FORM OF AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
This AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ("Agreement") is
made as of __________, 2003, between Investec Funds, a Delaware statutory trust
(the "Trust"), on behalf of Investec China & Hong Kong Fund, a series of the
Trust ("Acquiring Fund"), and the Trust, on behalf of Investec Mainland China
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.
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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
[relevant stock exchange/New York Stock Exchange] [("NYSE")] on the
date of the Closing as defined in paragraph 3.1 ("Valuation Time"),
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 in
accordance with the Funds current prospectus and Statement of
Additional Information and subject to review by the Board of Trustees
or Auditors of the Trust.]
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 ____________,
2003,] 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
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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 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;
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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 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.
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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 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
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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;
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.
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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.
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
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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 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
statutory 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 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
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Acquiring Fund) is bound, except as set forth in such opinion
or as previously disclosed in writing to and accepted by the
Trust;
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 statutory
trust duly formed 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
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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)
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
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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 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 the Target on
the transfer to the Acquiring Fund of Assets in
exchange solely for the Acquiring Fund's Shares and
the Acquiring Fund's assumption of Liabilities or on
the subsequent distribution of those shares to the
Shareholders in liquidation of the Target;
6.1.6.3 No gain or loss will be recognized by the Acquiring
Fund on its receipt of Assets in exchange solely for
the Acquiring Fund's Shares and its assumption of
Liabilities;
6.1.6.4 The Acquiring Fund's adjusted tax basis in the Assets
acquired will be equal to the basis thereof in the
Target's hands immediately before the Reorganization,
and the Acquiring Fund's holding period for the
Assets will include the Target's
holding period therefor;
6.1.6.5 A Shareholder will recognize no gain or loss on the
exchange of the Target Shares solely for the
Acquiring Fund's Shares pursuant to the
Reorganization; and
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6.1.6.6 A Shareholder's aggregate tax basis in the Acquiring
Fund's Shares received by it in the Reorganization
will equal its aggregate tax basis in its the Target
Shares surrendered in exchange therefor, and its
holding period for the Acquiring Fund Shares will
include its holding period for the Target Shares,
provided the Target Shares are held as capital assets
by the Shareholder at the Effective Time.
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. Guinness Atkinson Asset Management and the Funds will be responsible
for paying all expenses incurred in connection with the Reorganization.
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 _____________, 2003; or
9.1.2. By the parties' mutual agreement.
9.2. In the event of termination under paragraphs 9.1.1(a), (b) or (c) or
9.1.2, 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.
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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.
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 statutory 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 Mainland China Fund
By: ______________________________ By: ________________________________
Eric M. Banhazl Royce N. Brennan
Secretary President
ATTEST: INVESTEC FUNDS, on behalf of the
Investec China & Hong Kong Fund
By: ______________________________ By: ________________________________
Eric M. Banhazl Royce N. Brennan
Secretary President
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