to transact business in Massachusetts and is qualified to do business
in all jurisdictions in which it is required to be so qualified, except
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the Acquired Fund. The Acquired Fund is a legally designated,
validly existing series of shares of WMVT representing interests in a separate
portfolio thereof under the laws of Massachusetts. Each of WMVT and the Acquired
Fund has all necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now conducted, except
authorizations which the failure to so obtain would not have a material adverse
effect on the Acquired Fund.
(b) Registration as Investment Company. WMVT is duly registered under
the 1940 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.
Each of WMVT and the Acquired Fund is in compliance in all material respects
with the 1940 Act and the rules and regulations thereunder.
(c) Form N-14. The Registration Statement on N-14 and the Combined
Prospectus/Proxy Statement contained therein relating to the transactions
contemplated by this Agreement as amended or supplemented from time to time (the
"Registration Statement"), as of the effective date of the Registration
Statement and at all times subsequent thereto up to and including the Closing
Date, conforms and will conform, as it relates to WMVT and the Acquired Fund, in
all material respects to the requirements of federal and state securities laws
and the rules and regulations thereunder and does not and will not include, as
it relates to WMVT and the Acquired Fund, any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Any written information furnished by WMVT
with respect to WMVT or the Acquired Fund for use in the Registration Statement
or any other materials provided in connection with the Reorganization, as of the
effective date of the Registration and at all times subsequent thereto up to and
including the Closing Date, does not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under which such
statements were made, not misleading.
(d) Current Offering Documents. The prospectus, statement of additional
information and shareholder reports of WMVT relating to the Acquired Fund, each
to the extent incorporated by reference in the Registration Statement, comply in
all material respects with the requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act, are and will be accurate in all
material respects and do not and 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.
(e) No Violation. Each of WMVT and the Acquired Fund is not in
violation of Massachusetts law or in any material respect of any provision of
WMVT's Declaration of Trust or bylaws or of any agreement, indenture, note,
mortgage, instrument, contract, lease or other undertaking to which WMVT or the
Acquired Fund is a party or by which it is bound, and the execution, delivery
and performance of this Agreement will not result in any such violation or in
the acceleration of any obligation, or the imposition or any penalty, under any
material agreement, indenture, instrument, contract, lease or other undertaking
to which WMVT or the Acquired Fund is a party or by which it is bound.
(f) Contracts. Each of WMVT and the Acquired Fund has no material
contracts, agreements or other commitments (other than this Agreement) that will
not be terminated without liability to it before the Closing Date, other than
liabilities, if any, to be discharged prior to the Closing Date or reflected as
Stated Liabilities in the Statement of Assets and Stated Liabilities as provided
in Section 3.2 and other than contracts that may be terminated without liability
to it following the Closing Date.
(g) Litigation. To the knowledge of WMVT and the Acquired Fund, except
as has been disclosed in writing to PVC, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to the Acquired Fund, any of its properties
or assets, or any person whom WMVT or the Acquired Fund may be obligated to
indemnify in connection with such litigation, proceeding or investigation, there
are no facts which form the basis for the institution of any such litigation,
proceeding or investigation, and each of WMVT and the Acquired Fund is not a
party to or subject to the provisions of any order, decree or judgment of any
court of governmental body, which materially and adversely affects its business
or its ability to consummate the transactions contemplated hereby.
(h) Financial Statements. The audited financial statements of the
Acquired Fund for the fiscal year ended December 31, 2005, have been prepared in
accordance with accounting principles generally accepted in the United States of
America consistently applied and have been audited by Deloitte & Touche LLP .
True and complete copies of such statements have been furnished to PVC. Such
statements fairly reflect the financial condition and the results of operations
of the Acquired Fund as of such date and the results of operations and changes
in net assets for the periods indicated, and there are no liabilities of or the
Acquired Fund whether actual or contingent and whether or not determined or
determinable as of such date that are required to be disclosed but are not
disclosed in such statements. The unaudited financial statements of the Acquired
Fund for the six months ended June 30, 2006 have been prepared in accordance
with accounting principles generally accepted in the United States of America
consistently applied by WMVT. True and complete copies of such statements have
been furnished to PVC. Such statements fairly reflect the financial condition
and the results of operations of the Acquired Fund as of such date and the
results of operations and changes in net assets for the periods indicated, and
there are no liabilities of the Acquired Fund whether actual or contingent and
whether or not determined or determinable as of such date that are required to
be disclosed but are not disclosed in such statements. There are no liabilities
of any Acquired Fund, whether actual or contingent and whether or not determined
or determinable, other than liabilities disclosed or provided for in the
financial statements of the Acquired Fund referred to above, liabilities
incurred in the ordinary course of business subsequent to December 31, 2005,
liabilities previously disclosed to and accepted by PVC and liabilities which in
the aggregate have not been and will not be materially adverse to the financial
condition, results of operations, business or assets of the Acquired Fund.
(i) No Material Adverse Change. Since December 31, 2005, there has been
no material adverse change in the financial condition, assets, liabilities or
business of the Acquired Fund (other than changes occurring in the ordinary
course of business) or any incurrence by the Acquired Fund of indebtedness,
except as disclosed to PVC. For the purposes of this Section, distributions of
net investment income and net realized capital gains, changes in portfolio
securities, changes in the market value of portfolio securities or net
redemptions shall be deemed to be in the ordinary course of business.
(j) Taxes. Each of WMVT and the Acquired Fund has duly filed all
federal, state, local and foreign tax returns which are required to have been
filed, and all taxes of WMVT and the Acquired Fund which are due and payable
have been paid except for amounts that alone or in the aggregate would not
reasonably be expected to have a material adverse effect. As of the Closing
Date, all federal and other tax returns and reports of WMVT and the Acquired
Fund required by law to have been filed by such date (giving effect to
extensions) shall have been filed, and all federal and other taxes shown to be
due on such returns and reports or on any assessment received shall have been
paid, or provisions shall have been made for the payment thereof. All of the
Acquired Fund's tax liabilities will have been adequately provided for on its
books. To the best of the knowledge of WMVT and the Acquired Fund, each of them
will not have had any tax deficiency or liability asserted against it or
question with respect thereto raised, and it will not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes in
excess of those already paid.
(k) Regulated Investment Company. Each of WMVT and the Acquired Fund
has met the requirements of subchapter M of the Code for treatment as a
"regulated investment company" within the meaning of Section 851 of the Code in
respect of each taxable year since it commenced operations and will continue to
meet such requirements at all times through the Closing Date. Each of WMVT and
the Acquired Fund has not at any time since its inception been liable for nor is
now liable for any material income or excise tax pursuant to Section 852 or 4982
of the Code. The Acquired Fund is in compliance in all material respects with
applicable regulations of the Internal Revenue Service pertaining to the
reporting of dividends and other distributions on and redemptions of its capital
stock and to withholding in respect of dividends and other distributions to
shareholders and is not liable for any material penalties which could be imposed
thereunder.
(l) Capitalization. The authorized capital of WMVT consists of an
unlimited number of shares of beneficial interest, of such number of different
series as the Board of Trustees may authorize from time to time. All issued and
outstanding shares of beneficial interest of the Acquired Fund are, and on the
Closing Date will be, duly authorized and validly issued and outstanding, fully
paid and non-assessable (except as described in the prospectus of WMVT) by WMVT
and will have been issued in compliance with all applicable registration or
qualification requirements of federal and state securities laws. No options,
warrants or other rights to subscribe for or purchase, or securities convertible
into, any shares of beneficial interest of the Acquired Fund are outstanding and
none will be outstanding on the Closing Date. The shares of beneficial interest
are not subject to preemptive or dissenter's rights. At the Effective Time, all
issued and outstanding shares of beneficial interest in the Acquired Fund will
be held in book-entry form by shareholders of record of the Acquired Fund as set
forth on the books and records of WMVT in the amounts set forth therein, and as
set forth in any list of shareholders of record provided to PVC or the
corresponding Acquiring Fund for purposes of the Reorganization.
(m) Investment Operations. The Acquired Fund's investment operations
from inception to the date of this Agreement have been in compliance in all
material respects with the investment policies and investment restrictions set
forth in its prospectus or prospectuses and statement or statements of
additional information as in effect from time to time, except as previously
disclosed in writing to PVC.
(n) Authority Relative to this Agreement. WMVT, on behalf of the
Acquired Fund, has the power to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Board of Trustees of WMVT, and, subject to approval by the
required majority of the shareholders of the Acquired Fund, this Agreement
constitutes the valid and binding obligation of WMVT and the Acquired Fund,
enforceable in accordance with its terms except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and other equitable principles.
(o) No Distribution. The Acquiring Fund Shares to be issued to the
Acquired Fund pursuant to Section 1.1(c) will not be acquired for the purpose of
making any distribution thereof other than to the shareholders of the Acquired
Fund as provided in Section 1.4.
(p) Information. The information provided by the Acquired Fund for use
in the Registration Statement referred to in Section 4.1(c) or in no-action
letters, applications for orders or other documents that may be necessary in
connection with the transactions contemplated by this Agreement shall be
accurate and complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations as applicable
thereto.
(q) Regulatory Approvals. No consent, approval, authorization or order
of any court or governmental authority is required for the consummation by WMVT
on behalf of the Acquired Fund of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the Securities
Exchange Act of 1934 (the "1934 Act"), the 1940 Act and state securities or
"Blue Sky" laws (which terms as used herein shall include the laws of the
District of Columbia and of Puerto Rico).
(r) The Assets. At the Closing Date, WMVT, on behalf of the Acquired
Fund, will have good and marketable title to the Assets of the Acquired Fund to
be transferred to the corresponding Acquiring Fund pursuant to Section 1.1(a)
and will have full right, power and authority to sell, assign, transfer and
deliver such Assets hereunder. At the Closing Date, subject only to the delivery
of the Assets and the Stated Liabilities and payment therefor as contemplated by
this Agreement, the Acquiring Fund will acquire good and marketable title to the
Assets of the Acquired Fund, subject to no encumbrances, liens or security
interests whatsoever and without any restrictions on their transfer, except as
previously disclosed to and accepted by the Acquiring Fund.
(s) Diversification. At the Closing Date, the Acquired Fund will have
sold such of its assets, if any, as are necessary to assure that, after giving
effect to the acquisition of the Assets of the Acquired Fund pursuant to this
Agreement, the Acquiring Fund, if it is a "diversified company" within the
meaning of Section 5(b)(1) of the 1940 Act, will remain such a "diversified
company" and in any event will remain in compliance with such other mandatory
investment restrictions as are set forth in the Acquiring Fund Prospectus, as
amended through the Closing Date.
(t) Restricted Securities. No registration of any of the Assets of the
Acquired Fund would be required if they were, as of the time of such transfer,
the subject of a public distribution by either of the Acquiring Fund or the
Acquired Fund, except as previously disclosed by the Acquired Fund to the
Acquiring Fund.
(u) Variable Contract Diversification Requirements. WMVT and the
Acquired Fund currently are, at all times since their inception have been, and
will continue to be up until and at the Effective Time in compliance with
Section 817(h)(1) of the Code and Treas. Reg. Section 1.817-5 (relating to the
diversification requirements for variable annuity, endowment and life insurance
contracts) as if those provisions applied directly to that Fund. The Acquired
Fund's shares are (and since its inception have been) held only by (i) insurance
company "segregated asset accounts" within the meaning of Treas. Reg. Section
1.817-5(e) and (ii) other purchasers of the kind specified in Treas. Reg.
Section 1.817-5(f)(3) as from time to time in effect, and at the Effective Time
will be held only by purchasers of the types specified in clauses (i) and (ii)
of this sentence.
4.2 Acquiring Fund. PVC on behalf of the Acquiring Fund represents and
warrants to WMVT and the Acquired Fund as follows:
(a) Organization, Existence, etc. PVC is a corporation that is duly
organized, validly existing and in good standing under the laws of the State of
Maryland and has power to own all of its properties and assets and to carry on
its business as presently conducted. PVC is duly authorized to transact business
in Maryland and is qualified to do business in all jurisdictions in which it is
required to be so qualified, except jurisdictions in which the failure to so
qualify would not have a material adverse effect on the Acquiring Fund. The
Acquiring Fund is a legally designated, validly existing series of shares of PVC
representing interests in a separate portfolio thereof under the laws of
Maryland. Each of PVC and the Acquiring Fund has all necessary federal, state
and local authorizations to own all of its properties and assets and to carry on
its business as now, or in the case of a New Acquiring Fund, as then, being
conducted, except authorizations which the failure to so obtain would not have a
material adverse effect on the Acquiring Fund.
(b) Registration as Investment Company. PVC is duly registered under
the 1940 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.
Each of PVC and the Acquiring Fund is in compliance in all material respects
with the 1940 Act and the rules and regulations thereunder.
(c) Form N-14. The Registration Statement as of its effective date and
at all times subsequent thereto up to and including the Closing Date, conforms
and will conform, as it relates to PVC and the Acquiring Fund, in all material
respects to the requirements of federal and state securities laws and the rules
and regulations thereunder and does not and will not include, as it relates to
PVC and the Acquiring Fund, any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representations and warranties in this Section
4.2(c) apply to statements or omissions made in reliance upon and in conformity
with written information concerning WMVT and the Acquired Fund furnished to the
Acquiring Fund by WMVT or the Acquired Fund. From the effective date of the
Registration Statement through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished by PVC
with respect to PVC and the Acquiring Fund for use in the Registration Statement
or any other materials provided in connection with the Reorganization, as of the
effective date of the Registration and at all times subsequent thereto up to and
including the Closing Date, does not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under which such
statements were made, not misleading.
(d) Current Offering Documents. The Acquiring Fund Prospectus and
shareholder reports of PVC relating to the Acquiring Fund, each to the extent
incorporated by reference in the Registration Statement, comply in all material
respects with the requirements of the 1933 Act and the 1940 Act, are and will be
accurate in all material respects and do not and 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.
(e) Acquiring Fund Assets. At the Closing Date, PVC, on behalf of the
Acquiring Fund, will have good and marketable title to the assets attributable
to the Acquiring Fund.
(f) No Violation. Each of PVC and the Acquiring Fund is not in
violation of Maryland law or in any material respect of any provision of PVC's
Articles of Incorporation or bylaws or of any agreement, indenture, note,
mortgage, instrument, contract, lease or other undertaking to which PVC or the
Acquiring Fund is a party or by which it is bound, and the execution, delivery
and performance of this Agreement will not result in any such violation or in
the acceleration of any obligation, or the imposition or any penalty, under any
material agreement, indenture, instrument, contract, lease or other undertaking
to which PVC or the Acquiring Fund is a party or by which it is bound.
(g) Litigation. To the knowledge of PVC and the Acquiring Fund, except
as has been disclosed in writing to WMVT, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to the Acquiring Fund, any of its properties
or assets, or any person whom PVC or the Acquiring Fund may be obligated to
indemnify in connection with such litigation, proceeding or investigation, there
are no facts which form the basis for the institution of any such litigation,
proceeding or investigation, and each of PVC and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree or judgment of any
court of governmental body, which materially and adversely affects its business
or its ability to consummate the transactions contemplated hereby.
(h) Financial Statements. The audited financial statements of the
Acquiring Fund for the fiscal year ended December 31, 2005, have been prepared
in accordance with accounting principles generally accepted in the United States
of America consistently applied and have been audited by Ernst & Young LLP. True
and complete copies of such statements have been furnished to WMVT. Such
statements fairly reflect the financial condition and the results of operations
of the Acquiring Fund as of such date and the results of operations and changes
in net assets for the periods indicated, and there are no liabilities of the
Acquiring Fund whether actual or contingent and whether or not determined or
determinable as of such date that are required to be disclosed but are not
disclosed in such statements. The unaudited financial statements of Acquiring
Fund for the six months ended June 30, 2006 have been prepared in accordance
with accounting principles generally accepted in the United States of America
consistently applied by PVC. True and complete copies of such statements have
been furnished to WMVT. Such statements fairly reflect the financial condition
and the results of operations of the Acquiring Fund as of such date and the
results of operations and changes in net assets for the periods indicated, and
there are no liabilities of the Acquiring Fund whether actual or contingent and
whether or not determined or determinable as of such date that are required to
be disclosed but are not disclosed in such statements. There are no liabilities
of any Acquiring Fund, whether actual or contingent and whether or not
determined or determinable, other than liabilities disclosed or provided for in
the financial statements of the Acquiring Fund referred to above, liabilities
incurred in the ordinary course of business subsequent to December 31, 2005,
liabilities previously disclosed to and accepted by WMVT and liabilities which
in the aggregate have not been and will not be materially adverse to the
financial condition, results of operations, business or assets of the Acquiring
Fund.
(i) No Material Adverse Change. Since December 31, 2005, there has been
no material adverse change in the financial condition, assets, liabilities or
business of the Acquiring Fund (other than changes occurring in the ordinary
course of business) or any incurrence by the Acquiring Fund of indebtedness,
except as disclosed to WMVT. For the purposes of this Section, distributions of
net investment income and net realized capital gains, changes in portfolio
securities, changes in the market value of portfolio securities or net
redemptions shall be deemed to be in the ordinary course of business.
(j) Taxes. Each of PVC and the Acquiring Fund has duly filed all
federal, state, local and foreign tax returns which are required to have been
filed, and all taxes of PVC and the Acquiring Fund which are due and payable
have been paid except for amounts that alone or in the aggregate would not
reasonably be expected to have a material adverse effect. As of the Closing
Date, all federal and other tax returns and reports of PVC and the Acquiring
Fund required by law to have been filed by such date (giving effect to
extensions) shall have been filed, and all federal and other taxes shown to be
due on such returns and reports or on any assessment received shall have been
paid, or provisions shall have been made for the payment thereof. All of the
Acquiring Fund's tax liabilities will have been adequately provided for on its
books. To the best of the knowledge of PVC and the Acquiring Fund, each of them
will not have had any tax deficiency or liability asserted against it or
question with respect thereto raised, and it will not be under audit by the
Internal Revenue Service or by any state or local tax authority for taxes in
excess of those already paid.
(k) Regulated Investment Company. Each of PVC and the Acquiring Fund
has met the requirements of subchapter M of the Code for treatment as a
"regulated investment company" within the meaning of Section 851 of the Code in
respect of each taxable year since it commenced operations and will continue to
meet such requirements at all times through the Closing Date. Each of PVC and
the Acquiring Fund has not at any time since its inception been liable for nor
is now liable for any material income or excise tax pursuant to Section 852 or
4982 of the Code. The Acquiring Fund is in compliance in all material respects
with applicable regulations of the Internal Revenue Service pertaining to the
reporting of dividends and other distributions on and redemptions of its capital
stock and to withholding in respect of dividends and other distributions to
shareholders and is not liable for any material penalties which could be imposed
thereunder.
(l) Capitalization. The authorized capital of PVC consists of [ ]
shares of capital stock of such number of different series as the Board of
Directors may authorize from time to time. All issued and outstanding shares of
the Acquiring Fund are, and on the Closing Date will be, duly authorized and
validly issued and outstanding, fully paid and non-assessable (except as
described in the prospectus of PVC) by PVC and will have been issued in
compliance with all applicable registration or qualification requirements of
federal and state securities laws. No options, warrants or other rights to
subscribe for or purchase, or securities convertible into, any shares of the
Acquiring Fund are outstanding and none will be outstanding on the Closing Date.
The shares are not subject to preemptive or dissenter's rights.
(m) Investment Operations. The Acquiring Fund's investment operations
from inception to the date of this Agreement have been in compliance in all
material respects with the investment policies and investment restrictions set
forth in its prospectus or prospectuses and statement or statements of
additional information as in effect from time to time, except as previously
disclosed in writing to WMVT.
(n) Authority Relative to this Agreement. PVC, on behalf of the
Acquiring Fund, has the power to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Board of Directors of PVC, and this Agreement constitutes the
valid and binding obligation of PVC and the Acquiring Fund, enforceable in
accordance with its terms except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and other equitable principles.
(o) Information. The information provided by the Acquiring Fund for use
in the Registration Statement referred to in Section 4.1(c) or in no-action
letters, applications for orders or other documents that may be necessary in
connection with the transactions contemplated by this Agreement shall be
accurate and complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations as applicable
thereto.
(p) Regulatory Approvals. No consent, approval, authorization or order
of any court or governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated by this Agreement, except such
as may be required under the 1933 Act, the 1934 Act, the 1940 Act and state
securities or "Blue Sky" laws (which terms as used herein shall include the laws
of the District of Columbia and of Puerto Rico).
(q) Variable Contract Diversification Requirements. PVC and the
Acquiring Fund currently are, at all times since their inception have been, and
will continue to be up until and at the Effective Time in compliance with
Section 817(h)(1) of the Code and Treas. Reg. Section 1.817-5 (relating to the
diversification requirements for variable annuity, endowment and life insurance
contracts) as if those provisions applied directly to that Fund. The Acquiring
Fund's shares are (and since its inception have been) held only by (i) insurance
company "segregated asset accounts" within the meaning of Treas. Reg. Section
1.817-5(e) and (ii) other purchasers of the kind specified in Treas. Reg.
Section 1.817-5(f)(3) as from time to time in effect, and at the Effective Time
will be held only by purchasers of the types specified in clauses (i) and (ii)
of this sentence.
5. COVENANTS
5.1 The Acquired Fund. WMVT on behalf of the Acquired Fund covenants
and agrees as follows:
(a) Operations in the Ordinary Course. Except as otherwise contemplated
by this Agreement, WMVT with respect to the Acquired Fund shall conduct its
business in the ordinary course between the date of this Agreement and the
Closing Date, it being understood that such ordinary course of business will
include the regular and customary periodic dividends and distributions.
(b) Meeting of the Acquired Fund's Shareholders. WMVT will call and
hold a meeting of the shareholders of the Acquired Funds to consider and act
upon this Agreement and the transactions contemplated herein and take all other
reasonable action necessary to obtain the required shareholder approval of the
transactions contemplated hereby. The meeting shall be scheduled for December
15, 2006 or such other date to which WMVT and PVC may agree.
(c) Registration Statement. In connection with the preparation of the
Registration Statement, WMVT will cooperate with PVC and will furnish to PVC the
information relating to the Acquired Funds required to be included in the
Registration Statement.
(d) Cooperation in Effecting Reorganization. The Acquired Fund agrees
to take, or cause to be taken, all action, and do or cause to be done, all
things reasonably necessary, proper or advisable to cause the conditions to the
obligations of PVC and the corresponding Acquiring Fund to consummate the
transactions contemplated hereby to be met or fulfilled and otherwise to
consummate and make effective such transactions.
(e) Statement of Earnings and Profits. As promptly as practicable, but
in any case within 30 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 the corresponding Acquiring Fund will succeed to and take into account as a
result of Section 381 through 384 of the Code. Such statement will be certified
by the principal accounting officer of WMVT.
5.2 The Acquiring Fund. PVC on behalf of the Acquiring Fund covenants
and agrees as follows:
(a) Operations in the Ordinary Course. Except as otherwise contemplated
by this Agreement, PVC with respect to the Acquiring Fund shall conduct its
business in the ordinary course between the date of this Agreement and the
Closing Date, it being understood that such ordinary course of business will
include the regular and customary periodic dividends and distributions.
(b) Registration Statement. PVC will prepare and file the Registration
Statement and include therein the Prospectus/Proxy Statement to be used in
connection with the shareholders meeting referred to in Section 5.1(b).
(c) Cooperation in Effecting Reorganization. The Acquiring Fund agrees
to take, or cause to be taken, all action, and do or cause to be done, all
things reasonably necessary, proper or advisable to cause the conditions to the
obligations of WMVT and the Acquired Fund to consummate the transactions
contemplated hereby to be met or fulfilled and otherwise to consummate and make
effective such transactions.
(d) Continued Operations. PVC will use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state securities or "Blue Sky" laws as it may deem appropriate in order
to continue the operations of the Acquiring Fund after the Closing Date.
6. CONDITIONS PRECEDENT
6.1 The Acquired Fund. The obligations of WMVT on behalf of the
Acquired Fund to consummate the transactions provided for herein shall be
subject, at its election, to the performance by PVC and the Acquiring Fund of
all the obligations to be performed by them hereunder on or before the Closing
Date and, in addition thereto, to the following further conditions:
(a) Officers Certificate. PVC on behalf of the Acquiring Fund shall
have delivered to WMVT on behalf of the Acquired Fund a certificate executed in
its name by its President or Vice President and its Chief Financial Officer, in
form and substance satisfactory to WMVT and dated as of the Closing Date, to the
effect that the representations and warranties of PVC on behalf of the Acquiring
Fund made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and that PVC and the Acquiring Fund have complied with all the
covenants and agreements and satisfied all of the conditions on their parts to
be performed or satisfied under this Agreement at or prior to the Closing Date.
(b) Opinion of Counsel. WMVT on behalf of the Acquired Fund shall have
received a favorable opinion of Xxxxxx Xxxxxxx PLLC, counsel to the Acquiring
Fund for the transactions contemplated hereby, dated the Closing Date and in a
form satisfactory to WMVT, to the following effect:
(i) PVC is a corporation organized and validly existing under the laws of
the State of Maryland and has power to own all of its properties and
assets and to carry on its business as presently conducted and
described in the registration statement on Form N-1A of PVC, and the
Acquiring Fund is a separate series of PVC constituted in accordance
with the applicable provisions of the 1940 Act and the Articles of
Incorporation and Bylaws of PVC;
(ii) This Agreement has been authorized, executed and delivered by the
Acquiring Fund and, assuming the Registration Statement referred to in
Section 5.2(b) and the Prospectus/Proxy Statement included therein
comply with applicable federal securities laws and assuming the
authorization, execution and delivery of this Agreement by WMVT and
the Acquired Fund, is the valid and binding obligation of PVC and the
Acquiring Fund enforceable against PVC and the Acquiring Fund in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and other equitable
principles;
(iii) The Acquiring Fund has the power to assume the liabilities to be
assumed by it hereunder and upon consummation of the transactions
contemplated hereby the Acquiring Fund will have assumed such
liabilities;
(iv) The Acquiring Fund Shares to be issued for transfer to the Acquired
Fund Shareholders as provided by this Agreement are authorized and
upon such transfer and delivery will be validly issued and outstanding
and fully paid and non-assessable Class 1 and Class 2 shares of
capital stock in the Acquiring Fund, and no shareholder of the
Acquiring Fund has any preemptive right of subscription or purchase in
respect thereof;
(v) The execution and delivery of this Agreement did not, and the
performance by PVC and the Acquiring Fund of their obligations
hereunder will not, violate the PVC Articles of Incorporation or
Bylaws, or any provision of any material agreement known to such
counsel to which PVC or the Acquiring Fund is a party or by which it
is bound or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty under
any material agreement or any judgment or decree to which PVC or the
Acquiring Fund is a party or by which it is bound;
(vi) To the knowledge of such counsel, no consent, approval, authorization
or order of any court or governmental authority is required for the
consummation by PVC and the Acquiring Fund of the transactions
contemplated by this Agreement except such as may be required under
state securities or "Blue Sky" laws or such as have been obtained;
(vii) Such counsel does not know of any legal or governmental proceedings
relating to PVC or the Acquiring Fund existing on or before the date
of mailing of the Prospectus/Proxy Statement included in the
Registration Statement referred to in Section 5.2(b) or the Closing
Date required to be described in the Registration Statement which are
not described as required;
(viii) PVC is registered with the SEC as an investment company under the 1940
Act; and
(ix) To the knowledge of such counsel, except as has been disclosed in
writing to WMVT, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or threatened as to PVC or the Acquiring Fund or any of their
properties or assets or any person whom PVC or the Acquiring Fund may
be obligated to indemnify in connection with such litigation,
proceeding or investigation, and each of PVC and the Acquiring Fund is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and
adversely affects its business or its ability to consummate the
transactions contemplated hereby.
6.2 The Acquiring Fund. The obligations of PVC on behalf of the
Acquiring Fund to complete the transactions provided for herein shall be
subject, at its election, to the performance by WMVT and the Acquired Fund of
all the obligations to be performed by them hereunder on or before the Closing
Date and, in addition thereto, to the following further conditions:
(a) Officers Certificate. WMVT on behalf of the Acquired Fund shall
have delivered to PVC on behalf of the Acquiring Fund a certificate executed in
its name by its President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to PVC and dated as of the Closing
Date, to the effect that the representations and warranties of WMVT on behalf of
the Acquired Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and that WMVT and the Acquired Fund have complied with all the
covenants and agreements and satisfied all of the conditions on their parts to
be performed or satisfied under this Agreement at or prior to the Closing Date.
(b) Opinion of Counsel. PVC on behalf of the Acquiring Fund shall have
received a favorable opinion of Ropes & Xxxx LLP, counsel to the Acquired Fund
for the transactions contemplated hereby, dated the Closing Date and in a form
satisfactory to the Acquiring Fund, to the following effect:
(i) WMVT is a business trust organized and validly existing under the laws
of the Commonwealth of Massachusetts and has power to own all of its
properties and assets and to carry on its business as presently
conducted and described in the registration statement on Form N-1A of
WMVT, and the Acquired Fund is a separate series of WMVT constituted
in accordance with the applicable provisions of the 1940 Act and the
Declaration of Trust and Bylaws of WMVT;
(ii) This Agreement has been authorized, executed and delivered on behalf
of WMVT and the Acquired Fund and, assuming the Registration Statement
referred to in Section 5.2(b) and the Prospectus/Proxy Statement
included therein comply with applicable federal securities laws and
assuming the authorization, execution and delivery of this Agreement
by PVC and the Acquiring Fund, is the valid and binding obligation of
WMVT and the Acquired Fund enforceable against WMVT and the Acquired
Fund in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and other
equitable principles;
(iii) The Acquired Fund has the power to sell, assign, transfer and deliver
the Assets to be transferred by it hereunder, and, upon consummation
of the transactions contemplated hereby, the Acquired Fund will have
transferred such Assets to the Acquiring Fund;
(iv) The execution and delivery of this Agreement did not, and the
performance by WMVT and the Acquired Fund of their obligations
hereunder will not, violate the WMVT Declaration of Trust or Bylaws,
or any provision of any material agreement known to such counsel to
which WMVT or the Acquired Fund is a party or by which it is bound or,
to the knowledge of such counsel, result in the acceleration of any
obligation or the imposition of any penalty under any material
agreement or any judgment or decree to which WMVT or the Acquired Fund
is a party or by which it is bound;
(v) To the knowledge of such counsel, no consent, approval, authorization
or order of any court or governmental authority is required for the
consummation by WMVT and the Acquired Fund of the transactions
contemplated by this Agreement, except such as have been obtained;
(vi) Such counsel does not know of any legal or governmental proceedings
relating to WMVT or the Acquired Fund existing on or before the date
of mailing of the Prospectus/ Proxy Statement included in the
Registration Statement referred to in Section 5.2(b) or the Closing
Date required to be described in the Registration Statement which are
not described as required;
(vii) WMVT is registered with the SEC as an investment company under the
1940 Act; and
(viii) To the knowledge of such counsel, except as has been disclosed in
writing to PVC, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or threatened as to WMVT or the Acquired Fund or any of their
properties or assets or any person whom WMVT or the Acquired Fund may
be obligated to indemnify in connection with such litigation,
proceeding or investigation, and each of WMVT and the Acquired Fund is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and
adversely affects its business or its ability to consummate the
transactions contemplated hereby.
(c) Distributions. Prior to the Closing Date, WMVT on behalf of the
Acquired Fund (if it is a corresponding Fund to an Existing Acquiring Fund)
shall have declared a dividend or dividends, with a record and ex-dividend date
prior to the Effective Time, which, together with all previous dividends, shall
have the effect of distributing all of the Acquired Fund's investment company
taxable income for all its taxable periods ending on or prior to the Closing
Date (computed without regard to any deduction for dividends paid), plus the
excess of its interest income, if any, excludable from gross income under
Section 103(a) of the Code over its deductions disallowed under Sections 265 and
171(a)(2) of the Code for all taxable periods ending on or before the Closing
Date and all of its net capital gains realized in all its taxable periods ending
on or prior to the Closing Date (after reduction for any capital loss carry
forward).
(d) Tax Certificate. The Acquired Fund shall have furnished to the
Acquiring Fund a certificate, signed by the President (or any Vice President)
and the Treasurer of WMVT, as to the adjusted tax basis in the hands of the
Acquired Fund of the securities delivered to the Acquiring Fund pursuant to this
Agreement.
(e) Custodian Certificate. The custodian of the Acquired Fund shall
have delivered to the Acquiring Fund a certificate identifying all of the assets
of the Acquired Fund held by such custodian as of the Closing Date.
6.3 Further Conditions Precedent. The respective obligations of WMVT on
behalf of the Acquired Fund and PVC on behalf of the Acquiring Fund hereunder
are subject to the further conditions that on or before the Closing Date:
(a) Shareholder Approval. This Agreement and the transactions
contemplated herein shall have received all necessary shareholder approvals at
the meeting of shareholders of the Acquired Fund referred to in Section 5.1(b).
(b) Closing under Stock Purchase Agreement. The closing under the Stock
Purchase Agreement dated as of July 25, 2006 among Washington Mutual, Inc., New
American Capital, Inc., Principal Financial Group, Inc. and Principal Management
Corporation shall have occurred.
(c) Proceedings. 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 hereby.
(d) Consents. All consents of other parties and all other consents,
orders and permits of federal, state and local regulatory authorities (including
those of the SEC and of state "Blue Sky" and securities authorities) deemed
necessary by WMVT and PVC to permit consummation, in all material respects, of
the transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a risk of
a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund.
(e) Registration Statement. The Registration Statement shall have
become effective under the 1933 Act and no stop order suspending the
effectiveness thereof shall have been issued and, to the best knowledge of the
parties hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act.
(f) Tax Opinion. WMVT on behalf of the Acquired Fund and PVC on behalf
of the Acquiring Fund shall have received a favorable opinion of Xxxxxx Xxxxxxx
PLLC dated on the Closing Date (which opinion will be subject to certain
qualifications) satisfactory to both parties substantially to the effect that,
on the basis of the existing provisions of the Code, Treasury regulations
promulgated thereunder, current administrative rules, and court decisions,
generally for federal income tax purposes:
(i) The acquisition by the Acquiring Fund of the Assets of the Acquired
Fund in exchange for the Acquiring Fund's assumption of the Stated
Liabilities of the Acquired Fund and issuance of the Acquiring Fund
Shares, followed by the distribution by the Acquired Fund of such
Acquiring Fund Shares to the shareholders of the Acquired Fund in
exchange for their shares of the Acquired Fund, all as provided in
Section 1 hereof, will constitute a reorganization within the meaning
of Section 368(a) of the Code, and the Acquired Fund and the Acquiring
Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(ii) No gain or loss will be recognized by the Acquired Fund (i) upon the
transfer of its assets to the Acquiring Fund in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Stated Liabilities of the Acquired Fund or (ii) upon the distribution
of the Acquiring Fund Shares by the Acquired Fund to its shareholders
in liquidation, as contemplated in Section 1 hereof;
(iii) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the
assumption of the Stated Liabilities of the Acquired Fund and issuance
of the Acquiring Fund Shares as contemplated in Section 1 hereof;
(iv) The tax basis of the Assets of the Acquired Fund acquired by the
Acquiring Fund will be the same as the tax basis of such Assets in the
hands of the Acquired Fund immediately prior to the transfer;
(v) The holding periods of the Assets of the Acquired Fund in the hands of
the Acquiring Fund will include the periods during which such Assets
were held by the Acquired Fund;
(vi) No gain or loss will be recognized by the Acquired Fund Shareholders
upon the exchange of all of their Acquired Fund Shares for the
Acquiring Fund Shares;
(vii) The aggregate tax basis of the Acquiring Fund Shares to be received by
each shareholder of the Acquired Fund will be the same as the
aggregate tax basis of the Acquired Fund Shares exchanged therefor;
(viii) An Acquired Fund shareholder's holding period for the Acquiring Fund
Shares to be received will include the period during which the
Acquired Fund Shares exchanged therefor were held, provided that the
shareholder held the Acquired Fund Shares as a capital asset on the
date of the exchange; and
(ix) The Acquiring Fund will succeed to and take into account the items of
the Acquired Fund described in Section 381(c) of the Code, subject to
the conditions and limitations specified in Sections 381, 382, 383 and
384 of the Code and the regulations thereunder.
The opinion will be qualified to reflect that the Code requires that
certain contracts or securities (including, in particular, futures contracts,
certain foreign currency contracts, "non-equity" options and investments in
"passive foreign investment companies") be marked-to-market (treated as sold for
their fair market value) at the end of a taxable year (or upon their termination
or transfer).
The opinion will be based on certain factual certifications made by
officers of WMVT and PVC and will also be based on customary assumptions. The
opinion is not a guarantee that the tax consequences of the Reorganization will
be as described above. The opinion will note and distinguish certain published
precedent. There is no assurance that the Internal Revenue Service or a court
would agree with the opinion.
7. FEES AND EXPENSES
Except as set forth in Section 1.7, whether or not the transactions
contemplated hereby are consummated, all fees and expenses in connection with
this Agreement, and the transactions contemplated hereby, incurred (a) by WMVT,
the Acquired Fund and NAC shall be paid by NAC and (b) by PVC, the Acquiring
Fund and PMC shall be paid by PMC; provided, however, that each of NAC and PMC
shall pay 50% of the document preparation (including reasonable attorneys'
fees), printing, mailing and other costs and expenses associated with the board
approvals and proxy solicitations (including the solicitation of voting
instructions from owners of variable annuity and variable life insurance
products) contemplated by this Agreement, including amounts reimbursed to the
Acquired Funds and the Acquiring Funds. Notwithstanding the foregoing, expenses
will in any event be paid by the party directly incurring such expenses if and
to the extent that the payment by another person of such expenses would result
in the disqualification of such party as a "regulated investment company" within
the meaning of Section 851 of the Code.
8. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
8.1 Entire Agreement. The Acquired Fund and the Acquiring Fund, agree
that neither party has made any representation, warranty or covenant not set
forth herein and that this Agreement constitutes the entire agreement between
the parties.
8.2 Survival. The representations, warranties and covenants contained
in this Agreement or in any document delivered pursuant hereto or in connection
herewith shall not survive the consummation of the transactions contemplated
hereunder except Sections 1.1, 1.4, 1.6 through 1.11, 4.1(c) and (d), 4.2(c) and
(d), 7, 8, 11 and 12.
9. TERMINATION
9.1 This Agreement may be terminated by the mutual agreement of the
Acquired Fund and the Acquiring Fund. In addition, either the Acquired Fund or
the Acquiring Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
(a) Of a material breach by the other of any representation, warranty,
covenant or agreement contained herein to be performed by the other party at or
prior to the Closing Date;
(b) A condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears that it will
not or cannot be met; or
(c) Any governmental authority of competent jurisdiction shall have
issued any judgment, injunction, order, ruling or decree or taken any other
action restraining, enjoining or otherwise prohibiting this Agreement or the
consummation of any of the transactions contemplated herein and such judgment,
injunction, order, ruling, decree or other action becomes final and
non-appealable; provided that the party seeking to terminate this Agreement
pursuant to this Section 9.1(c) shall have used its reasonable best efforts to
have such judgment, injunction, order, ruling, decree or other action lifted,
vacated or denied.
9.2 If the transactions contemplated by this Agreement have not been
substantially completed by June 30, 2007, this Agreement shall automatically
terminate on that date unless a later date is agreed to by both the Acquired
Fund and the Acquiring Fund.
9.3 If for any reason the transactions contemplated by this Agreement
are not consummated, no party shall be liable to any other party for any damages
resulting therefrom, including without limitation consequential damages, in the
absence of willful default. In the event of willful default, all remedies at law
or in equity of the party adversely effected shall survive.
10. 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 WMVT on
behalf of the Acquired Fund and PVC on behalf of the Acquiring Fund; provided,
however, that following the shareholders' meeting called by the Acquired Fund
pursuant to Section 5.2(b) no such amendment may have the effect of changing the
provisions for determining the number of Acquiring Fund Shares to be issued to
shareholders of the Acquired Fund under this Agreement to the detriment of such
shareholders without their further approval.
11. NOTICES
All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed given if delivered personally,
transmitted by facsimile (and telephonically confirmed), mailed by registered or
certified mail with postage prepaid and return receipt requested, or sent by
commercial overnight courier, courier fees prepaid (if available; otherwise, by
the next best class of service available), to the parties at the following
address:
(a)......if to PVC or the Acquiring Fund, to it at:
Principal Financial Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx PLLC
0000 X Xxxxxx, X.X.
Xxxxx 000-Xxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
(b) if to WMVT or the Acquired Fund, to it at:
WM Variable Trust
0000 0xx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX, 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
with a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. XxXxxx, Esq.
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing to the other parties in accordance with this Section. All such notices
or other communications shall be deemed to have been received on the date of the
personal delivery or on the third business day after the mailing or dispatch
thereof; provided that notice of change of address shall be effective only upon
receipt.
12. GENERAL
12.1 Headings. 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.
12.2 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
12.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland, without giving affect to
any choice or conflicts of law rule or provision that would result in the
application of the laws of any other jurisdiction.
12.4 Assignment. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other parties. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
12.5 Waivers. At any time prior to the Effective Time of the
Reorganization, each of WMVT, on behalf of the Acquired Fund, and PVC, on behalf
of the Acquiring Fund, may by written instrument signed by it (i) waive any
inaccuracies in the representations and warranties made to it and such Fund
contained herein and (ii) waive compliance with any of the covenants or
conditions made for its benefit and the benefit of such Fund contained herein,
except that conditions set forth in Sections 6.3(c) and (d) may not be waived
and except that any such waiver that would have a material adverse effect on the
interests or rights of any Acquired Fund (or its shareholders or owners of
Variable Contracts that are funded by its shares) or any Acquiring Fund (or its
shareholders or owners of Variable Contracts that are funded by its shares)
shall be made only with the consent of the Board of WMVT or PVC, respectively.
12.6 Reliance. All covenants and agreements made under this Agreement
shall be deemed to have been material and relied upon by WMVT on behalf of the
Acquired Fund and PVC on behalf of the Acquiring Fund notwithstanding any
investigation made by such party or on its behalf.
12.7 Limitation of Liability. It is expressly agreed that the
obligations of WMVT hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of WMVT personally, but
shall bind only the property of the Acquired Funds, as provided in the
Declaration of Trust of WMVT. Moreover, no Acquired Fund shall be responsible
for the obligations of another Acquired Fund hereunder, and all persons shall
look only to the assets of each Acquired Fund to satisfy the obligations of that
Acquired Fund hereunder. The execution and delivery of this Agreement have been
authorized by the Board of Trustees of WMVT on behalf of it and each of the
Acquired Funds and signed by authorized officers of WMVT, acting as such.
Neither the authorization by such Board of Trustees nor the execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the property of WMVT and each Acquired Fund as provided in the
Declaration of Trust of WMVT.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President as of the date first
written above.
.........
WM VARIABLE TRUST PRINCIPAL VARIABLE CONTRACTS FUND, INC.
on behalf of each of the following Acquired Funds: on behalf of each of the following Acquiring Funds:
Equity Income Fund Equity Income Account I
Growth Fund Growth Account
Growth & Income Fund LargeCap Blend Account
Income Fund Income Account
International Growth Fund Diversified International Account
Mid Cap Stock Fund MidCap Stock Account
Money Market Fund Money Market Account
REIT Fund Real Estate Securities Account
Short Term Income Fund Short Term Income Account
Small Cap Growth Fund SmallCap Growth Account
Small Cap Value Fund SmallCap Value Account
Balanced Portfolio Balanced Fund
Conservative Balanced Portfolio Conservative Balanced Portfolio
Conservative Growth Portfolio Conservative Growth Portfolio
Flexible Income Portfolio Flexible Income Portfolio
Strategic Growth Portfolio Strategic Growth Portfolio
U.S. Government Securities Fund Mortgage Securities Account
West Coast Equity Fund West Coast Equity Account
/s/Xxxxxxx X. Xxxxxx /s/Xxxxx X. Xxxxxx
By: ________________________________ By: _______________________________
Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxx
President and Chief Executive Officer President and
Chief Executive Officer
NEW AMERICAN CAPITAL, INC. PRINCIPAL MANAGEMENT CORPORATION
/s/Xxxxx X. Xxxxxx
/s/Xxxx Xxxxx By: ____________________________
By: _________________________________ Xxxxx X. Xxxxxx
Xxxx Xxxxx President
Executive Vice President
DISCLOSURE SCHEDULE
January 5, 2007
The following Disclosure Schedule is provided by the WM Variable Trust
(the "Trust") pursuant to that certain Agreement and Plan of Reorganization
dated as of December 1, 2006 by and among Principal Variable Contracts Fund Inc.
("PVC"), WM Variable Trust, Principal Management Corporation and New American
Capital, Inc. (the "Merger Agreement"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Merger Agreement.
This Disclosure Schedule qualifies the representations and warranties
made by the Trust in the Merger Agreement. Inclusion of information in this
Disclosure Schedule is not intended to be, and shall not be construed as, an
admission of liability, or any fact pertaining to such liability, with respect
to any matter whatsoever. Any summary or description of any law, regulation,
contract, plan or other document contained in this Disclosure Schedule is for
convenience only and reference should be made to such law, regulation, contract,
plan or other document for a full explanation thereof. Disclosures contained in
any documents referenced in this Disclosure Schedule shall be deemed to have
been made in writing by the Trust to PVC for purposes of the Merger Agreement.
If an item is disclosed in any part of this Disclosure Schedule and the
existence of such item or its contents are relevant to any other Schedule, then
such item will be deemed to be disclosed in such other Schedule to the extent
such item or its contents would be reasonably understood to apply to the
information called for by such other Schedule.
Section 4.1(g)
Litigation
1. By letter dated February 26, 2004, the SEC requested documents and
information regarding WM Shareholder Services, Inc. in connection with its
services as transfer agent. WM Shareholder Services responded to the request and
additional requests for information based on the initial inquiry. The SEC has
not provided any notice of any failure by WM Shareholder Services to comply with
any applicable laws or regulation.
2. On June 10, 2005, WM Strategic Asset Management Portfolios, LLC (the "XXX
Funds") and WM Advisors, Inc. (the "Adviser") received a letter written in
response to an examination by the SEC, in which the staff expressed concerns
relating to the XXX Fund's advisory contract with the Adviser. A copy of this
letter has been provided to PIF.
On July 8, 2005, the Trustees of the XXX Funds who are not interested persons of
the XXX Funds sent a response letter to the SEC, a copy of which has also been
provided to PIF. No further response has been received by the XXX Funds from the
SEC.
Section 4.1(r)
The Assets
The VT Short Term Income Fund holds 00 xxxxxx xxxxxxxxx xx X.X. 0 Year Treasury
Note, March 2007. The basic margin requirement for these security futures is
1.5% of the underlying value of the contract. The collateral is 75,000 cusip
000000XX0 US Treasury Note 3.25% 8/15/08.
Section 4.1(t)
Restricted Securities
VT International Growth Fund
Developed Markets:
------------------
FR 4002121 BOUYGUES
JP B1FF8P7 IDEMITSU KOSAN CO LTD
SG B02PY22 SINGAPORE TELECOMMUNICATIONS
HK 6859927 SUN HUNG KAI PROPERTIES
CH 7110753 HOLCIM LTD-REG
Emerging Markets:
OM B0LMH69 BANK MUSCAT SAOG-GDR REG S
CA 2714019 BANRO CORPORATION
SG X000XX0 XXXXXX XXXX XXXXXXXX XXX
XX 6425663 CATHAY FINANCIAL HOLDING CO LT
TR B058ZV4 COCA-COLA ICECEK URETIM AS
CN B0LMTQ3 CHINA CONSTRUCTION BANK
NL 00000X000 EFES BREWERIES INTERNATIONAL
TW 438090201 HON HAI PRECISION INDUSTRY
KR 556082204 MACQUARIE KOREA INFRASTRUC
RU 00000X000 NOVOLIPETSK STEEL
PK 00000X000 OIL & GAS DEVELOP-GDR 144A
EG 00000X000 ORASCOM CONSTRUCT GDR
TH B15F664 THAI BEVERAGE PCL
SG B17KMY7 YANLORD LAND GROUP
VT Income Fund
CA 00000XXX0 Express Pipelines 7.390% 12/31/2017 000X
XX 000000XX0 Farmers Exchange Capital 6.00% 8/1/14 144A
US 00000XXX0 Sealed Air Corp. conv. Bond 3.00% 06/30/33 000X
XX 000000XX0 155E Tropicana Hooters 8.750% 04/01/2012 144A
US 00000XXX0 CCM Merger Inc 8% 08/1/2003 114A
US 000000XX0 Healthsouth Corp. 10.750% 06/15/2016 144A
US 00000XXX0 Dow Xxxxx CDX HY 7 T1, 12/29/2011 144A
VT Equity Income Fund
US 00000XXX0 V2 Music Holdings Warrants 144A
US 00000XXX0 ERAC USA Fin. Co. 7.35% 6/15/08
KR 796050888 Samsung Electronics GDR 144A
VT Short Term Income Fund
US 00000XXX0 Cendant Mortgage Corp. 03-3P A1 5.500% 4/25/30 000X
XX 000000XX0 Xxx Enterprises 4.375% 05/01/08 144A
US 000000XX0 XXXXX 1999-CTL1 A 7.151% 2/15/08
US 00000XXX0 XX Treasury Co. LLC 9.40% 12/29/49 144A
VT Money Market Fund
US 000000XX0 Lauren Company Private Placement 7/1/2033
