Exhibit (4)
Form of Plan of Reorganization
FIFTH THIRD FUNDS
Fifth Third Cardinal Fund and
Fifth Third Quality Growth Fund
PLAN OF REORGANIZATION
This Plan of Reorganization having been approved by the Board of Trustees of
Fifth Third Funds is made as of June 21, 2000, by Fifth Third Funds (the
"Plan"). The capitalized terms used herein shall have the meaning ascribed to
them in this Plan.
OVERVIEW OF PLAN OF REORGANIZATION
(1) The Fifth Third Cardinal Fund (the "Cardinal Fund") will sell, assign,
convey, transfer and deliver to the Fifth Third Quality Growth Fund (the
"Quality Growth Fund") on the Exchange Date all of the properties and assets
existing at the Valuation Time in the Cardinal Fund. In consideration therefor,
the Quality Growth Fund shall, on the Exchange Date, assume all of the
liabilities of the Cardinal Fund for a number of full and fractional Shares of
the Quality Growth Fund having an aggregate net asset value equal to the value
of the assets of the Cardinal Fund transferred to the Quality Growth Fund on
such date less the value of the liabilities of the Cardinal Fund assumed by the
Quality Growth Fund on that date. It is intended that the reorganization
described in this Plan shall be a tax-free reorganization under the Internal
Revenue Code of 1986, as amended (the "Code").
(2) Upon consummation of the transactions described in paragraph (1) of
this Plan, the Cardinal Fund shall distribute in complete liquidation to its
shareholders of record as of the Exchange Date the Shares of beneficial interest
("Shares") of the Quality Growth Fund received by it, each shareholder being
entitled to receive the number of such Shares of the Quality Growth Fund equal
to the proportion which the number of Shares of the Cardinal Fund held by such
shareholder bears to the number of such Shares of the Cardinal Fund outstanding
on such date.
FACTUAL BASIS OF THE PLAN
1. (a) Fifth Third Funds is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts and has power to
own all of its properties and assets and to carry out the transactions involved
under this Plan. Each of Fifth Third Funds, the Cardinal Fund and the Quality
Growth Fund has all necessary federal, state and local authorizations to carry
on its business as now being conducted and to carry out this Plan.
(b) Fifth Third Funds is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and such registration has not been revoked or rescinded and is in full force and
effect. The Cardinal Fund and the Quality Growth Fund have elected to qualify
and have qualified as regulated investment companies under Part I of Subchapter
M of the Code as of and since their first taxable year and the Cardinal Fund and
the Quality Growth Fund qualify and intend to continue to qualify as regulated
investment companies for the taxable year ending upon their liquidation. The
Cardinal Fund and the Quality Growth Fund have been regulated investment
companies under such Sections of the Code at all times since their inception.
(c) The statement of assets and liabilities, statement of operations,
and statements of changes in net assets financial highlights and schedule of
investments (indicating their market values) for the Cardinal Fund and the
Quality Growth Fund for the year ended July 31, 2000, fairly present the
financial position of the Cardinal Fund
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and the Quality Growth Fund as of such date and said statements of operations
and changes in net assets and financial highlights fairly reflect the results of
operations, changes in net assets and financial highlights for the periods
covered thereby in conformity with generally accepted accounting principles.
(d) The prospectus of each of the Cardinal Fund and the Quality Growth Fund
dated November 30, 1999, as filed with the Securities and Exchange Commission
(the "Commission") (the "Prospectuses") and the Statement of Additional
Information for Fifth Third Funds, dated November 30, 1999 (as revised February
1, 2000 and June 1, 2000), as filed with the Commission, did not as of such
date, and will not as of the Exchange Date 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 not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Fifth Third Funds, the Cardinal Fund, or the
Quality Growth Fund, threatened against Fifth Third Funds, the Cardinal Fund or
the Quality Growth Fund which assert liability on the part of Fifth Third Funds,
the Cardinal Fund or the Quality Growth Fund.
(f) The Cardinal Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on its
statement of assets and liabilities as of July 31, 2000, referred to in Section
1(c) hereof and those incurred in the ordinary course of Fifth Third Funds'
business as an investment company since that date.
(g) As used in this Plan, the term "Investments" shall mean the Cardinal
Fund's investments shown on the schedule of its portfolio investments as of July
31, 2000, referred to in Section 1(c) hereof as supplemented with such changes
as Fifth Third Funds or the Cardinal Fund shall make after that date.
(h) Fifth Third Funds and each of the Cardinal Fund and the Quality Growth
Fund have filed or will file all federal and state tax returns which, to the
knowledge of Fifth Third Funds' officers, are required to be filed by Fifth
Third Funds and each of the Cardinal Fund and the federal and state taxes shown
to be due on said returns or on any Quality Growth Fund and have paid or will
pay all assessments received by Fifth Third Funds or each of the Cardinal Fund
and the Quality Growth Fund. All tax liabilities of Fifth Third Funds and each
of the Cardinal Fund and the Quality Growth Fund have been adequately provided
for on its books, and no tax deficiency or liability of Fifth Third Funds or
either of the Cardinal Fund and the Quality Growth Fund has been asserted, and
no question with respect thereto has been raised by the Internal Revenue Service
or by any state or local tax authority for taxes in excess of those already
paid.
(i) At both the Valuation Time and the Exchange Date and except for
shareholder approval, Fifth Third Funds and the Cardinal Fund will have full
right, power and authority to sell, assign, transfer and deliver the Investments
and any other assets and liabilities transferred by it pursuant to this Plan. At
the Exchange Date, subject only to the delivery of the Shares, Investments and
any such other assets and liabilities as contemplated by this Plan, the Quality
Growth Fund will acquire the Investments and any such other assets subject to no
encumbrances, liens or security interests whatsoever and without any
restrictions upon the transfer thereof.
(j) At both the Valuation Time and the Exchange Date, Fifth Third Funds and
the Quality Growth Fund will have full right, power and authority to purchase
the Investments and any other assets and assume the liabilities of the Cardinal
Fund to be transferred to it pursuant to this Plan.
(k) The Cardinal Fund and the Quality Growth Fund are qualified and will at
all times through the Exchange Date qualify for taxation as a "regulated
investment company" under Sections 851 and 852 of the Code.
(l) At the Exchange Date, the Cardinal Fund will have sold such of its
assets, if any, as necessary to assure that, after giving effect to the
acquisition of its assets pursuant to this Plan, the Quality Growth Fund will
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remain a "diversified company" within the meaning of Section 5(b)(1) of the 1940
Act and in compliance with such other mandatory investment restrictions as are
set forth in its Prospectuses and Statement of Additional Information.
SPECIFICS OF PLAN
2. Reorganization. (a) Subject to the requisite approval of the shareholders of
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the Cardinal Fund and to the other terms and conditions contained herein
(including the Cardinal Fund's distribution to its shareholders of all of its
investment company taxable income and net capital gain (as described in Section
7(l)), the Cardinal Fund will sell, assign, convey, transfer and deliver to the
Quality Growth Fund and the Quality Growth Fund will acquire from the Cardinal
Fund, on the Exchange Date all of the Investments and all of the cash and other
assets of the Cardinal Fund in exchange for that number of Shares of the Quality
Growth Fund provided for in Section 3 and the assumption by the Quality Growth
Fund of all of the liabilities of the Cardinal Fund. Pursuant to this Plan, the
Cardinal Fund will, as soon as practicable after the Exchange Date, distribute
in liquidation all of the Quality Growth Fund's Shares received by it to its
shareholders in exchange for their Shares of the Cardinal Fund.
(b) Fifth Third Funds, on behalf of the Cardinal Fund, will pay or cause
to be paid to the Quality Growth Fund any interest and cash dividends received
by it on or after the Exchange Date with respect to the Investments transferred
to the Quality Growth Fund hereunder. Fifth Third Funds, on behalf of the
Cardinal Fund, will transfer to the Quality Growth Fund any rights, stock
dividends or other securities received by the Cardinal Fund after the Exchange
Date as stock dividends or other distributions on or with respect to the
Investments transferred, which rights, stock dividends and other securities
shall be deemed included in the assets transferred to the Quality Growth Fund at
the Exchange Date and shall not be separately valued, in which case any such
distribution that remains unpaid as of the Exchange Date shall be included in
the determination of the value of the assets of the Cardinal Fund acquired by
the Quality Growth Fund.
3. Exchange Date; Valuation Time. On the Exchange Date, the Quality Growth Fund
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will deliver to the Cardinal Fund a number of Shares of the Quality Growth Fund
having an aggregate net asset value equal to the value of the assets of the
Cardinal Fund acquired by the Quality Growth Fund, less the value of the
liabilities of the Cardinal Fund assumed, determined as hereafter provided in
this Section.
(a) The valuation time shall be 4:00 p.m. (Eastern Time) [DATE], 2000, or
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such earlier or later day as may be established by the proper officers of Fifth
Third Funds (the "Valuation Time").
(b) The net asset value of Shares of the Quality Growth Fund to be
delivered to the Cardinal Fund, the value of the assets of the Cardinal Fund,
and the value of the liabilities of the Cardinal Fund to be assumed by the
Quality Growth Fund in each case shall be computed as of the Valuation Time
pursuant to the valuation procedures customarily used by Fifth Third Funds.
(c) No formula will be used to adjust the net asset value of the Cardinal
Fund or the Quality Growth Fund to take into account differences in realized and
unrealized gains and losses.
(d) Fifth Third Funds, on behalf of the Quality Growth Fund, shall issue
its Shares to the Cardinal Fund on one share deposit receipt registered in the
name of the Cardinal Fund. The Cardinal Fund shall distribute in liquidation
Shares of the Quality Growth Fund received by it hereunder pro rata to its
shareholders by redelivering such share deposit receipt to Fifth Third Funds'
transfer agent, which will as soon as practicable set up open accounts for each
shareholder of the Cardinal Fund in accordance with written instructions
furnished by Fifth Third Funds.
(e) The Quality Growth Fund shall assume all liabilities of the Cardinal
Fund, whether accrued or contingent, in connection with the acquisition of
assets and subsequent dissolution of the Cardinal Fund or
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otherwise, except that recourse for assumed liabilities relating to the Cardinal
Fund will be limited to the Quality Growth Fund.
4. Expenses and Fees. (a) All fees and expenses incurred by the Cardinal Fund
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and/or the Quality Growth Fund as a direct result of the transactions
contemplated by this Plan, will be allocated ratably between the two Funds in
proportion to their net assets as of the Exchange Date except that (a) the costs
of proxy materials and proxy solicitations will be borne by Fifth Third Bank
and (b) such fees and expenses will be paid by the party directly incurring such
expenses if and to the extent that payment by the other party would result in
the disqualification of the Quality Growth Fund or the Cardinal Fund, as the
case may be, as a "regulated investment company" within the meaning of Section
851 of the Code.
(b) Notwithstanding any other provisions of this Plan, if for any reason
the transaction contemplated by this Plan is not consummated, no entity shall be
liable to the other entity for any damages resulting therefrom, including,
without limitation, consequential damages.
5. Exchange Date. Delivery of the assets of the Cardinal Fund to be
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transferred, assumption of the liabilities of the Cardinal Fund to be assumed,
and the delivery of the Quality Growth Fund Shares to be issued shall be made at
the offices of Fifth Third Funds, 3435 Stelzer Road, Columbus, Ohio 43219, at
10:00 a.m. Eastern standard time on the next full business day following the
Valuation Time, or at such other time and date established by the proper
officers of Fifth Third Funds, the date and time upon which such delivery is to
take place being referred to herein as the "Exchange Date."
6. Special Meeting of Shareholders: Dissolution. (a) The Cardinal Fund will
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call a special meeting of its shareholders as soon as is practicable after the
effective date of the registration statement filed with the Commission by Fifth
Third Funds on Form N-14 relating to the Shares of the Quality Growth Fund
issuable hereunder (the "Registration Statement"), and the proxy statement of
the Cardinal Fund included therein (the "Proxy Statement") for the purpose of
considering the sale of all of the assets of the Cardinal Fund to and the
assumption of all of the liabilities of the Cardinal Fund by the Quality Growth
Fund as herein provided, adopting this Plan, and authorizing the liquidation and
dissolution of the Cardinal Fund, and it shall be a condition to the obligations
of each of the parties hereto that the holders of the Shares of the Cardinal
Fund shall have approved this Plan and the transactions contemplated herein in
the manner required by law and Fifth Third Funds' Declaration of Trust at such a
meeting on or before the Valuation Time.
(b) The Cardinal Fund will liquidate and dissolve in the manner provided
in Fifth Third Funds' Declaration of Trust and in accordance with applicable
law, provided that the Cardinal Fund will not make any distributions of Shares
of the Quality Growth Fund to its shareholders without first paying or
adequately providing for the payment of all of its debts, obligations and
liabilities.
7. Conditions to Be Met Regarding the Transaction. The intention of Fifth Third
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Funds to consummate the transactions described herein are subject to the
following conditions:
(a) This Plan shall have been adopted and the transactions contemplated
hereby, including the liquidation and dissolution of the Cardinal Fund, shall
have been approved by the shareholders of the Cardinal Fund in the manner
required by law.
(b) The officers of Fifth Third Funds shall cause the preparation of a
statement of the assets and liabilities of the Cardinal Fund, with values
determined as provided in Section 3, together with a list of Investments with
their respective tax costs, all as of the Valuation Time, certified on Fifth
Third Funds' behalf by its President (or any Vice President) and Treasurer, and
a certificate of both such officers, dated the Exchange Date, that there has
been no material adverse change in the financial position of the Cardinal Fund
since July 31,
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2000, other than changes in the Investments since that date or changes in the
market value of the Investments, or changes due to net redemptions of Shares of
the Cardinal Fund, dividends paid or losses from operations.
(c) The officers of Fifth Third Funds shall cause the preparation of a
statement of the Quality Growth Fund's net assets, together with a list of
portfolio holdings with values determined as provided in Section 3 hereof, all
as of the Valuation Time certified on Fifth Third Funds' behalf by its President
(or any Vice President) and Treasurer.
(d) The President (or any Vice President) and Treasurer of Fifth Third
Funds shall certify that as of the Valuation Time and as of the Exchange Date
all the elements in Section 1 of this Plan are true and correct in all material
respects as if made at and as of such dates and that each of the Cardinal Fund
and the Quality Growth Fund has complied with and satisfied all the conditions
on its part under the Plan to be performed or satisfied at or prior to such
dates.
(e) Fifth Third Funds shall have received a letter from Arthur Andersen
LLP dated the Exchange Date stating that such firm reviewed (i) the federal and
state income tax returns of the Cardinal Fund related to the year ended July 31,
2000, and (ii) to the extent returns have not been prepared or filed, all
available information of the Cardinal Fund for the period from July 31, 2000, to
the Exchange Date, and that, in the course of such review, nothing came to their
attention which caused them to believe that such returns and/or available
information did not properly reflect, in all material respects, the federal and
state income taxes of the Cardinal Fund for the periods covered thereby, or that
the Cardinal Fund would not qualify as a regulated investment company for
federal income tax purposes.
(f) There shall not be any material litigation pending with respect to the
matters contemplated by this Plan.
(g) Fifth Third Funds shall have received an opinion of Ropes & Gray dated
the Exchange Date to the effect that: (i) Fifth Third Funds is a business trust
duly established and validly existing under the laws of the Commonwealth of
Massachusetts, and neither Fifth Third Funds, the Cardinal Fund, nor the Quality
Growth Fund is, to the knowledge of such counsel, required to qualify to do
business as a foreign association in any jurisdiction; (ii) Fifth Third Funds
and the Cardinal Fund have power to sell, assign, convey, transfer and deliver
the Investments and other assets contemplated hereby and, upon consummation of
the transactions contemplated hereby in accordance with the terms of this Plan,
Fifth Third Funds and the Cardinal Fund will have duly sold, assigned, conveyed,
transferred and delivered such Investments and other assets to the Quality
Growth Fund; (iii) the adoption of this Plan did not, and the consummation of
the transactions contemplated hereby will not, violate Fifth Third Funds'
Declaration of Trust or Bylaws, as amended or any provision of any agreement
known to such counsel to which Fifth Third Funds is a party or by which it is
bound; (iv) no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Fifth Third Funds of
the transactions contemplated hereby, except such as have been obtained under
the Securities Act of 1933 (the "1933 Act"), the Securities Exchange Act of 1934
("the 1934 Act") and the 1940 Act; (v) this Plan has been duly authorized,
executed and delivered by Fifth Third Funds and is a valid and binding
obligation of Fifth Third Funds; and (vi) the Shares of the Quality Growth Fund
to be delivered to the Cardinal Fund as provided for by this Plan are duly
authorized and upon such delivery will be validly issued and will be fully paid
and nonassessable by Fifth Third Funds and no shareholder of Fifth Third Funds
has any preemptive right to subscription or purchase in respect thereof.
(h) Fifth Third Funds shall have received an opinion of Ropes & Gray
addressed to Fifth Third Funds and dated the Exchange Date to the effect that
for Federal income tax purposes: (i) no gain or loss will be recognized by the
Cardinal Fund upon the transfer of the assets and Investments to the Quality
Growth Fund in exchange for Shares of the Quality Growth Fund and the assumption
by the Quality Growth Fund of the liabilities of the Cardinal Fund or upon the
distribution of Shares of the Quality Growth Fund by the Cardinal Fund to its
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shareholders in liquidation; (ii) no gain or loss will be recognized by the
shareholders of the Cardinal Fund upon the exchange of their Shares for the
Shares of the Quality Growth Fund; (iii) the basis of the Shares of the Quality
Growth Fund Shares a shareholder of the Cardinal Fund receives in connection
with the exchange will be the same as the basis of his or her Cardinal Fund
Shares exchanged therefor; (iv) a Cardinal Fund shareholder's holding period for
his or her Quality Growth Fund Shares will be determined by including the period
for which he or she held the Shares of the Cardinal Fund exchanged therefor,
provided that he or she held such Shares of the Cardinal Fund as capital assets;
(v) no gain or loss will be recognized by the Quality Growth Fund upon the
receipt of the assets transferred to the Quality Growth Fund pursuant to this
Plan in exchange for the Shares of the Quality Growth Fund and the assumption by
the Quality Growth Fund of the liabilities of the Cardinal Fund; (vi) the basis
in the hands of the Quality Growth Fund of the assets of the Cardinal Fund will
be the same as the basis of the assets in the hands of the Cardinal Fund
immediately prior to the transfer; and (vii) the Quality Growth Fund's holding
periods of the assets of the Cardinal Fund will include the period for which
such assets were held by the Cardinal Fund.
(i) The assets of the Cardinal Fund to be acquired by the Quality Growth
Fund will include no assets which the Quality Growth Fund, by reason of
limitations contained in its Declaration of Trust or of investment restrictions
disclosed in its Prospectuses in effect on the Exchange Date, may not properly
acquire.
(j) The Registration Statement shall have become effective under the 1933
Act, and no stop order suspending such effectiveness shall have been instituted
or to the knowledge of Fifth Third Funds, contemplated by the Commission.
(k) Fifth Third Funds shall have received from the Commission such order
or orders as Ropes & Gray deems reasonably necessary or desirable under the 1933
Act, the 1934 Act, the 1940 Act in connection with the transactions contemplated
hereby, and that all such orders shall be in full force and effect.
(l) Prior to the Exchange Date, the Cardinal Fund and the Quality Growth
Fund shall have declared a dividend or dividends which, together with all
previous such dividends, shall have the effect of distributing to its
shareholders all of its investment company taxable income for its taxable years
ending on or after July 31, 2000, and on or prior to the Exchange Date (computed
without regard to any deduction for dividends paid), and all of its net capital
gain realized in each of its taxable years ending on or after July 31, 2000 and
on or prior to the Exchange Date (after reduction for any capital loss
carryover).
(m) The custodian of Fifth Third Funds shall have delivered to Fifth
Third Funds a certificate identifying all of the assets of the Cardinal Fund
held by such custodian as of the Valuation Time.
(n) The transfer agent of Fifth Third Funds shall have provided to Fifth
Third Funds (i) a certificate setting forth the number of Shares of the Cardinal
Fund outstanding as of the Valuation Time and (ii) the name and address of each
holder of record of any such Shares of the Cardinal Fund and the number and
class of Shares held of record by each such shareholder.
(o) Fifth Third Funds, on behalf of the Quality Growth Fund, shall have
executed and delivered an Assumption of Liabilities dated as of the Exchange
Date pursuant to which the Quality Growth Fund will assume all of the
liabilities of the Cardinal Fund existing at the Valuation Time in connection
with the transactions contemplated by this Plan.
(p) Fifth Third Funds, on behalf of the Cardinal Fund, shall have executed
and delivered an instrument of transfer ("Transfer Document") and any other
certificates or documents Fifth Third Funds may deem necessary or desirable to
transfer the Cardinal Fund's entire right, title and interest in and to the
Investments and all other assets of the Cardinal Fund.
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8. No Broker. There is no person who has dealt with Fifth Third Funds, the
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Cardinal Fund or the Quality Growth Fund who by reason of such dealings is
entitled to any broker's or finder's or other similar fee or commission arising
out of the transactions contemplated by this Plan.
9. Termination. Fifth Third Funds may, by consent of its Trustees, terminate
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this Plan, and Fifth Third Funds, after consultation with counsel, may modify
this Plan in any manner deemed necessary or desirable.
10. Rule 145. Pursuant to Rule 145 under the 1933 Act, Fifth Third Funds will,
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in connection with the issuance of any Shares of the Quality Growth Fund to any
person who at the time of the transaction contemplated hereby is deemed to be an
affiliate of a party to the transaction pursuant to Rule 145(c), cause to be
affixed upon the certificates issued to such person (if any) a legend as
follows:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO FIFTH THIRD
FUNDS OR ITS PRINCIPAL UNDERWRITER UNLESS (i) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(ii) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO FIFTH THIRD FUNDS SUCH
REGISTRATION IS NOT REQUIRED.
and, further, Fifth Third Funds will issue stop transfer instructions to Fifth
Third Funds' transfer agent with respect to such Shares.
11. Declaration of Trust. Copies of the Declaration of Trust of Fifth Third
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Funds and any amendments thereto so filed are on file with the Secretary of
State of Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the trustees of Fifth Third Funds, as trustees and not
individually, and that the obligations of this instrument are not binding upon
any of the trustees, officers or shareholders of Fifth Third Funds individually
but are binding only upon the assets and property of Fifth Third Funds.
The names "Fifth Third Funds" and "Trustees of Fifth Third Funds" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust filed on September 15, 1988, as amended, to which reference is hereby made
and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed. The obligations of Fifth
Third Funds entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, Shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of Shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement of any
claims against the Trust.
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