This AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ("Agreement") is
made as of October __, 2001, between Investec Funds, a Delaware business trust
(the "Trust"), on behalf of Investec Asia Small Cap Fund, a series of the Trust
("Acquiring Fund"), and the Trust, on behalf of, Investec Asia New Economy Fund
a series of the Trust ("Target"). (Acquiring Fund and Target are sometimes
referred to herein individually as a "Fund" and collectively as the "Funds," and
the Trust is sometimes referred to herein as the "Investment Company.")
All agreements, representations, and obligations described herein, made or
to be taken or undertaken by either Fund, are made or shall be taken or
undertaken by the Trust on the Fund's behalf.
In accordance with the terms and conditions set forth in this Agreement,
the parties desire that Target transfer substantially all its assets to
Acquiring Fund in exchange solely for voting shares of beneficial interest of
Acquiring Fund ("Acquiring Fund's Shares") and the assumption by Acquiring Fund
of substantially all of Target's liabilities, and that Target distribute
Acquiring Fund's Shares pro rata to the holders of shares of beneficial interest
in Target ("Target's Shares") in liquidation of Target. All such transactions
with respect to Target and Acquiring Fund are referred to herein collectively as
the "Reorganization."
It is intended by the parties hereto that the Reorganization constitute a
reorganization within the meaning of Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"). The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Treasury
Regulation Sections 1.368-2(g) and 1.368-3(a).
In consideration of the mutual promises herein, the parties covenant and
agree as follows:
1. PLAN OF REORGANIZATION AND LIQUIDATION OF TARGET
1.1. At the Effective Time (as defined in paragraph 3.1), 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 therefore:
(a) to issue and deliver to Target the number of full and
fractional Acquiring Fund's Shares determined by dividing the
net value of Target (computed as set forth in paragraph 2.1)
by the "NAV" (computed as set forth in paragraph 2.2) of
Acquiring Fund's Shares; and
(b) to assume Target's liabilities described in paragraph 1.3
("Liabilities").
1.2. Assets shall include, without limitation, 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. Liabilities shall include (except as otherwise provided herein) all
of Target's known liabilities, debts and obligations arising in the
ordinary course of business reflected on
the books of Target at the Effective Time, and any contingent
liabilities, if any, as the Board of Trustees shall reasonably deem
exist against Target at the Effective Time, for which contingent and
other appropriate liability reserves shall be established on
Target's books. Notwithstanding the foregoing, Target agrees to use
its best efforts to discharge all of its known Liabilities prior to
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 Acquiring Fund's Shares
received by it pursuant to paragraph 1.1 to Target's shareholders of
record, determined as of the Effective Time (collectively
"Shareholders" and individually a "Shareholder"), in exchange for
Target's Shares and in liquidation of Target. To accomplish this
distribution, Acquiring Fund's transfer agent ("Transfer Agent")
shall open accounts on Acquiring Fund's share transfer books in the
Shareholders' names and transfer Acquiring Fund's Shares thereto.
Each Shareholder's account shall be credited with the pro rata
number of full and fractional (rounded to the third decimal place)
Acquiring Fund's Shares due that Shareholder. All outstanding
Target's Shares, including any represented by certificates, shall
simultaneously be canceled on Target's share transfer books.
Acquiring Fund shall not issue certificates representing Acquiring
Fund's Shares in connection with the Reorganization. However,
certificates representing Target's Shares shall represent Acquiring
Fund's Shares after the Reorganization.
1.6. As soon as reasonably practicable after distribution of Acquiring
Fund's Shares pursuant to paragraph 1.5, Target shall be terminated
and any further actions shall be taken in connection therewith as
required by applicable law. Target shall file such instruments and
shall take all other steps necessary to effect a complete
liquidation and dissolution of Target.
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 upon issuance of Acquiring Fund's Shares
in a name other than that of the registered holder on Target's books
of Target's Shares exchanged therefor shall be paid by the person to
whom Acquiring Fund's Shares are to be issued, as a condition of
such transfer.
2. VALUATION
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
as defined in paragraph 3.1 ("Valuation Time"),
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using the valuation procedures set forth in Target's then current
prospectus and statement of additional information less (b) the
amount of the Liabilities as of the Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of Acquiring Fund's Shares
shall be computed as of the Valuation Time, using the valuation
procedures set forth in Acquiring Fund's then current prospectus and
statement of additional information.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by
or under the direction of Investec Asset Management U.S. Limited.
3. CLOSING AND EFFECTIVE TIME
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal
offices, located at 1055 Washington Blvd., Stamford, CT 06901 on
____________, 2001, or at such other place and/or on such other date
upon which the parties 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 upon which the
parties 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 the net
value of Target and the NAV for Acquiring Fund is impracticable, the
Effective Time shall be postponed until the first business day after
the day when such trading shall have been fully resumed and such
reporting shall have been restored.
3.2. Target shall deliver to the Trust at the Closing a schedule of its
Assets as of the Effective Time, which shall set forth for all
portfolio securities included therein their adjusted tax bases and
holding periods by lot. Target's custodian shall deliver at the
Closing a certificate of an authorized officer stating that (a) the
Assets held by the custodian 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. The Transfer Agent shall deliver at the Closing a certificate as to
the opening on Acquiring Fund's share transfer books of accounts in
the names of Target's Shareholders. The Trust shall issue and
deliver a confirmation to Target evidencing Acquiring Fund's Shares
to be credited to Target at the Effective Time or provide evidence
satisfactory to Target that Acquiring Fund's Shares have been
credited to Target's account on Acquiring Fund's books. At the
Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts, or other
documents as the other party or its counsel may reasonably request.
3.4. The Trust, on behalf of Target and Acquiring Fund, respectively,
shall deliver at the Closing a certificate executed in its name by
its President or a Vice President and dated as of the Effective
Time, to the effect that the representations and warranties it
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made in this Agreement are true and correct in all material respects
at the Effective Time, with the same force and effect as if made at
and as of the Effective Time, except as they may be affected by the
transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1. Target represents and warrants as follows:
4.1.1. At the Closing, Target will have good and marketable title
to its Assets and full right, power, and authority to sell,
assign, transfer, and deliver its Assets free of any liens
or other encumbrances; and upon delivery and payment for
the Assets, Acquiring Fund will acquire good and marketable
title thereto;
4.1.2. Acquiring Fund's Shares are not being acquired for the
purpose of making any distribution thereof, other than in
accordance with the terms hereof;
4.1.3. Target's current prospectus and statement of additional
information conform in all material respects to the
applicable requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and do not include any untrue
statement of a material fact or omit 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;
4.1.4. Target is not in violation of, and the execution and
delivery of this Agreement and consummation of the
transactions contemplated hereby will not (a) conflict with
or violate Delaware law or any provision of the Trust's
Trust Instrument or By-laws or of any agreement,
instrument, lease, or other undertaking to which Target is
a party or by which it is bound or (b) 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 the
Trust;
4.1.5. Except as otherwise disclosed in writing to and accepted by
the Trust, all material contracts and other commitments of
or applicable to Target (other than this Agreement and
investment contracts, including options and futures) will
be terminated, or provision for discharge of any
liabilities of Target thereunder will be made, at or prior
to the Effective Time, without Target 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 not taken by any other
party thereto prior to the Closing;
4.1.6. Except as otherwise disclosed in writing to and accepted by
the Trust on behalf of Acquiring Fund, no litigation,
administrative proceeding, or investigation of or before
any court or governmental body is presently pending or (to
Target's knowledge) threatened against 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; Target knows of
no facts that might form
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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;
4.1.7. The execution, delivery, and performance of this Agreement
has been duly authorized as of the date hereof by all
necessary action on the part of the Trust's Board of
Trustees on behalf of Target, which has made the
determinations required by Rule 17a-8(a) under the 1940
Act; and, subject to approval by Target's shareholders and
receipt of any necessary exemptive relief or no-action
assurances requested from the Securities and Exchange
Commission ("SEC") or its staff with respect to Sections
17(a) and 17(d) of the 1940 Act, this Agreement will
constitute 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;
4.1.8. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by
Target's shareholders;
4.1.9. 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
Target, except for (a) a proxy statement ("Proxy
Statement"), the information for which is included in a
combined prospectus and proxy statement filed by Acquiring
Fund with the SEC on Form N-14, (b) receipt of the
exemptive relief or no-action assurances referenced in
subparagraph 4.1.7, and (c) such consents, approvals,
authorizations, and filings as have been made or received
or as may be required subsequent to the Effective Time;
4.1.10. 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 any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading. This provision shall not apply to statements in
or omissions from the Proxy Statement made in reliance on
and in conformity with information furnished by the Trust
for use therein.
4.2. Acquiring Fund represents and warrants as follows:
4.2.1. Acquiring Fund's 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 nonassessable by
the Trust (except as disclosed in
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the Trust's then current prospectus and statement of
additional information). Except as contemplated by this
Agreement, Acquiring Fund does not have outstanding any
options, warrants, or other rights to subscribe for or
purchase any of its shares, nor is there outstanding any
security convertible into any of its shares;
4.2.2. Acquiring Fund's current prospectus and statement of
additional information 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 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;
4.2.3. Acquiring Fund is not in violation of, and the execution
and delivery of this Agreement and consummation of the
transactions contemplated hereby (a) will not conflict with
or violate Delaware law or any provision of the Trust's
Trust Instrument or By-laws or any provision of any
agreement, instrument, lease, or other undertaking to which
Acquiring Fund is a party or by which it is bound or (b)
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 the Trust;
4.2.4. Except as otherwise disclosed in writing to and accepted by
the Trust on behalf of Target, no litigation,
administrative proceeding, or investigation of or before
any court or governmental body is presently pending or (to
Acquiring Fund's knowledge) threatened against the Trust
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; Acquiring Fund 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;
4.2.5. The execution, delivery, and performance of this Agreement
has been duly authorized as of the date hereof by all
necessary action on the part of the Trust's Board of
Trustees on behalf of Acquiring Fund, which has made the
determinations required by Rule 17a-8(a) under the 1940
Act; and, subject to receipt of any necessary exemptive
relief or no-action assurances requested from the SEC or
its staff with respect to Sections 17(a) and 17(d) of the
1940 Act, this Agreement will constitute 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;
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4.2.6. 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 the Trust, except for (a) the filing with the
SEC of the Registration Statement and a post-effective
amendment to the Trust's registration statement on Form
N-14, (b) receipt of the exemptive relief or no-action
assurances referenced in subparagraph 4.2.5, and (c) such
consents, approvals, authorizations, and filings as have
been made or received or as may be required subsequent to
the Effective Time;
4.3. The Trust, on behalf of each Fund, represents and warrants to the
other as follows:
4.3.1. The Trust is a business trust that is duly organized,
validly existing, and in good standing under the laws of
the State of Delaware; and a copy of its Certificate of
Trust is on file with the Secretary of the State of
Delaware;
4.3.2. The Trust is duly registered as an open-end management
investment company under the 1940 Act, and such
registration will be in full force and effect at the
Effective Time;
4.3.3. Each Fund is a duly established and designated series of
the Trust.
5. COVENANTS
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 such changes
in operations as are contemplated by each Fund's normal business
activities and (b) each Fund will retain exclusive control of the
composition of its portfolio until the Closing, provided that Target
shall not dispose of more than an insignificant portion of its
historic business assets during such period without Acquiring Fund's
prior consent.
5.2. Target covenants to call a special meeting of shareholders to
consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated
hereby.
5.3. Target covenants that Acquiring Fund's 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 the Trust in obtaining such
information as the Trust reasonably requests concerning the
beneficial ownership of Target's 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 the Trust at the
Closing.
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5.6. Each Fund covenants to cooperate in preparing the Proxy Statement in
compliance with applicable federal 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 such assignments and other instruments,
and will take or cause to be taken such further action, as the other
Fund may deem necessary or desirable in order to vest in, and
confirm to (a) Acquiring Fund, title to and possession of all
Target's Assets, and (b) Target, title to and possession of
Acquiring Fund's 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 such state securities laws as it may deem appropriate in order
to continue its operations after the Effective Time.
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
6.1. Each Fund's obligations hereunder shall be subject to (a)
performance by the other Fund of all the 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:
6.1.1. This Agreement and the transactions contemplated hereby
shall have been duly adopted and approved by the Trust's
Board of Trustees on behalf of Target and Acquiring Fund
and shall have been approved by Target's shareholders in
accordance with applicable law.
6.1.2. 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 Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall
have been
8
obtained, except where failure to obtain the same would not
involve a risk of a material adverse effect on the assets
or properties of the Fund.
6.1.3. 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.
6.1.4 Target shall have received an opinion of Kramer Levin
Naftalis & Frankel LLP, counsel to the Trust ("Counsel"),
substantially to the effect that:
6.1.4.1. Acquiring Fund is a validly existing series of the
Trust, a business trust duly formed and validly
existing and in good standing under the laws of the
State of Delaware with the power under its Trust
Instrument to carry on its business and to own all
of its properties and assets;
6.1.4.2. This Agreement (a) has been duly authorized and
executed by the Trust on behalf of Acquiring Fund
and (b) assuming due authorization, execution, and
delivery of this Agreement by Target, is a legal,
valid and binding obligation of Acquiring Fund,
enforceable against Acquiring Fund in accordance
with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency,
reorganization, receivership, fraudulent conveyance,
moratorium or other laws of general application
relating to or affecting the enforcement of
creditors' rights and remedies, as from time to time
in effect, (ii) application of equitable principles
(regardless of whether such enforceability is
considered in a proceeding in equity or at law) and
(iii) principles of course of dealing or course of
performance and standards of good faith, fair
dealing, materiality and reasonableness that may be
applied by a court to the exercise of rights and
remedies;
6.1.4.3. Acquiring Fund's Shares to be issued and delivered
to the Shareholders under this Agreement, assuming
their due delivery as contemplated by this
Agreement, will be duly authorized and validly
issued and outstanding and fully paid and
nonassessable (except as disclosed in the Trust's
then current prospectus and statement of additional
information);
6.1.4.4. The execution and delivery of this Agreement did
not, and the consummation of the transactions
contemplated hereby will not (a) materially violate
the Trust's Trust Instrument or By-laws or any
provision of any agreement to which the Trust (with
respect to Acquiring Fund) is a party or by which it
is bound or (b) to the knowledge of Counsel, result
in the acceleration of any obligation, or the
imposition of any penalty, under any agreement,
judgment, or decree known to Counsel to which the
Trust (with respect to Acquiring Fund) is a party or
by which it (with respect to Acquiring Fund) is
bound, except as set forth in such opinion or as
previously disclosed in writing to and accepted by
the Trust;
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6.1.4.5. To the knowledge of Counsel, no consent, approval,
authorization or order of any Delaware or Federal
Court or governmental authority of the State of
Delaware or the United States of America is required
for the consummation by the Trust on behalf of
Acquiring Fund, of the transactions contemplated by
the Agreement, except such as may be required under
the 1933 Act, the 1934 Act and the 1940 Act and
under securities laws of states other than the State
of Delaware;
6.1.4.6. The 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 such registration; and
6.1.4.7. To the knowledge of Counsel, (a) no litigation,
administrative proceeding, or investigation of or
before any court or governmental body is pending or
threatened as to the Trust (with respect to
Acquiring Fund) or any of its properties or assets
attributable or allocable to Acquiring Fund and (b)
the Trust (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 such opinion
or as otherwise disclosed in writing to and accepted
by the Trust.
In rendering such opinion, Counsel may (i) rely, as to
matters governed by the laws of the State of Delaware, on
an opinion of competent Delaware counsel, (ii) make
assumptions regarding the authenticity, genuineness, and/or
conformity of documents and copies thereof without
independent verification thereof, and other customary
assumptions as the parties may agree, (iii) limit such
opinion to applicable federal and state law, (iv) define
the word "knowledge" and related terms to mean the
knowledge of attorneys then with such firm who have devoted
substantive attention to matters directly related to this
Agreement and the Reorganization; and (v) rely on
certificates of officers or trustees of the Trust, in each
case reasonably acceptable to the Trust.
6.1.5. Acquiring Fund shall have received an opinion of Counsel,
substantially to the effect that:
6.1.5.1. Target is a validly existing series of the Trust,
a business trust duly organized and validly existing
and in good standing under the laws of the State of
Delaware with power under its Trust Instrument to
own all of its properties and assets and, to the
knowledge of Counsel, to carry on its business as
presently conducted;
6.1.5.2. This Agreement (a) has been duly authorized and
executed by the Trust on behalf of Target and (b)
assuming due authorization, execution, and delivery
of this Agreement by the Trust on behalf of
Acquiring Fund, is a legal, valid and binding
obligation of Target, enforceable against Target in
accordance with its terms, except as such
enforceability may be limited by (i)
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bankruptcy, insolvency, reorganization,
receivership, fraudulent conveyance, moratorium or
other laws of general application relating to or
affecting the enforcement of creditors' rights and
remedies, as from time to time in effect, (ii)
application of equitable principles (regardless of
whether such enforceability is considered in a
proceeding in equity or at law) and (iii) principles
of course of dealing or course of performance and
standards of good faith, fair dealing, materiality
and reasonableness that may be applied by a court to
the exercise of rights and remedies;
6.1.5.3. The execution and delivery of this Agreement did
not, and the consummation of the transactions
contemplated hereby will not, (a) materially violate
the Trust's Trust Instrument or By-laws or any
provision of any agreement known to Counsel, to
which the Trust (with respect to Target) is a party
or by which it is bound or (b) to the knowledge of
such counsel, result in the acceleration of any
obligation, or the imposition of any penalty, under
any agreement, judgment, or decree known to Counsel
to which the Trust (with respect to Target) is a
party or by which it (with respect to Target) is
bound, except as set forth in such opinion or as
previously disclosed in writing to and accepted by
the Trust; 6.1.5.4. To the knowledge of Counsel, no
consent, approval, authorization or order of any
Delaware or Federal Court or governmental authority
of the State of Delaware or the United States of
America is required for the consummation by the
Trust on behalf of Target, of the transactions
contemplated by the Agreement, except such as may be
required under the 1933 Act, the 1934 Act and the
1940 Act and under securities laws of states other
than the State of Delaware;
6.1.5.5. The 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 such registration; and
6.1.5.6. To the knowledge of Counsel, (a) no litigation,
administrative proceeding, or investigation of or
before any court or governmental body is pending or
threatened as to the Trust (with respect to Target)
or any of its properties or assets attributable or
allocable to Target and (b) the 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 such opinion or as otherwise disclosed in
writing to and accepted by the Trust.
In rendering such opinion, Counsel may (i) rely, as to
matters governed by the laws of the State of Delaware, on
an opinion of competent Delaware counsel, (ii) make
assumptions regarding the authenticity, genuineness, and/or
conformity of documents and copies thereof without
independent verification thereof, and other customary
assumptions as the parties may agree, (iii) limit such
opinion to applicable federal and state law, (iv) define
the word "knowledge" and related
11
terms to mean the knowledge of attorneys then with such
firm who have devoted substantive attention to matters
directly related to this Agreement and the Reorganization,
and (v) rely on certificates of officers or trustees of
Target; in each case reasonably acceptable to the Trust.
6.1.6. [The Trust, on behalf of Target and Acquiring Fund, 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 of the Reorganization ("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
(and/or in separate letters addressed to Counsel) and each
Fund's separate covenants. Each Fund agrees to make
reasonable covenants and representations as to factual
matters as of the Effective Time in connection with the
rendering of such opinion. 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:
6.1.6.1. The Reorganization will constitute a
reorganization within the meaning of section
368(a)(1) of the Code, and each Fund will be "a
party to a reorganization" within the meaning of
section 368(b) of the Code;
6.1.6.2. No gain or loss will be recognized by Target on
the transfer to Acquiring Fund of its assets in
exchange solely for Acquiring Fund's Shares and
Acquiring Fund's assumption of Target's liabilities
or on the subsequent distribution of those shares to
the Shareholders in liquidation of Target;
6.1.6.3. No gain or loss will be recognized by Acquiring
Fund on its receipt of Targets assets in exchange
solely for Acquiring Fund's Shares and its
assumption of Target's liabilities;
6.1.6.4. Acquiring Fund's adjusted tax basis in the assets
acquired from Target will be equal to the basis
thereof in Target's hands immediately before the
Reorganization, and Acquiring Fund's holding period
for the assets acquired from Target will include
Target's holding period therefor;
6.1.6.5. A Shareholder will recognize no gain or loss on
the exchange of Target Shares solely for Acquiring
Fund's Shares pursuant to the Reorganization; and
6.1.6.6. A Shareholder's aggregate tax basis in Acquiring
Fund's Shares received by it in the Reorganization
will equal its aggregate tax basis in its Target
Shares surrendered in exchange therefor, and its
holding period for Acquiring Fund Shares received in
the reorganization will include its holding period
for Target Shares surrendered in exchange therefor,
provided such Target Shares are held as capital
assets by the Shareholder at the Effective Time.]
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6.2. At any time before the Closing, either Fund may waive any of the
foregoing conditions if, in the judgment of the Trust's Board of
Trustees, such waiver will not have a material adverse effect on its
shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
7.1. The Trust, on behalf of each Fund, represents and warrants that
there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
7.2. The Funds will be responsible for paying the following expenses
incurred in connection with the Reorganization:
[to be provided]
8. ENTIRE AGREEMENT; SURVIVAL
8.1. 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 survive the Closing.
9. TERMINATION OF AGREEMENT
9.1. This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Target's
Shareholders:
9.1.1. By either Fund (a) in the event of a 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
_____________, 2002; or
9.1.2. By the parties' mutual agreement.
9.2. In the event of termination under paragraphs 0(a), (b) or (c) or 0,
there shall be no liability for damages on the part of either Fund
affected by the termination, or the trustees or officers of the
Trust, to the other Fund.
10. AMENDMENT
10.1. This Agreement may be amended, modified, or supplemented at any
time, notwithstanding approval thereof by Target's Shareholders, in
such manner as may be mutually agreed upon in writing by the
parties; provided that following such approval no such amendment
shall have a material adverse effect on such Shareholders'
interests.
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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 such 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 upon 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. The parties acknowledge that the Trust is a business trust. Notice
is hereby given that this instrument is executed on behalf of the
Trust's Trustees solely in their capacity as trustees, and not
individually, and that the Trust's obligations under this instrument
on behalf of each Fund are not binding on or enforceable against any
of its trustees, officers, or shareholders, but are only binding on
and enforceable against the respective Funds' assets and property.
Each Fund agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the corresponding Fund's assets and
property in settlement of such rights or claims and not to such
Trustees or shareholders or to the assets of any other series of the
Trust.
11.4. The Trust agrees to indemnify and hold harmless each Trustee of the
Trust at the time of the execution of this Agreement against
expenses, including reasonable attorneys' fees, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by such
Trustee in connection with any claim that is asserted against such
trustee arising out of such person's service as a Trustee of the
Trust, provided that such indemnification shall be limited to the
full extent of the indemnification that is available to the Trustees
of the Trust pursuant to the provisions of the Trust's Trust
Instrument and applicable law.
11.5 The Trust, on behalf of each Fund, hereby waives any conflict
arising out of the representation of each Fund by Counsel.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed
by its duly authorized officer.
ATTEST: INVESTEC FUNDS, on behalf of the
Investec Asia Small Cap Fund
By: _________________________________ By: ________________________________
Eric M. Banhazl Royce N. Brennan
Secretary President
ATTEST: INVESTEC FUNDS, on behalf of the
Investec Asia New Economy Fund
By: _________________________________ By: ________________________________
Eric M. Banhazl Royce N. Brennan
Secretary President
15