FORM OF
AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION ("Agreement") is
made as of ________, 2000, between Neuberger Berman Equity Funds ("Equity
Funds"), on behalf of each segregated portfolio of assets ("series") thereof
listed on Schedule A to this Agreement ("Schedule A") (each, an "Acquiring
Fund"), and Neuberger Berman Equity Trust ("Equity Trust"), on behalf of each
series thereof listed on Schedule A (each, a "Target"). (Each Acquiring Fund and
Target is sometimes referred to herein individually as a "Fund" and collectively
as the "Funds"; and Equity Funds and Equity Trust are sometimes referred to
herein individually as an "Investment Company" and collectively as the
"Investment Companies.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by a Fund are
made and shall be taken or undertaken by Equity Funds on behalf of each
Acquiring Fund and by Equity Trust on behalf of each Target.
The Investment Companies, each of which is a Delaware business trust, wish
to effect eleven separate reorganizations, each described in section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended ("Code"), and
intend this Agreement to be, and adopt it as, a "plan of reorganization" within
the meaning of the regulations under section 368 of the Code ("Regulations").
Each reorganization will involve the transfer of a Target's assets to the
Acquiring Fund listed on Schedule A opposite its name (each, a "corresponding
Acquiring Fund") in exchange solely for voting shares of beneficial interest in
that Acquiring Fund and that Acquiring Fund's assumption of that Target's
liabilities, followed by the constructive distribution of those shares PRO RATA
to the holders of shares of beneficial interest in that Target in exchange
therefor, all on the terms and conditions set forth herein. (All such
transactions involving each Target and its corresponding Acquiring Fund are
referred to herein as a "Reorganization.") For convenience, the balance of this
Agreement will refer only to a single Reorganization, one Target, and one
Acquiring Fund, but the terms and conditions hereof shall apply separately to
each Reorganization. The consummation of one Reorganization shall not be
contingent on the consummation of any other Reorganization.
Each Target has a single class of shares ("Target Shares"). Acquiring
Fund's shares are divided into multiple classes, including Trust Class shares.
Only Acquiring Fund's Trust Class shares ("Acquiring Fund Shares"), which are
substantially similar to the Target Shares, are involved in the Reorganization.
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. PLAN OF REORGANIZATION AND TERMINATION
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1.1. Target agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to Acquiring Fund. Acquiring
Fund agrees in exchange therefor --
(a) to issue and deliver to Target the number of full and
fractional (rounded to the third decimal place) Acquiring Fund
Shares determined by dividing the net value of Target
(computed as set forth in paragraph 2.1) by the net asset
value ("NAV") of an Acquiring Fund Share (computed as set
forth in paragraph 2.2), and
(b) to assume all of Target's liabilities described in paragraph
1.3 ("Liabilities"). These transactions shall take place at
the Closing (as defined in paragraph 3.1).
1.2. The Assets shall include all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), claims and rights of
action, rights to register shares under applicable securities laws, books and
records, deferred and prepaid expenses shown as assets on Target's books, and
other property owned by Target at the Effective Time (as defined in paragraph
3.1).
1.3. The Liabilities shall include all of Target's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not arising in the ordinary course of
business, whether or not determinable at the Effective Time, and whether or not
specifically referred to in this Agreement. Notwithstanding the foregoing,
Target agrees to use its best efforts to discharge all its known Liabilities
before the Effective Time.
1.4. At or immediately before the Effective Time, Target shall declare
and pay to its shareholders a dividend and/or other distribution in an amount
large enough so that it will have distributed substantially all (and in any
event not less than 90%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and substantially all of its
realized net capital gain, if any, for the current taxable year through the
Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares received by it
pursuant to paragraph 1.1 to Target's shareholders of record, determined as of
the Effective Time (each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Target Shares. That distribution shall be
accomplished by Equity Funds's transfer agent's opening accounts on Acquiring
Fund's share transfer books in the Shareholders' names and transferring those
Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with
the respective PRO RATA number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares due that Shareholder. All outstanding
Target Shares , including any represented by certificates, shall simultaneously
be canceled on Target's share transfer books. Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares issued in connection with
the Reorganization.
1.6. As soon as reasonably practicable after distribution of the
Acquiring Fund Shares pursuant to paragraph 1.5, but in all events within six
months after the Effective Time, Target shall be terminated as a series of
Equity Trust and any further actions shall be taken in connection therewith as
required by applicable law.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.8. Any transfer taxes payable on issuance of Acquiring Fund Shares in
a name other than that of the registered holder on Target's books of the Target
Shares constructively exchanged therefor shall be paid by the person to whom
those Acquiring Fund Shares are to be issued, as a condition of that transfer.
2. VALUATION
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2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a)
the value of the Assets computed as of the close of regular trading on the New
York Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"),
using the valuation procedures set forth in its then-current prospectus and
statement of additional information ("SAI"), less (b) the amount of the
Liabilities as of the Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund
Share shall be computed as of the Valuation Time, using the valuation procedures
set forth in Acquiring Fund's then-current prospectus and SAI.
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2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made
by or under the direction of Neuberger Berman Management Inc.
3. CLOSING AND EFFECTIVE TIME
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3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Investment Companies'
principal office on or about [____ _], 2000, or at such other place and/or on
such other date as to which the Investment Companies may agree. All acts taking
place at the Closing shall be deemed to take place simultaneously as of the
close of business on the date thereof or at such other time as to which the
Investment Companies may agree ("Effective Time"). If, immediately before the
Valuation Time, (a) the NYSE is closed to trading or trading thereon is
restricted or (b) trading or the reporting of trading on the NYSE or elsewhere
is disrupted, so that accurate appraisal of Target's net value and/or the NAV of
an Acquiring Fund Share is impracticable, the Effective Time shall be postponed
until the first business day after the day when that trading shall have been
fully resumed and that reporting shall have been restored.
3.2. Equity Trust's fund accounting and pricing agent shall deliver at
the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot) concerning the
Assets, including all portfolio securities, transferred by Target to Acquiring
Fund, as reflected on Acquiring Fund's books immediately after the Closing, does
or will conform to that information on Target's books immediately before the
Closing. Equity Trust's custodian shall deliver at the Closing a certificate of
an authorized officer stating that (a) the Assets it holds will be transferred
to Acquiring Fund at the Effective Time and (b) all necessary taxes in
conjunction with the delivery of the Assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision for payment
has been made. 3.3. Equity Trust shall deliver to Equity Funds at the Closing a
list of the names and addresses of the Shareholders and the number of
outstanding Target Shares owned by each Shareholder, all as of the Effective
Time, certified by Equity Trust's Secretary or an Assistant Secretary thereof.
Equity Funds's transfer agent shall deliver at the Closing a certificate as to
the opening on Acquiring Fund's share transfer books of accounts in the
Shareholders' names. Equity Funds shall issue and deliver a confirmation to
Equity Trust evidencing the Acquiring Fund Shares to be credited to Target at
the Effective Time or provide evidence satisfactory to Equity Trust that those
Acquiring Fund Shares have been credited to Target's account on Acquiring Fund's
books.
3.4. Each Investment Company shall deliver to the other at the Closing
(a) a certificate executed in its name by its President or a Vice President in
form and substance satisfactory to the recipient and dated the Effective Time,
to the effect that the representations and warranties it made in this Agreement
are true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement and (b) bills of sale, checks,
assignments, stock certificates, receipts, and other documents the other
Investment Company or its counsel reasonably requests.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
4.1. Equity Trust represents and warrants as follows:
4.1.1. Equity Trust is a business trust duly organized and validly
existing under the laws of the State of Delaware, and its Certificate of
Trust has been duly filed in the office of the Secretary of State
thereof;
4.1.2.Equity Trust is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
("1940 Act"), and that registration will be in full force and effect at
the Effective Time;
4.1.3. Target is a duly established and designated series of Equity
Trust;
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4.1.4. At the Closing, Target will have good and marketable title
to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other
encumbrances; and on delivery and payment for the Assets, Acquiring Fund
will acquire good and marketable title thereto;
4.1.5.Target's current prospectus and SAI conform in all material
respects to the applicable requirements of the Securities Act of 1933,
as amended ("1933 Act"), and the 1940 Act and the rules and regulations
thereunder and do not include 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;
4.1.6.Target is not in violation of, and the execution and delivery
of this Agreement and consummation of the transactions contemplated
hereby will not conflict with or violate, Delaware law or any provision
of the Amended and Restated Trust Instrument ("Trust Instrument") or
By-Laws of Equity Trust or of any agreement, instrument, lease, or other
undertaking to which Target is a party or by which it is bound or result
in the acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Target is a party or
by which it is bound, except as previously disclosed in writing to and
accepted by Equity Funds;
4.1.7.Except as otherwise disclosed in writing to and accepted by
Equity Funds, all material contracts and other commitments of or
applicable to Target (other than this Agreement and investment
contracts, including options, futures, and forward contracts) will be
terminated, or provision for discharge of any liabilities of Target
thereunder will be made, at or prior to the Effective Time, without
either Fund's incurring any liability or penalty with respect thereto
and without diminishing or releasing any rights Target may have had with
respect to actions taken or omitted or to be taken by any other party
thereto prior to the Closing;
4.1.8.Except as otherwise disclosed in writing to and accepted by
Equity Funds, no litigation, administrative proceeding, or investigation
of or before any court or governmental body is presently pending or (to
Equity Trust's knowledge) threatened against Equity Trust with respect
to Target or any of its properties or assets that, if adversely
determined, would materially and adversely affect Target's financial
condition or the conduct of its business; and Equity Trust knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and is not a party to or
subject to the provisions of any order, decree, or judgment of any court
or governmental body that materially or adversely affects its business
or its ability to consummate the transactions contemplated hereby;
4.1.9.The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action
on the part of Equity Trust's board of trustees, which has made the
determinations required by Rule 17a-8(a) under the 1940 Act; and,
subject to approval by Target's shareholders, this Agreement constitutes
a valid and legally binding obligation of Target, enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
and similar laws relating to or affecting creditors' rights and by
general principles of equity;
4.1.10. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Target's
shareholders;
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4.1.11. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the Securities Exchange Act of
1934, as amended ("1934 Act"), or the 1940 Act for the execution or
performance of this Agreement by Equity Trust, except for (a) the filing
with the Securities and Exchange Commission ("SEC") of a registration
statement by Equity Funds on Form N-14 relating to the Acquiring Fund
Shares issuable hereunder, and any supplement or amendment thereto
("Registration Statement"), including therein a prospectus/proxy
statement ("Proxy Statement"), and (b) such consents, approvals,
authorizations, and filings as have been made or received or as may be
required subsequent to the Effective Time;
4.1.12. On the effective date of the Registration Statement, at the
time of the shareholders' meeting referred to in paragraph 5.2, and at
the Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act,
and the 1940 Act and the rules and regulations thereunder and (b) not
contain any untrue statement of a material fact or omit to state a
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; provided that the foregoing shall not apply to
statements in or omissions from the Proxy Statement made in reliance on
and in conformity with information furnished by Equity Funds for use
therein;
4.1.13. The Liabilities were incurred by Target in the ordinary
course of its business and are associated with the Assets; and there are
no Liabilities other than liabilities disclosed or provided for in
Equity Trust's financial statements referred to in paragraph 4.1.18 and
liabilities incurred by Target in the ordinary course of its business
subsequent to [_______ __, 2000], or otherwise previously disclosed to
Equity Funds, none of which has been materially adverse to the business,
assets, or results of Target's operations;
4.1.14. Target is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("RIC") for each past taxable year since it
commenced operations and will continue to meet all the requirements for
that qualification for its current taxable year; the Assets will be
invested at all times through the Effective Time in a manner that
ensures compliance with the foregoing; and Target has no earnings and
profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it;
4.1.15. Target is not under the jurisdiction of a court in a "title
11 or similar case" (within the meaning of section 368(a)(3)(A) of the
Code);
4.1.16. During the five-year period ending on the Closing Date,
neither Target nor any person "related" (as defined in section
1.368-1(e)(3) of the Regulations without regard to section
1.368-1(e)(3)(i)(A) thereof) to Target will have directly or through any
transaction, agreement, or arrangement with any other person, (a)
acquired Target Shares with consideration other than Acquiring Fund
Shares or Target Shares, except for shares redeemed in the ordinary
course of Target's business as a series of an open-end investment
company as required by the 1940 Act, or (b) made distributions with
respect to Target Shares, except for (i) dividends qualifying for the
deduction for dividends paid (as defined in section 561 of the Code)
referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code and (ii)
additional distributions, to the extent they do not exceed 50% of the
value (without giving effect to those distributions) of the proprietary
interest in Target on the Closing Date;
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4.1.17. Target's federal income tax returns, and all applicable
state and local tax returns, for all taxable years through and including
the taxable year ended [_____ __, ____], have been timely filed and all
taxes payable pursuant to those returns have been timely paid; and
4.1.18. Equity Trust's financial statements for the year ended
[_____ __, ____], [AND FOR THE SIX MONTHS ENDED _____ __, 2000,] to be
delivered to Equity Funds, fairly represent Target's financial position
as of that [EACH SUCH] date and the results of its operations and
changes in its net assets for the year [PERIOD] then ended.
4.2. Equity Funds represents and warrants as follows:
4.2.1. Equity Funds is a business trust duly organized and validly
existing under the laws of the State of Delaware, and its Certificate of
Trust has been duly filed in the office of the Secretary of State
thereof;
4.2.2. Equity Funds is duly registered as an open-end management
investment company under the 1940 Act, and that registration will be in
full force and effect at the Effective Time;
4.2.3. Acquiring Fund is a duly established and designated series
of Equity Funds;
4.2.4. No consideration other than Acquiring Fund Shares (and
Acquiring Fund's assumption of the Liabilities) will be issued in
exchange for the Assets in the Reorganization;
4.2.5.The Acquiring Fund Shares to be issued and delivered to
Target hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly and
validly issued and outstanding shares of Acquiring Fund, fully paid and
non-assessable;
4.2.6.Acquiring Fund's current prospectus and SAI conform in all
material respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations thereunder and do not include any
untrue statement of a material fact or omit 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;
4.2.7.Acquiring Fund is not in violation of, and the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby will not conflict with or violate, Delaware law or
any provision of the Trust Instrument or By-Laws of Equity Funds or of
any provision of any agreement, instrument, lease, or other undertaking
to which Acquiring Fund is a party or by which it is bound or result in
the acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Acquiring Fund is a
party or by which it is bound, except as previously disclosed in writing
to and accepted by Equity Trust;
4.2.8.Except as otherwise disclosed in writing to and accepted by
Equity Trust, no litigation, administrative proceeding, or investigation
of or before any court or governmental body is presently pending or (to
Equity Funds's knowledge) threatened against Equity Funds with respect
to Acquiring Fund or any of its properties or assets that, if adversely
determined, would materially and adversely affect Acquiring Fund's
financial condition or the conduct of its business; and Equity Funds
knows of no facts that might form the basis for the institution of any
such litigation, proceeding, or investigation and is not a party to or
subject to the provisions of any order, decree, or judgment of any court
or governmental body that materially or adversely affects its business
or its ability to consummate the transactions contemplated hereby;
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4.2.9.The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action
on the part of Equity Funds's board of trustees (together with Equity
Trust's board of trustees, the "Boards"), which has made the
determinations required by Rule 17a-8(a) under the 1940 Act; and this
Agreement constitutes a valid and legally binding obligation of
Acquiring Fund, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
4.2.10. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the 1934 Act, or the 1940 Act
for the execution or performance of this Agreement by Equity Funds,
except for (a) the filing with the SEC of the Registration Statement and
(b) such consents, approvals, authorizations, and filings as have been
made or received or as may be required subsequent to the Effective Time;
4.2.11. On the effective date of the Registration Statement, at the
time of the shareholders' meeting referred to in paragraph 5.2, and at
the Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act,
and the 1940 Act and the rules and regulations thereunder and (b) not
contain any untrue statement of a material fact or omit to state a
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; provided that the foregoing shall not apply to
statements in or omissions from the Proxy Statement made in reliance on
and in conformity with information furnished by Equity Trust for use
therein;
4.2.12. Acquiring Fund is a "fund" as defined in section 851(g)(2)
of the Code; it qualified for treatment as a RIC for each past taxable
year since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year; it
intends to continue to meet all such requirements for the next taxable
year; and it has no earnings and profits accumulated in any taxable year
in which the provisions of Subchapter M of the Code did not apply to it;
4.2.13. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares
issued in the ordinary course of its business as a series of an open-end
investment company; nor does Acquiring Fund, or any person "related"
(within the meaning of section 1.368-1(e)(3) of the Regulations) to
Acquiring Fund, have any plan or intention to redeem or otherwise
reacquire any Acquiring Fund Shares issued to the Shareholders pursuant
to the Reorganization, except to the extent it is required by the 1940
Act to redeem any of its shares presented for redemption at NAV in the
ordinary course of that business;
4.2.14. Following the Reorganization, Acquiring Fund (a) will
continue Target's "historic business" (within the meaning of section
1.368-1(d)(2) of the Regulations), (b) will use a significant portion of
Target's "historic business assets" (within the meaning of section
1.368-1(d)(3) of the Regulations) in a business; in addition, Acquiring
Fund has no plan or intention to sell or otherwise dispose of any of the
Assets, except for dispositions made in the ordinary course of that
business and dispositions necessary to maintain its status as a RIC;
4.2.15. There is no plan or intention for Acquiring Fund to be
dissolved or merged into another business trust or a corporation or any
"fund" thereof (within the meaning of section 851(g)(2) of the Code)
following the Reorganization;
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4.2.16. Acquiring Fund does not directly or indirectly own, nor at
the Effective Time will it directly or indirectly own, nor has it
directly or indirectly owned at any time during the past five years, any
shares of Target;
4.2.17. Acquiring Fund's federal income tax returns, and all
applicable state and local tax returns, for all taxable years through
and including the taxable year ended [_____ __, ____], have been timely
filed and all taxes payable pursuant to such returns have been timely
paid; and
4.2.18. Equity Funds's financial statements for the year ended
[_____ __, ____], [AND FOR THE SIX MONTHS ENDED _____ __, 2000,] to be
delivered to Equity Trust, fairly represent Acquiring Fund's financial
position as of that [EACH SUCH] date and the results of its operations
and changes in its net assets for the year [PERIOD] then ended.
4.3. Each Investment Company represents and warrants as follows:
4.3.1. The fair market value of the Acquiring Fund Shares received
by each Shareholder will be approximately equal to the fair market value
of its Target Shares constructively surrendered in exchange therefor;
4.3.2.Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of
their Target Shares before the Reorganization to any person "related"
(within the meaning of section 1.368-1(e)(3) of the Regulations) to
either Fund or (ii) any portion of the Acquiring Fund Shares to be
received by them in the Reorganization to any person "related" (within
such meaning) to Acquiring Fund, (b) does not anticipate dispositions of
those Acquiring Fund Shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of dispositions of
shares of Target as a series of an open-end investment company, (c)
expects that the percentage of Shareholder interests, if any, that will
be disposed of as a result of or at the time of the Reorganization will
be DE MINIMIS, and (d) does not anticipate that there will be
extraordinary redemptions of Acquiring Fund Shares immediately following
the Reorganization;
4.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
4.3.4. The fair market value of the Assets on a going concern basis
will equal or exceed the Liabilities to be assumed by Acquiring Fund and
those to which the Assets are subject;
4.3.5. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount;
4.3.6.Pursuant to the Reorganization, Target will transfer to
Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the
fair market value of the net assets, and at least 70% of the fair market
value of the gross assets, Target held immediately before the
Reorganization. For the purposes of this representation, any amounts
Target used to pay its Reorganization expenses and to make redemptions
and distributions immediately before the Reorganization (except (a)
redemptions in the ordinary course of its business required by section
22(e) of the 1940 Act and (b) regular, normal dividend distributions
made to conform to its policy of distributing all or substantially all
of its income and gains to avoid the obligation to pay federal income
tax and/or the excise tax under section 4982 of the Code) after the date
of this Agreement will be included as assets held thereby immediately
before the Reorganization;
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4.3.7.None of the compensation received by any Shareholder who is
an employee of or service provider to Target will be separate
consideration for, or allocable to, any of the Target Shares held by
that Shareholder; none of the Acquiring Fund Shares received by any such
Shareholder will be separate consideration for, or allocable to, any
employment agreement, investment advisory agreement, or other service
agreement; and the consideration paid to any such Shareholder will be
for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar services;
4.3.8. Immediately after the Reorganization, the Shareholders will
not own shares constituting "control" (within the meaning of section
304(c) of the Code) of Acquiring Fund; and
4.3.9. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization
(determined in accordance with the guidelines set forth in Rev. Rul.
73-54, 1973-1 C.B. 187).
5. COVENANTS
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5.1. Each Fund covenants to operate its respective business in
the ordinary course between the date hereof and the Closing, it being
understood that --
(a) such ordinary course will include declaring and paying customary
dividends and other distributions and changes in operations
contemplated by each Fund's normal business activities, and
(b) each Fund will retain exclusive control of its investments until the
Closing; provided that Target shall not dispose of more than an
insignificant portion of its historic business assets (as defined
above) during that period without Acquiring Fund's prior consent.
5.2. Target covenants to call a shareholders' meeting to consider and
act on this Agreement and to take all other action necessary to obtain approval
of the transactions contemplated hereby.
5.3. Target covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
5.4. Target covenants that it will assist Equity Funds in obtaining
information Equity Funds reasonably requests concerning the beneficial ownership
of Target Shares. 5.5. Target covenants that its books and records (including
all books and records required to be maintained under the 1940 Act and the rules
and regulations thereunder) will be turned over to Equity Funds at the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy Statement
in compliance with applicable federal and state securities laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be executed and
delivered all assignments and other instruments, and will take or cause to be
taken further action, the other Fund may deem necessary or desirable to vest in,
and confirm to, (a) Acquiring Fund, title to and possession of all the Assets,
and (b) Target, title to and possession of the Acquiring Fund Shares to be
delivered hereunder, and otherwise to carry out the intent and purpose hereof.
5.8. Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and
state securities laws it deems appropriate to continue its operations after the
Effective Time.
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5.9. Subject to this Agreement, each Fund covenants to take or cause to
be taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
6. CONDITIONS PRECEDENT
--------------------
Each Fund's obligations hereunder shall be subject to (a) the other
Fund's performance of all its obligations to be performed hereunder at or before
the Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made at
and as of the Effective Time, and (c) the following further conditions that, at
or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Board and shall have been approved by
Target's shareholders in accordance with Equity Trust's Trust Instrument and
By-Laws and applicable law.
6.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The Registration Statement shall have become
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued, and the SEC shall not have issued an unfavorable
report with respect to the Reorganization under section 25(b) of the 1940 Act
nor instituted any proceedings seeking to enjoin consummation of the
transactions contemplated hereby under section 25(c) of the 1940 Act. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on either Fund's assets or properties, provided that either
Investment Company may for itself waive any of such conditions.
6.3. At the Effective Time, no action, suit, or other proceeding shall
be pending before any court or governmental agency in which it is sought to
restrain or prohibit, or to obtain damages or other relief in connection with,
the transactions contemplated hereby.
6.4. Equity Trust shall have received an opinion of Kirkpatrick &
Lockhart LLP ("Counsel") substantially to the effect that:
6.4.1.Acquiring Fund is a duly established series of Equity Funds,
a business trust duly organized and validly existing under the laws of
the State of Delaware with power under its Trust Instrument to own all
its properties and assets and, to the knowledge of Counsel, to carry on
its business as presently conducted;
6.4.2.This Agreement (a) has been duly authorized, executed, and
delivered by Equity Funds on behalf of Acquiring Fund and (b) assuming
due authorization, execution, and delivery of this Agreement by Equity
Trust on behalf of Target, is a valid and legally binding obligation of
Equity Funds with respect to Acquiring Fund, enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, and similar
laws relating to or affecting creditors' rights and by general
principles of equity;
6.4.3.The Acquiring Fund Shares to be issued and distributed to the
Shareholders under this Agreement, assuming their due delivery as
contemplated by this Agreement, will be duly authorized, validly issued
and outstanding, and fully paid and non-assessable;
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6.4.4.The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
materially violate Equity Funds's Trust Instrument or By-Laws or any
provision of any agreement (known to Counsel, without any independent
inquiry or investigation) to which Equity Funds (with respect to
Acquiring Fund) is a party or by which it is bound or (to the knowledge
of Counsel, without any independent inquiry or investigation) result in
the acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Equity Funds (with
respect to Acquiring Fund) is a party or by which it is bound, except as
set forth in that opinion or as previously disclosed in writing to and
accepted by Equity Trust;
6.4.5.To the knowledge of Counsel (without any independent inquiry
or investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Equity Funds (on behalf of Acquiring Fund) of the transactions
contemplated herein, except those obtained under the 1933 Act, the 1934
Act, and the 1940 Act and those that may be required under state
securities laws;
6.4.6. Equity Funds is registered with the SEC as an investment
company, and to the knowledge of Counsel no order has been issued or
proceeding instituted to suspend that registration; and
6.4.7.To the knowledge of Counsel (without any independent inquiry
or investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending or
threatened as to Equity Funds (with respect to Acquiring Fund) or any of
its properties or assets attributable or allocable to Acquiring Fund and
(b) Equity Funds (with respect to Acquiring Fund) is not a party to or
subject to the provisions of any order, decree, or judgment of any court
or governmental body that materially and adversely affects Acquiring
Fund's business, except as set forth in that opinion or as otherwise
disclosed in writing to and accepted by Equity Trust.
In rendering the foregoing opinion, Counsel may (1) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (2) make assumptions regarding the authenticity, genuineness, and/or
conformity of documents and copies thereof without independent verification
thereof, (3) limit that opinion to applicable federal and state law, and (4)
define the word "knowledge" and related terms to mean the knowledge of attorneys
then with Counsel who have devoted substantive attention to matters directly
related to this Agreement and the Reorganization. 6.5. Equity Funds shall have
received an opinion of Counsel substantially to the effect that:
6.5.1.Target is a duly established series of Equity Trust, a
business trust duly organized and validly existing under the laws of the
State of Delaware with power under its Trust Instrument to own all its
properties and assets and, to the knowledge of Counsel, to carry on its
business as presently conducted;
6.5.2.This Agreement (a) has been duly authorized, executed, and
delivered by Equity Trust on behalf of Target and (b) assuming due
authorization, execution, and delivery of this Agreement by Equity Funds
on behalf of Acquiring Fund, is a valid and legally binding obligation
of Equity Trust with respect to Target, enforceable in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and similar laws
relating to or affecting creditors' rights and by general principles of
equity;
6.5.3.The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
materially violate Equity Trust's Trust Instrument or By-Laws or any
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provision of any agreement (known to Counsel, without any independent
inquiry or investigation) to which Equity Trust (with respect to Target)
is a party or by which it is bound or (to the knowledge of Counsel,
without any independent inquiry or investigation) result in the
acceleration of any obligation, or the imposition of any penalty, under
any agreement, judgment, or decree to which Equity Trust (with respect
to Target) is a party or by which it is bound, except as set forth in
that opinion or as previously disclosed in writing to and accepted by
Equity Funds;
6.5.4.To the knowledge of Counsel (without any independent inquiry
or investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Equity Trust (on behalf of Target) of the transactions contemplated
herein, except those obtained under the 1933 Act, the 1934 Act, and the
1940 Act and those that may be required under state securities laws;
6.5.5. Equity Trust is registered with the SEC as an investment
company, and to the knowledge of Counsel no order has been issued or
proceeding instituted to suspend that registration; and
6.5.6.To the knowledge of Counsel (without any independent inquiry
or investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending or
threatened as to Equity Trust (with respect to Target) or any of its
properties or assets attributable or allocable to Target and (b) Equity
Trust (with respect to Target) is not a party to or subject to the
provisions of any order, decree, or judgment of any court or
governmental body that materially and adversely affects Target's
business, except as set forth in that opinion or as otherwise disclosed
in writing to and accepted by Equity Funds.
In rendering the foregoing opinion, Counsel may (1) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (2) make assumptions regarding the authenticity, genuineness, and/or
conformity of documents and copies thereof without independent verification
thereof, (3) limit such opinion to applicable federal and state law, and (4)
define the word "knowledge" and related terms to mean the knowledge of attorneys
then with Counsel who have devoted substantive attention to matters directly
related to this Agreement and the Reorganization.
6.6. Each Investment Company shall have received an opinion of Counsel,
addressed to and in form and substance reasonably satisfactory to it, as to the
federal income tax consequences mentioned below ("Tax Opinion"). In rendering
the Tax Opinion, Counsel may rely as to factual matters, exclusively and without
independent verification, on the representations made in this Agreement, which
Counsel may treat as representations made to it, or in separate letters
addressed to Counsel and the certificates delivered pursuant to paragraph 3.4.
The Tax Opinion shall be substantially to the effect that, based on the facts
and assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income tax
purposes:
6.6.1. Acquiring Fund's acquisition of the Assets in exchange
solely for Acquiring Fund Shares and Acquiring Fund's assumption of the
Liabilities, followed by Target's distribution of those shares PRO RATA
to the Shareholders constructively in exchange for their Target Shares,
will qualify as a reorganization within the meaning of section
368(a)(1)(C) of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
-12-
6.6.2.Target will recognize no gain or loss on the transfer of the
Assets to Acquiring Fund in exchange solely for Acquiring Fund Shares
and Acquiring Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive
exchange for their Target Shares;
6.6.3. Acquiring Fund will recognize no gain or loss on its receipt
of the Assets in exchange solely for Acquiring Fund Shares and its
assumption of the Liabilities;
6.6.4. Acquiring Fund's basis in the Assets will be the same as
Target's basis therein immediately before the Reorganization, and
Acquiring Fund's holding period for the Assets will include Target's
holding period therefor;
6.6.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring Fund
Shares pursuant to the Reorganization; and
6.6.6.A Shareholder's aggregate basis in the Acquiring Fund Shares
to be received by it in the Reorganization will be the same as the
aggregate basis in its Target Shares to be constructively surrendered in
exchange for those Acquiring Fund Shares, and its holding period for
those Acquiring Fund Shares will include its holding period for those
Target Shares, provided the Shareholder held them as capital assets at
the Effective Time.
Notwithstanding subparagraphs 6.6.2 and 6.6.4, the Tax Opinion may state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
Shareholder with respect to any asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a mark-to-market
system of accounting.
At any time before the Closing, either Investment Company may waive any of
the foregoing conditions (except that set forth in paragraph 6.1) if, in the
judgment of its Board, that waiver will not have a material adverse effect on
its Fund's shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
---------------------------
7.1. Each Investment Company represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
7.2. Each Fund will bear its own Reorganization expenses.
8. ENTIRE AGREEMENT; NO SURVIVAL
-----------------------------
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
9. TERMINATION OF AGREEMENT
------------------------
This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Target's shareholders:
9.1. By either Fund (a) in the event of the other Fund's material breach
of any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before December 31, 2000; or
9.2. By the parties' mutual agreement.
In the event of termination under paragraphs 9.1(c) or 9.2, there shall be no
liability for damages on the part of either Fund, or the trustees or officers of
either Investment Company, to the other Fund.
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10. AMENDMENT
---------
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's shareholders, in any manner
mutually agreed on in writing by the parties; provided that following that
approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
11. MISCELLANEOUS
-------------
11.1. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware; provided that, in the case of
any conflict between those laws and the federal securities laws, the latter
shall govern.
11.2. Nothing expressed or implied herein is intended or shall be
construed to confer on or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
11.3. Each Investment Company acknowledges that the other is a business
trust organized in series form. This Agreement is executed by Equity Funds on
behalf of Acquiring Fund, and by Equity Trust on behalf of Target, and by their
respective trustees and/or officers in their capacities as such, and not
individually. Each Investment Company's obligations under this Agreement are not
binding on or enforceable against any of its trustees, officers, or shareholders
but are only binding on and enforceable against (a) in the case of Equity Funds,
the assets and property of Acquiring Fund and no other series thereof and (b) in
the case of Equity Trust, the assets and property of Target and no other series
thereof. A trustee of one Investment Company shall not be personally liable
hereunder to the other Investment Company or its trustees or shareholders for
any act, omission, or obligation of the former Investment Company or any other
trustee thereof. Each Investment Company agrees that, in asserting any rights or
claims under this Agreement on behalf of its Fund, it shall look only to the
other Fund's assets and property in settlement of those rights and claims and
not to those trustees, officers, or shareholders.
11.4. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by each Investment Company and
delivered to the other party. 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.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
ATTEST: NEUBERGER BERMAN EQUITY FUNDS, on
behalf of each of its series listed
on Schedule A
________________________ By:___________________________
Secretary _______________
Vice President
ATTEST: NEUBERGER BERMAN EQUITY TRUST, on behalf
of each of its series listed on Schedule A
________________________ By:___________________________
Secretary _______________
Vice President
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SCHEDULE A
TARGETS ACQUIRING FUNDS
(All Series of Equity Trust) (All Series of Equity Funds)
- - -------------------------------------- ------------------------------------
Neuberger Berman Century Trust Neuberger Berman Century Fund
Neuberger Berman Focus Trust Neuberger Berman Focus Fund
Neuberger Berman Genesis Trust Neuberger Berman Genesis Fund
Neuberger Berman Guardian Trust Neuberger Berman Guardian Fund
Neuberger Berman International Trust Neuberger Berman International Fund
Neuberger Berman Manhattan Trust Neuberger Berman Manhattan Fund
Neuberger Berman Millennium Trust Neuberger Berman Millennium Fund
Neuberger Berman Partners Trust Neuberger Berman Partners Fund
Neuberger Berman Regency Trust Neuberger Berman Regency Fund
Neuberger Berman Socially Responsive Neuberger Berman Socially
Trust Responsive Fund
Neuberger Berman Technology Trust Neuberger Berman Technology Fund