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EXHIBIT 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of the 10th day of September, 1997, by and between The Latin America Dollar
Income Fund, Inc., a Maryland corporation ("LADIF"), and Scudder World Income
Opportunities Fund, Inc., a Maryland corporation ("SWIOF").
PLAN OF REORGANIZATION
The reorganization will comprise the acquisition by LADIF of
substantially all of the assets, and the assumption of substantially all of the
liabilities, of SWIOF in exchange solely for an equal aggregate net asset value
of LADIF's shares of common stock, with a par value of $0.01 per share (the
"LADIF Common Stock"), and the subsequent distribution to SWIOF stockholders in
liquidation of SWIOF of all of the LADIF Common Stock received in exchange for
their corresponding shares of common stock of SWIOF, with a par value of $0.01
per share (the "SWIOF Common Stock"), upon and subject to the terms hereinafter
set forth (the "Reorganization").
In the course of the Reorganization, LADIF Common Stock will be
distributed to SWIOF stockholders as follows: each holder of SWIOF Common Stock
will be entitled to receive the number of shares of LADIF Common Stock to be
received by SWIOF having an aggregate net asset value equal to the aggregate net
asset value of the SWIOF Common Stock owned by such stockholder on the Exchange
Date (as defined in Section 7 of this Agreement). In consideration therefor, on
the Exchange Date LADIF shall assume substantially all of SWIOF's obligations
and liabilities then existing, whether absolute, accrued, contingent or
otherwise. It is intended that the Reorganization described in this Plan shall
be a reorganization within the meaning of Section 368(a)(l)(D) of the Internal
Revenue Code of 1986, as amended (the "Code"), and any successor provision.
As promptly as practicable after the liquidation of SWIOF pursuant
to the Reorganization, SWIOF shall be dissolved in accordance with the laws of
the State of Maryland and will terminate its registration under the Investment
Company Act of 1940, as amended (the "1940 Act").
AGREEMENT
In order to consummate the Reorganization and in consideration of
the premises and the covenants and agreements hereinafter set forth, and
intending to be legally bound, SWIOF and LADIF hereby agree as follows:
1. Representations and Warranties of SWIOF. SWIOF represents and
warrants to, and agrees with, LADIF that:
(a) SWIOF is a corporation duly organized, validly existing and in
good standing in conformity with the laws of the State of Maryland, and has the
power to own all of its assets and to perform its obligations under this
Agreement. SWIOF has all necessary Federal, state and local authorizations to
carry on its business as it is now being conducted and to perform its
obligations under this Agreement.
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(b) SWIOF is duly registered under the 1940 Act as a
non-diversified, closed-end management investment company (File No. 811-8316)
and such registration has not been revoked or rescinded and is in full force and
effect. SWIOF has elected to qualify and has qualified as a regulated investment
company under Sections 851-855 of the Code as of its taxable year ended April
30, 1997, has been a regulated investment company at all times since its
inception and meets the requirements for and intends to continue to qualify as a
regulated investment company for its taxable year ending upon the liquidation of
SWIOF.
(c) As used in this Agreement, the term "Investments" shall mean (i)
the investments of SWIOF shown on the schedule of its investments as of the
Valuation Time (as defined in Section 3(c) of this Agreement) furnished to
LADIF, with such additions thereto and deletions therefrom as may have arisen in
the course of SWIOF's business up to the Valuation Time; and (ii) all other
assets owned by SWIOF or liabilities incurred as of the Valuation Time, except
that SWIOF shall retain cash, bank deposits or cash equivalent securities in an
estimated amount necessary to (1) discharge its unpaid liabilities on its books
at the Valuation Time (including, but not limited to, its income dividends and
capital gains distributions, if any, payable for the period prior to the
Valuation Time), and (2) pay such contingent and other liabilities as the Board
of Directors of SWIOF reasonably shall deem to exist against SWIOF, if any, at
the Valuation Time, for which contingent and other appropriate liability
reserves shall be established on SWIOF's books. SWIOF also shall retain any and
all rights which it may have over and against any other person which may have
accrued up to the Valuation Time. Any unexpended portion of the foregoing funds
so retained by SWIOF shall be disbursed by SWIOF pro rata to its stockholders
upon dissolution of SWIOF as a final liquidating dividend.
(d) SWIOF has full power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action of its Board of
Directors, and, subject to the approval of this Agreement and the Reorganization
by SWIOF stockholders, this Agreement constitutes a valid and binding agreement
enforceable against SWIOF in accordance with its terms, subject to the effects
of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and to general equity
principles.
(e) LADIF has been furnished with a statement of assets, liabilities
and capital and a schedule of investments of SWIOF, each as of April 30, 1997,
said financial statements having been audited by Coopers & Lybrand LLP,
independent public accountants, have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and fairly present
the financial position of SWIOF as of the date thereof. An unaudited statement
of assets, liabilities and capital of SWIOF and an unaudited schedule of
investments of SWIOF, each as of the Valuation Time, will be furnished to LADIF
at or prior to the Exchange Date for the purpose of determining the number of
shares of LADIF Common Stock to be issued pursuant to Section 4 of this
Agreement; and such unaudited statements will fairly present the financial
position of SWIOF as of the Valuation Time in conformity with generally accepted
accounting principles applied on a consistent basis.
(f) There are no material legal, administrative or other proceedings
pending or, to the knowledge of SWIOF, threatened against SWIOF which assert
liability on the part of SWIOF or
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which materially affect its financial condition or its ability to consummate the
Reorganization. SWIOF is not charged with or, to the best of its knowledge,
threatened with any violation or investigation of any possible violation of any
provisions of any Federal, state or local law or regulation or administrative
ruling relating to any aspect of its business.
(g) There are no material contracts outstanding to which SWIOF is a
party that have not been disclosed in the N-14 Registration Statement (as
defined in subsection (m) below) or will not otherwise be disclosed to LADIF
prior to the Valuation Time.
(h) SWIOF is not a party to or obligated under any provision of its
Articles of Incorporation, as amended, or its by-laws, as amended, or any
contract or other commitment or obligation, and is not subject to any order or
decree that would be violated by its execution of or performance of its
obligations under this Agreement.
(i) SWIOF has no known liabilities of a material amount, contingent
or otherwise, other than those shown on its statements of assets, liabilities
and capital referred to above, those incurred in the ordinary course of its
business as an investment company since April 30, 1997 and those incurred in
connection with the Reorganization. As of the Valuation Time, SWIOF will advise
LADIF in writing of all known liabilities, contingent or otherwise, whether or
not incurred in the ordinary course of business, existing or accrued as of such
time.
(j) SWIOF has filed, or has obtained extensions to file, all
Federal, state and local tax returns that are required to be filed by it, and
has paid or has obtained extensions to pay, all Federal, state and local taxes
shown on said returns to be due and owing and all assessments received by it, up
to and including the taxable year in which the Exchange Date occurs. All tax
liabilities of SWIOF have adequately been provided for on its books, and no tax
deficiency or liability of SWIOF 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, up to and including the
taxable year in which the Exchange Date occurs.
(k) At both the Valuation Time and the Exchange Date, SWIOF will
have full right, power and authority to sell, assign, transfer and deliver the
Investments. At the Exchange Date, subject only to the delivery of the
Investments as contemplated by this Agreement, SWIOF will have good and
marketable title to all of the Investments, and LADIF will acquire all of the
Investments free and clear of any encumbrances, liens or security interests and
without any restrictions upon the transfer thereof (except those imposed by the
Federal, state or foreign securities laws and those imperfections of title or
encumbrances as do not materially detract from the value or use of the
Investments or materially affect title thereto).
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by SWIOF of the
Reorganization, except such as may be required under the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934 (the "1934
Act"), and the 1940 Act or state securities laws (which term as used herein
shall include the laws of the District of Columbia and Puerto Rico) and except
for the filing of Articles of Transfer with the Maryland State Department of
Assessment and Taxation.
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(m) The registration statement filed by LADIF on Form N-14 relating
to the LADIF Common Stock to be issued pursuant to this Agreement, and any
supplement or amendment thereto or to the documents therein (as amended, the
"N-14 Registration Statement"), on the effective date of the N-14 Registration
Statement, at the time of the stockholders' meetings referred to in Section 6(a)
of this Agreement and on the Exchange Date, insofar as it relates to SWIOF (i)
complied or will comply in all material respects with the provisions of the 1933
Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder, and
(ii) did not or will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; and the prospectus and statement of
additional information included therein did not or will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall apply only to statements in or omissions
from the N-14 Registration Statement made in reliance upon and in conformity
with information furnished by SWIOF for use in the N-14 Registration Statement.
(n) SWIOF is authorized to issue 100,000,000 shares of capital
stock, par value $0.01 per share, each outstanding share of which is fully paid,
nonassessable and has full voting rights.
(o) All of the issued and outstanding shares of SWIOF Common Stock
were offered for sale and sold in conformity with all applicable Federal and
state securities laws.
(p) The books and records of SWIOF made available to LADIF and/or
its counsel are substantially true and correct and contain no material
misstatements or omissions with respect to the operations of SWIOF.
(q) SWIOF will not sell or otherwise dispose of any of the shares of
LADIF to be received in the Reorganization, except in distribution to the
stockholders of SWIOF.
(r) Since April 30, 1997, there has not been any material adverse
change in SWIOF's financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business, or any incurrence by
SWIOF of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to and accepted by
LADIF. For purposes of this subparagraph (r), a decline in net asset value per
share or the total assets of SWIOF in the ordinary course of business shall not
constitute a material adverse change.
(s) The information to be furnished by SWIOF for use in no-action
letters, applications for exemptive orders and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations thereunder
applicable thereto.
(t) The Board of Directors of SWIOF, including a majority of the
directors who are not "interested persons" of SWIOF (as defined by the 1940
Act), have determined that this Agreement and the transactions contemplated
hereby are in the best interests of SWIOF and that the interests of the SWIOF
stockholders would not be diluted as a result of such transactions.
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2. Representations and Warranties of LADIF. LADIF represents and
warrants to, and agrees with, SWIOF that:
(a) LADIF is a corporation duly organized, validly existing and in
good standing in conformity with the laws of the State of Maryland, and has the
power to own all of its assets and to perform its obligations under this
Agreement. LADIF has all necessary Federal, state and local authorizations to
carry on its business as it is now being conducted and to perform its
obligations under this Agreement.
(b) LADIF is duly registered under the 1940 Act as a
non-diversified, closed-end management investment company (File No. 811-6671),
and such registration has not been revoked or rescinded and is in full force and
effect. LADIF has elected to qualify and has qualified as a regulated investment
company under Sections 851-855 of the Code as of its taxable year ending October
31, 1996, and has been a regulated investment company at all times since its
inception.
(c) SWIOF has been furnished with a statement of assets, liabilities
and capital and a schedule of investments of LADIF, each as of April 30, 1997,
said financial statements having been audited by Price Waterhouse LLP,
independent accountants, have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and fairly present
the financial position of LADIF as of the date thereof. An unaudited statement
of assets, liabilities and capital of LADIF and an unaudited schedule of
investments of LADIF, each as of the Valuation Time, will be furnished to SWIOF
at or prior to the Exchange Date for the purpose of determining the number of
shares of LADIF Common Stock to be issued pursuant to Section 4 of this
Agreement; and such unaudited financial statements will fairly present the
financial position of LADIF as of the Valuation Time in conformity with
generally accepted accounting principles applied on a consistent basis.
(d) LADIF has full power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action of its Board of
Directors, and, subject to the approval of the issuance of the LADIF Common
Stock in the Reorganization by the LADIF stockholders, this Agreement
constitutes a valid and binding agreement enforceable in accordance with its
terms, subject to the effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights generally
and to general equity principles.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of LADIF, threatened against LADIF which assert
liability on the part of LADIF or which materially affect its financial
condition or its ability to consummate the Reorganization. LADIF is not charged
with or, to the best of its knowledge, threatened with any violation or
investigation of any possible violation of any provisions of any Federal, state
or local law or regulation or administrative ruling relating to any aspect of
its business.
(f) LADIF is not a party to or obligated under any provision of its
Articles of Incorporation, as amended, or its by-laws, as amended, or any
contract or other commitment or
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obligation, and is not subject to any order or decree which would be violated by
its execution of or performance of its obligations under this Agreement.
(g) There are no material contracts outstanding to which LADIF is a
party that have not been disclosed in the N-14 Registration Statement or will
not otherwise be disclosed to SWIOF prior to the Valuation Time.
(h) LADIF has no known liabilities of a material amount, contingent
or otherwise, other than those shown on LADIF's statements of assets,
liabilities and capital referred to above, those incurred in the ordinary course
of its business as an investment company since April 30, 1997 and those incurred
in connection with the Reorganization. As of the Valuation Time, LADIF will
advise SWIOF in writing of all known liabilities, contingent or otherwise,
whether or not incurred in the ordinary course of business, existing or accrued
as of such time.
(i) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by LADIF of the
Reorganization, except such as may be required under the 1933 Act, the 1934 Act,
the 1940 Act or state securities laws and except for the filing of Articles of
Transfer with the Maryland State Department of Assessment and Taxation.
(j) The N-14 Registration Statement, on its effective date, at the
time of the stockholders' meetings referred to in Section 6(a) of this Agreement
and at the Exchange Date, insofar as it relates to LADIF (i) complied or will
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder and (ii) did not
or will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the prospectus and statement of additional
information included therein did not or will not contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this subsection only shall apply to statements in or omissions from the N-14
Registration Statement made in reliance upon and in conformity with information
furnished by LADIF for use in the N-14 Registration Statement.
(k) LADIF is authorized to issue 100,000,000 shares of capital
stock, par value $0.01 per share, each outstanding share of which is fully paid,
nonassessable and has full voting rights.
(l) The LADIF Common Stock to be issued to SWIOF pursuant to this
Agreement will have been duly authorized and, when issued and delivered pursuant
to this Agreement, will be legally and validly issued and will be fully paid and
nonassessable and will have full voting rights, no personal liability will
attach to the ownership thereof, and no stockholder of LADIF will have any
preemptive right of subscription or purchase in respect thereof.
(m) At or prior to the Exchange Date, the LADIF Common Stock to be
transferred to SWIOF on the Exchange Date will be duly qualified for offering to
the public in all states of the United States where such qualification is
required, and there are a sufficient number of such shares registered under the
1933 Act and with each pertinent state securities commission to permit the
transfers contemplated by this Agreement to be consummated.
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(n) Since April 30, 1997, there has not been any material adverse
change in LADIF's financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business. For purposes of this
subparagraph (n), a decline in net asset value per share or the total assets of
LADIF in the ordinary course of business shall not constitute a material adverse
change.
(o) The Board of Directors of LADIF, including a majority of the
directors who are not "interested persons" of LADIF (as defined by the 1940
Act), have determined that this Agreement and the transactions contemplated
hereby are in the best interests of LADIF and that the interests of the LADIF
stockholders would not be diluted as a result of such transactions.
(p) The information to be furnished by LADIF for use in no-action
letters, applications for exemptive orders and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations thereunder
applicable thereto.
(q) LADIF has filed, or has obtained extensions to file, all
Federal, state and local tax returns that are required to be filed by it, and
has paid or has obtained extensions to pay, all Federal, state and local taxes
shown on said returns to be due and owing and all assessments received by it, up
to and including the taxable year in which the Exchange Date occurs. All tax
liabilities of LADIF have adequately been provided for on its books, and no tax
deficiency or liability of LADIF 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, up to and including the
taxable year in which the Exchange Date occurs.
(o) All of the issued and outstanding shares of LADIF Common Stock
were offered for sale and sold in conformity with all applicable Federal and
state securities laws.
(p) The books and records of LADIF made available to SWIOF and/or
its counsel are substantially true and correct and contain no material
misstatements or omissions with respect to the operations of LADIF.
3. The Reorganization. (a) Subject to the requisite approvals of the
stockholders of each of SWIOF and LADIF being given, and to the other terms and
conditions contained herein, SWIOF agrees to convey, transfer and deliver to
LADIF for the benefit of LADIF, and LADIF agrees to acquire from SWIOF for the
benefit of LADIF, on the Exchange Date all of the Investments (including
interest accrued as of the Valuation Time on debt instruments) of SWIOF, and
assume substantially all of the liabilities of SWIOF, in exchange solely for
that number of shares of LADIF Common Stock provided in Section 4 of this
Agreement; provided, however, that LADIF shall have no obligation to acquire any
Investment or assume any liability that it is not permitted to acquire or assume
pursuant to the terms of its current investment policies as described in the
N-14 Registration Statement. Pursuant to this Agreement, as soon as practicable
SWIOF will distribute all LADIF Common Stock received by it to its stockholders
in exchange for their corresponding SWIOF Common Stock. Such distribution shall
be accomplished by the
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opening of stockholder accounts on the stock ledger records of LADIF in the
amounts due the stockholders of SWIOF based on their respective holdings in
SWIOF as of the Valuation Time.
(b) SWIOF will pay or cause to be paid to LADIF any interest it
receives on or after the Exchange Date with respect to the Investments
transferred to LADIF hereunder.
(c) The Valuation Time shall be 4:00 P.M., New York time, on
November 7, 1997 or such earlier or later day and time as mutually may be
agreed upon in writing (the "Valuation Time").
(d) LADIF will acquire substantially all of the assets of, and
assume substantially all of the known liabilities of, SWIOF, except that
recourse for such liabilities will be limited to LADIF. The known liabilities of
SWIOF as of the Valuation Time shall be confirmed in writing to LADIF by SWIOF
pursuant to Section 1(j) of this Agreement.
4. Issuance and Valuation of LADIF Common Stock in the
Reorganization. (a) Shares of LADIF Common Stock of an aggregate net asset value
equal (to the nearest one ten thousandth of one cent) to the value of the assets
of SWIOF acquired, determined as hereinafter provided, reduced by the amount of
liabilities assumed by LADIF, shall be issued by LADIF in exchange for such
assets of SWIOF. The assets of SWIOF and LADIF shall be determined in accordance
with LADIF's procedures as in effect as of the Valuation Time, and no formula
will be used to adjust the net asset value so determined of either SWIOF or
LADIF to take into account differences in realized and unrealized gains and
losses. Values in all cases shall be determined as of the Valuation Time. The
value of the Investments of SWIOF to be transferred to LADIF shall be determined
by LADIF pursuant to the procedures utilized by LADIF in valuing its own assets
and determining its own liabilities for purposes of the Reorganization. Such
valuation and determination shall be made by LADIF in cooperation with SWIOF and
shall be confirmed in writing to SWIOF by LADIF. The net asset value per share
of the LADIF Common Stock shall be determined in accordance with such procedures
and LADIF shall certify the computations involved. LADIF shall issue to SWIOF
separate certificates or share deposit receipts for the LADIF Common Stock
registered in the name of SWIOF. SWIOF then shall distribute the LADIF Common
Stock to the corresponding stockholders of SWIOF Common Stock by redelivering
the certificates or share deposit receipts evidencing ownership of the LADIF
Common Stock to State Street Bank & Trust Company, as the transfer agent and
registrar for the LADIF Common Stock. With respect to any SWIOF stockholder
holding certificates evidencing ownership of the SWIOF Common Stock as of the
Exchange Date, and subject to LADIF being informed thereof in writing by SWIOF,
LADIF will not permit such stockholder to receive new certificates evidencing
ownership of the LADIF Common Stock, to receive dividends payable to the holders
of record of LADIF Common Stock as of any date subsequent to the Exchange Date,
or pledge such LADIF Common Stock, in any case, until notified by SWIOF or its
agent that such stockholder has surrendered his or her outstanding certificates
evidencing ownership of the SWIOF Common Stock or, in the event of lost
certificates, posted adequate bond. SWIOF, at its own expense, will request its
stockholders to surrender their outstanding certificates evidencing ownership of
the SWIOF Common Stock, as the case may be, or post adequate bond therefor.
Dividends payable on LADIF Common Stock to holders of record as of any date
after the Exchange Date and prior to the exchange of certificates by an SWIOF
stockholder shall be paid to
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such stockholder, without interest, at the time such stockholder surrenders his
or her SWIOF Common Stock certificates for exchange.
(b) No certificates or scrip representing less than one share of
LADIF Common Stock shall be issued upon the surrender for exchange of
certificated SWIOF Common Stock. In lieu of any such fractional share, each
holder of certificated SWIOF Common Stock who would otherwise have been entitled
to a fraction of a share of LADIF Common Stock shall be paid upon surrender of
such certificates cash (without interest) in an amount equal to the net asset
value of such fractional share. Shares of SWIOF Common Stock that are registered
in book entry form only shall be issued fractional shares of LADIF Common Stock
in the Reorganization.
5. Payment of Expenses. (a) With respect to expenses incurred in
connection with the Reorganization, LADIF and SWIOF shall expense their
respective expenses incurred in connection with the Reorganization, including,
but not limited to, all costs related to the preparation and distribution of the
N-14 Registration Statement and the fees of counsel, and pay such expenses prior
to the Exchange Date. Such fees and expenses shall include legal, accounting and
state securities or blue sky fees, printing costs, filing fees, stock exchange
fees, portfolio transfer taxes (if any), and any similar expenses incurred in
connection with the Reorganization. Neither SWIOF nor LADIF shall pay any
expenses of its respective stockholders arising out of or in connection with the
Reorganization. The aggregate amount of estimated expenses of the
Reorganization, other than those borne by the Funds' investment manager,
will be allocated to SWIOF and LADIF based on their respective asset size.
(b) If for any reason the Reorganization is not consummated, no
party shall be liable to any other party for any damages resulting therefrom,
including, without limitation, consequential damages.
(c) SWIOF and LADIF each represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for in this Agreement.
6. Covenants of SWIOF and LADIF. (a) SWIOF agrees to call a meeting
of its stockholders as soon as is practicable after the effective date of the
N-14 Registration Statement for the purpose of considering the Reorganization.
LADIF agrees to call a meeting of its stockholders as soon as is practicable
after the effective date of the N-14 Registration Statement for the purpose of
considering the (i) issuance of the LADIF Common Stock in the Reorganization,
(ii) the amendment of LADIF's name and (iii) the amendment of LADIF's
fundamental investment policy with respect to issuer concentration, each as
described in this Agreement.
(b) SWIOF and LADIF each covenants to operate its respective
business as presently conducted between the date hereof and the Exchange Date.
(c) SWIOF agrees that following the consummation of the
Reorganization, it will liquidate and dissolve in accordance with the laws of
the State of Maryland and any other
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applicable law, it will not make any distributions of any LADIF Common Stock
other than to the stockholders of SWIOF and without first paying or adequately
providing for the payment of all of SWIOF's liabilities not assumed by LADIF, if
any, and on and after the Exchange Date it shall not conduct any business except
in connection with its liquidation and dissolution.
(d) SWIOF undertakes that if the Reorganization is consummated, it
will file an application pursuant to Section 8(f) of the 1940 Act for an order
declaring that SWIOF has ceased to be a registered investment company.
(e) SWIOF and LADIF jointly will file the N-14 Registration
Statement with the Securities and Exchange Commission (the "Commission") and
will use their best efforts to provide that the N-14 Registration Statement
becomes effective as promptly as practicable. SWIOF and LADIF agree to cooperate
fully with each other, and each will furnish to the other the information
relating to itself to be set forth in the N-14 Registration Statement as
required by the 1933 Act, 1934 Act, the 1940 Act, and the rules and regulations
thereunder and the state securities or blue sky laws.
(f) LADIF agrees to advise SWIOF promptly in writing if at any time
prior to the Exchange Date the assets of SWIOF include any assets which LADIF
will not be permitted, or reasonably believes to be unsuitable for it, to
acquire, including without limitation any security which, prior to its
acquisition by SWIOF, LADIF has informed SWIOF is unsuitable for LADIF to
acquire. Moreover, LADIF has no plan or intention to sell or otherwise dispose
of the assets of SWIOF to be acquired in the Reorganization, except for
dispositions made in the ordinary course of business.
(g) SWIOF and LADIF each agrees that by the Exchange Date all of its
Federal and other tax returns and reports required to be filed on or before such
date shall have been filed and all taxes shown as due on said returns either
have been paid or adequate liability reserves have been provided for the payment
of such taxes. In connection with this covenant, SWIOF and LADIF agree to
cooperate with each other in filing any tax return, amended return or claim for
refund, determining a liability for taxes or a right to a refund of taxes or
participating in or conducting any audit or other proceeding in respect of
taxes. LADIF agrees to retain for a period of ten years following the Exchange
Date all returns, schedules and work papers and all material records or other
documents relating to tax matters of SWIOF for its taxable period first ending
after the Exchange Date and for all prior taxable periods. Any information
obtained under this subsection shall be kept confidential except as otherwise
may be necessary in connection with the filing of returns or claims for refund
or in conducting an audit or other proceeding. After the Exchange Date, SWIOF
shall prepare, or cause it agents to prepare, any Federal, state or local tax
returns, including any Forms 1099, required to be filed by SWIOF with respect to
SWIOF's final taxable year ending with its complete liquidation and for any
prior periods or taxable years and further shall cause such tax returns and
Forms 1099 to be duly filed with the appropriate taxing authorities.
Notwithstanding the aforementioned provisions of this subsection, any expenses
incurred by SWIOF (other than for payment of taxes) in connection with the
preparation and filing of said tax returns and Forms 1099 after the Exchange
Date shall be borne by SWIOF to the extent such expenses have been accrued by
SWIOF in the ordinary course without regard to the
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Reorganization; any excess expenses shall be borne by Scudder, Stevens & Clark,
Inc. at the time such tax returns and Forms 1099 are prepared.
(h) SWIOF and LADIF each agrees to mail to each of its respective
stockholders of record entitled to vote at the meeting of stockholders at which
action is to be considered regarding this Agreement and the Reorganization, in
sufficient time to comply with requirements as to notice thereof, a combined
Proxy Statement and Prospectus which complies in all material respects with the
applicable provisions of Section 14(a) of the 1934 Act and Section 20(a) of the
1940 Act, and the rules and regulations, respectively, thereunder.
(i) Following the consummation of the Reorganization, LADIF expects
to stay in existence and continue its business as a closed-end management
investment company registered under the 1940 Act.
7. Exchange Date. (a) Delivery of the assets of SWIOF to be
transferred, together with any other Investments, and the LADIF Common Stock to
be issued, shall be made at the offices of Willkie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, New York, New York 10022, at 4:30 P.M. on
the Valuation Date, or at such other place, time and date agreed to by SWIOF and
LADIF, the date and time upon which such delivery is to take place being
referred to herein as the "Exchange Date." To the extent that any Investments,
for any reason, are not transferable on the Exchange Date, SWIOF shall cause
such Investments to be transferred to LADIF's account with Brown Brothers
Harriman & Co. at the earliest practicable date thereafter.
(b) SWIOF will deliver to LADIF on the Exchange Date confirmations
or other adequate evidence as to the tax basis of each of the Investments
delivered to LADIF hereunder, certified by Coopers & Lybrand LLP.
(c) LADIF shall have made prior arrangements for the delivery on the
Exchange Date of the Investments to Brown Brothers Harriman & Co. as the
custodian for LADIF.
(d) As soon as practicable after the close of business on the
Exchange Date, SWIOF shall deliver to LADIF a list of the names and addresses of
all of the stockholders of record of SWIOF on the Exchange Date and the number
of shares of SWIOF Common Stock owned by each such stockholder, certified by its
transfer agent for the SWIOF Common Stock, as applicable, or by its President to
the best of their knowledge and belief.
8. SWIOF Conditions. The obligations of SWIOF hereunder shall be
subject to the following conditions:
(a) That (i) the issuance of the LADIF Common Stock in the
Reorganization, the change of LADIF's name and the modification of LADIF's
fundamental investment policy with respect to issuer concentration, as well as
the modification of any other fundamental investment policy determined by the
Board of Directors of LADIF required to be modified in connection with the
Reorganization shall have been approved by the requisite vote of the LADIF
stockholders as described in the N-14 Registration Statement and (ii) this
Agreement shall have been adopted, and the Reorganization shall have been
approved, by the affirmative vote of the holders of more than fifty percent of
the SWIOF Common Stock issued and outstanding and entitled to vote thereon.
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(b) That LADIF shall have modified its investment policies to be
substantially similar to those of SWIOF on the date of execution of this
Agreement and that those modifications remain in full force and effect on the
Exchange Date.
(c) That LADIF shall have furnished to SWIOF a statement of LADIF's
assets, liabilities and capital, with values determined as provided in Section 4
of this Agreement, together with a schedule of its investments, all as of the
Valuation Time, certified on LADIF's behalf by its President (or any Vice
President) and its Treasurer, and a certificate signed by LADIF's President (or
any Vice President) and its Treasurer, dated as of the Exchange Date, certifying
that as of the Valuation Time and as of the Exchange Date there has been no
material adverse change in the financial position of LADIF since October 31,
1996, other than changes in its portfolio securities since that date or changes
in the market value of its portfolio securities.
(d) That LADIF shall have furnished to SWIOF a certificate signed by
LADIF's President (or any Vice President) and its Treasurer, dated as of the
Exchange Date, certifying that all representations and warranties of LADIF made
in this Agreement are true and correct in all material respects with the same
effect as if made at and as of the Exchange Date, and that LADIF has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied at or prior to such date.
(e) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement.
(f) That SWIOF shall have received an opinion of Venable, Baetjer
and Howard, LLP, Maryland counsel to LADIF, in form satisfactory to SWIOF and
dated the Exchange Date, to the effect that (i) LADIF is a corporation duly
organized, validly existing and in good standing in conformity with the laws of
the State of Maryland; (ii) the LADIF Common Stock to be delivered to SWIOF
stockholders as provided for by this Agreement is duly authorized and, upon
delivery, will be validly issued and outstanding and fully paid and
nonassessable by LADIF, and no stockholder of LADIF has any preemptive right to
subscription or purchase in respect thereof (pursuant to the Articles of
Incorporation, as amended, or the by-laws of LADIF or, to the best of such
counsel's knowledge, otherwise); (iii) this Agreement has been duly authorized,
executed and delivered by LADIF; (iv) the execution and delivery of this
Agreement did not, and the consummation of the Reorganization will not, violate
the Articles of Incorporation, as amended, or the by-laws of LADIF; (v) no
consent, approval, authorization or order of any Maryland court or governmental
authority is required for the consummation by LADIF of the Reorganization,
except such as have been obtained under Maryland law and assuming the
effectiveness of the Articles of Transfer; provided, however, that such counsel
need express no opinion with regard to the state securities laws of the State of
Maryland; and (vi) such opinion shall be rendered to Willkie Farr & Gallagher,
and may be relied upon by Willkie Farr & Gallagher in connection with the
rendering of its opinion to SWIOF. In connection with the rendering of the
opinion set forth above, Venable, Baetjer and Howard, LLP shall provide a letter
stating that SWIOF and Willkie Farr & Gallagher are permitted to rely upon the
Venable, Baetjer and Howard, LLP opinion previously rendered to Shareholder
Communications Corporation as to matters of Maryland law relating to the
utilization of televoting procedures by LADIF.
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(g) That SWIOF shall have received an opinion of Willkie Farr &
Gallagher, as counsel to LADIF, in form satisfactory to SWIOF and dated the
Exchange Date, to the effect that (i) no consent, approval, authorization or
order of any U.S. Federal court or governmental authority is required for the
consummation by SWIOF and LADIF of the Reorganization, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and the published
rules and regulations of the Commission thereunder and such as may be required
under state securities or blue sky laws; (ii) the N-14 Registration Statement
has become effective under the 1933 Act, no stop order suspending the
effectiveness of the N-14 Registration Statement has been issued and, to the
knowledge of such counsel, no proceedings for that purpose have been instituted
or are pending or contemplated under the 1933 Act, and the N-14 Registration
Statement, and each amendment or supplement thereto, as of their respective
effective dates, appear on their face to be appropriately responsive in all
material respects to the requirements of the 1933 Act, the 1934 Act and the 1940
Act and the published rules and regulations of the Commission thereunder; (iii)
the descriptions in the N-14 Registration Statement of statutes, legal and
governmental proceedings and contracts and other documents, to the extent that
such descriptions relate to matters of law are accurate and fairly present the
information required to be shown; (iv) such counsel do not know of any statutes,
legal or governmental proceedings or contracts or other documents related to the
Reorganization of a character required to be described in the N-14 Registration
Statement that are not described therein or, if required to be filed, filed as
required; (v) the execution and delivery of this Agreement does not, and the
consummation of the Reorganization will not, violate any material provision of
any agreement (known to such counsel) to which LADIF is a party or by which
LADIF is bound; (vi) LADIF, to the knowledge of such counsel, is not required to
qualify to do business as a foreign corporation in any jurisdiction except as
may be required by state securities or blue sky laws, and except where it has so
qualified or the failure so to qualify would not have a material adverse effect
on LADIF, or its stockholders; (vii) such counsel does not have actual knowledge
of any material suit, action or legal or administrative proceeding pending or
threatened against LADIF, the unfavorable outcome of which would materially and
adversely affect LADIF; (viii) all corporate actions required to be taken by
LADIF to authorize this Agreement and to effect the Reorganization have been
duly authorized by all necessary corporate actions on the part of LADIF and (ix)
this Agreement represents a valid and binding contract, enforceable against
LADIF in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and to general equity principles.
Such counsel also shall state that they have participated in
conferences with officers and other representatives of SWIOF and LADIF at which
the contents of the N-14 Registration Statement and related matters were
discussed and, although they are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the N-14 Registration Statement (except to the extent indicated in
their opinion), on the basis of the foregoing (relying as to materiality to a
large extent upon the opinions of officers and other representatives of the
LADIF), they do not believe that the proxy statement forming a part of the N-14
Registration Statement, as of its date, as of the date of the LADIF stockholder
meeting, and as of the Exchange Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
regarding LADIF or necessary, in the light of the circumstances under which they
were made, to make the statements therein regarding LADIF not
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misleading; and such counsel need not express any opinion or belief as to the
financial statements, other financial data, statistical data or information
relating to LADIF contained or incorporated by reference in the N-14
Registration Statement. In giving the opinion set forth above, Willkie Farr &
Gallagher may state that it is relying on certificates of officers of LADIF with
regard to matters of fact and certain certificates and written statements of
governmental officials with respect to the good standing of LADIF and on the
opinion of Venable, Baetjer and Howard, LLP as to matters of Maryland law. In
giving the opinion set forth above, Willkie Farr & Gallagher may state that it
is relying on the opinion of counsel to Shareholders Communications Corporation
as to matters of Maryland law relating to the utilization of televoting
procedures by LADIF.
(h) That SWIOF shall have received either (a) a private letter
ruling from the Internal Revenue Service or (b) an opinion of Willkie Farr &
Gallagher, to the effect that for Federal income tax purposes (i) the transfer
of substantially all of the Investments of SWIOF to LADIF and the assumption of
substantially all of the liabilities of SWIOF by LADIF in exchange solely for
LADIF Common Stock as provided in this Agreement will constitute a
reorganization within the meaning of Section 368(a)(1)(D) of the Code; (ii) in
accordance with Section 361(a) of the Code, no gain or loss will be recognized
to SWIOF as a result of the Reorganization; (iii) no gain or loss will be
recognized to LADIF as a result of the Reorganization; (iv) in accordance with
Section 354(a)(1) of the Code, no gain or loss will be recognized to the
stockholders of SWIOF on the distribution to them by SWIOF of LADIF Common Stock
in exchange for their corresponding SWIOF Common Stock, and in accordance with
Section 356(a) of the Code gain, if any, will be recognized with respect to any
cash or property other than LADIF Common Stock received; (v) in accordance with
Section 1032 of the Code, no gain or loss will be recognized by the stockholders
of LADIF upon the issuance of LADIF Common Stock and the distribution of such
LADIF Common Stock to SWIOF stockholders in the Reorganization; (vi) in
accordance with Section 362(b) of the Code, the basis to LADIF of the
Investments will be the same as the basis of the Investments in the hands of
SWIOF immediately prior to the consummation of the Reorganization, except for
any necessary adjustment on account of cash or property received; (vii) in
accordance with Section 1223 of the Code, a stockholder's holding period for his
LADIF Common Stock will be determined by including the period for which he or
she held the SWIOF Common Stock exchanged therefor, provided that he or she held
such SWIOF shares as a capital asset; (viii) in accordance with Section 1223 of
the Code, LADIF's holding period with respect to the Investments will include
the period for which such Investments were held by SWIOF; and (ix) no gain or
loss will be recognized to SWIOF or its stockholders upon the liquidation of
SWIOF in connection with the Reorganization. In addition, such opinion shall
state that, without any independent investigation having been made with respect
to the qualification of either SWIOF or LADIF as a regulated investment company
under the Code and based upon certain representations by SWIOF and LADIF, the
status of SWIOF and LADIF as regulated investment companies under Sections
851-855 of the Code will not be affected as a result of the Reorganization,
except that upon the liquidation of SWIOF in connection with the Reorganization
its regulated investment company status will terminate.
(i) That all proceedings taken by LADIF and its counsel in
connection with the Reorganization and all documents incidental thereto shall be
satisfactory in form and substance to SWIOF.
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(j) That the N-14 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 LADIF, contemplated by the Commission.
(k) That LADIF shall have received from Price Waterhouse LLP a
letter dated as of the effective date of the N-14 Registration Statement and a
similar letter dated within five days prior to the Exchange Date, in form and
substance satifactory to LADIF, to the effect that (i) they are independent
accountants with respect to LADIF within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder; (ii) in their opinion,
the financial statements and financial highlights of LADIF included or
incorporated by reference in the N-14 Registration Statement and reported on by
them comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the published rules and regulations thereunder;
(iii) on the basis of limited procedures agreed upon by SWIOF and described in
such letter (but not an examination in accordance with generally accepted
auditing standards) consisting of inquiries of certain officials of LADIF
responsible for financial and accounting matters, nothing came to their
attention that caused them to believe that (a) there had been any changes in
assets, liabilities, net assets and shares outstanding as compared with amounts
as of LADIF's most recent audited fiscal year end or the corresponding period in
LADIF's most recent audited fiscal year, other than changes occurring in the
ordinary course of business, and (b) based on such limited procedures, there is
no change in their report on the most recent audited financial statements of
LADIF; and (iv) on the basis of limited procedures agreed upon by LADIF and
described in such letter (but not an examination in accordance with generally
accepted auditing standards), the information relating to LADIF appearing in the
N-14 Registration Statement, which information is expressed in dollars (or
percentages derived from such dollars) (with the exception of performance
comparisons, if any), if any, has been obtained from the accounting records of
LADIF or from schedules prepared by officials of LADIF having responsibility for
financial and reporting matters and such information is in agreement with such
records, schedules or computations made therefrom.
(l) That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted or
threatened to institute any proceeding seeking to enjoin consummation of the
Reorganization under Section 25(c) of the 1940 Act, and no other legal,
administrative or other proceeding shall have been instituted or threatened
which would materially adversely affect the financial condition of LADIF or
would prohibit the Reorganization.
(m) That SWIOF shall have received from the Commission such orders
or interpretations as Willkie Farr & Gallagher, as counsel to SWIOF, deems
reasonably necessary or desirable under
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the 1933 Act and the 1940 Act in connection with the Reorganization, provided
that such counsel shall have requested such orders as promptly as practicable,
and all such orders shall be in full force and effect.
(n) In addition, SWIOF shall have received from Price Waterhouse LLP
a letter addressed to LADIF and SWIOF on the Exchange Date, in form and
substance satisfactory to LADIF and SWIOF, relating to the calculations of the
projected expense ratio appearing in the N-14 Registration Statement and the
calculation of the net asset value per share of SWIOF as of the Valuation Date
and on a basis of limited procedures to be agreed upon by LADIF, SWIOF and Price
Waterhouse, LLP (but not an examination in accordance with generally accepted
auditing standards).
(o) LADIF shall have executed the Articles of Transfer.
9. LADIF Conditions. The obligations of LADIF hereunder shall be
subject to the following conditions:
(a) That (i) the issuance of the LADIF Common Stock in the
Reorganization, the change of LADIF's name and the modification of LADIF's
fundamental investment policy with respect to issuer concentration, as well as
the modification of any other fundamental investment policy determined by the
Board of Directors of LADIF required to be modified in connection with the
Reorganization shall have been approved by the requisite vote of the LADIF
stockholders as described in the N-14 Registration Statement and (ii) this
Agreement shall have been adopted, and the Reorganization shall have been
approved, by the affirmative vote of the holders of more than fifty percent of
the SWIOF Common Stock issued and outstanding and entitled to vote thereon.
(b) That LADIF shall have modified its investment policies to be
substantially similar to those of SWIOF on the date of execution of this
Agreement and that those modifications remain in full force and effect on the
Exchange Date.
(c) That SWIOF shall have furnished to LADIF a statement of SWIOF's
assets, liabilities and capital, with values determined as provided in Section 4
of this Agreement, together with a schedule of investments with their respective
dates of acquisition and tax costs, all as of the Valuation Time, certified on
SWIOF's behalf by its President (or any Vice President) and its Treasurer, and a
certificate of both such officers, dated the Exchange Date, certifying that
there has been no material adverse change in the financial position of SWIOF
since April 30, 1997, other than changes in the Investments since that date or
changes in the market value of the Investments.
(d) That SWIOF shall have furnished to LADIF a certificate signed by
SWIOF's President (or any Vice President) and its Treasurer, dated the Exchange
Date, certifying that as of the Valuation Time and as of the Exchange Date all
representations and warranties of SWIOF made in this Agreement are true and
correct in all material respects as if made at and as of such date and
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SWIOF has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied at or prior to such date.
(e) That SWIOF shall have delivered to LADIF a letter from Coopers &
Lybrand LLP, dated the Exchange Date, stating that such firm has performed a
limited review of the Federal, state and local income tax returns of SWIOF for
the period ended April 30, 1997 (which returns originally were prepared and
filed by SWIOF), and that based on such limited review, nothing came to their
attention which caused them to believe that such returns did not properly
reflect, in all material respects, the Federal, state and local income taxes of
SWIOF for the period covered thereby; and that for the period from April 30,
1997 to and including the Exchange Date such firm has performed a limited review
to ascertain the amount of applicable Federal, state and local taxes, and has
determined that either such amount has been paid or reserves established for
payment of such taxes, this review to be based on unaudited financial data; and
that based on such limited review, nothing has come to their attention which
caused them to believe that the taxes paid or reserves set aside for payment of
such taxes were not adequate in all material respects for the satisfaction of
Federal, state and local taxes for the period from April 30, 1997 to and
including the Exchange Date and for any taxable year of SWIOF ending upon the
liquidation of SWIOF or that SWIOF would not continue to qualify as a regulated
investment company for Federal income tax purposes.
(f) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement.
(g) That LADIF shall have received an opinion of Venable, Baetjer
and Howard, LLP, Maryland counsel to SWIOF, in form satisfactory to LADIF and
dated the Exchange Date, to the effect that (i) SWIOF is a corporation duly
organized, validly existing and in good standing in conformity with the laws of
the State of Maryland; (ii) this Agreement has been duly authorized, executed
and delivered by SWIOF; (iii) SWIOF has the corporate power to sell, assign,
transfer and deliver the assets transferred by it hereunder and, upon
consummation of the Reorganization in accordance with the terms of this
Agreement, SWIOF will have duly transferred such assets and liabilities in
accordance with this Agreement; (iv) the execution and delivery of this
Agreement does not, and the consummation of the Reorganization will not, violate
the Articles of Incorporation, as amended, or the by-laws of SWIOF; (v) no
consent, approval, authorization or order of any Maryland court or governmental
authority is required for the consummation by SWIOF of the Reorganization,
except such as have been obtained under Maryland law and assuming the
effectiveness of the Articles of Transfer; provided, however, that such counsel
need express no opinion with regard to the state securities laws of the State of
Maryland; and (vi) such opinion shall be rendered to Willkie Farr & Gallagher,
and may be relied upon by Willkie Farr & Gallagher in connection with the
rendering of its opinion to LADIF. In connection with the rendering of the
opinion set forth above, Venable, Baetjer and Howard, LLP shall provide a letter
stating that LADIF and Willkie Farr & Gallagher are permitted to rely upon the
Venable, Baetjer and Howard, LLP opinion previously rendered to Shareholder
Communications Corporation as to matters of Maryland law relating to the
utilization of televoting procedures by SWIOF.
(h) That LADIF shall have received an opinion of Willkie Farr &
Gallagher, as counsel to SWIOF, in form satisfactory to LADIF and dated the
Exchange Date, with respect to the matters
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specified in Section 8(g) of this Agreement (except that references therein to
LADIF shall be changed to SWIOF) and such other matters as LADIF reasonably may
deem necessary or desirable.
(i) That LADIF shall have received a private letter ruling from the
Internal Revenue Service or opinion of Willkie Farr & Gallagher with respect to
the matters specified in Section 8(h) of this Agreement.
(j) That LADIF shall have received from Coopers & Lybrand LLP a
letter dated as of the effective date of the N-14 Registration Statement and a
similar letter dated within five days prior to the Exchange Date, in form and
substance satisfactory to LADIF, to the effect that (i) they are independent
accountants with respect to SWIOF within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder; (ii) in their opinion,
the financial statements and financial highlights of SWIOF included or
incorporated by reference in the N-14 Registration Statement and reported on by
them comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the published rules and regulations thereunder;
(iii) on the basis of limited procedures agreed upon by LADIF and described in
such letter (but not an examination in accordance with generally accepted
auditing standards) consisting of inquiries of certain officials of SWIOF
responsible for financial and accounting matters, nothing came to their
attention that caused them to believe that (a) there had been any changes in
assets, liabilities, net assets and shares outstanding as compared with amounts
as of SWIOF's most recent audited fiscal year end or the corresponding period in
SWIOF's most recent audited fiscal year, other than changes occurring in the
ordinary course of business, and (b) based on such limited procedures, there is
no change in their report on the most recent audited financial statements of
SWIOF; and (iv) on the basis of limited procedures agreed upon by LADIF and
described in such letter (but not an examination in accordance with generally
accepted auditing standards), the information relating to SWIOF appearing in the
N-14 Registration Statement, which information is expressed in dollars (or
percentages derived from such dollars) (with the exception of performance
comparisons, if any), if any, has been obtained from the accounting records of
SWIOF or from schedules prepared by officials of SWIOF having responsibility for
financial and reporting matters and such information is in agreement with such
records, schedules or computations made therefrom.
(k) That the Investments to be transferred to LADIF shall not
include any assets or liabilities which LADIF, by reason of charter limitations
or otherwise, may not properly acquire or assume.
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(l) That the N-14 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 SWIOF, contemplated by the Commission.
(m) That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted or
threatened to institute any proceeding seeking to enjoin consummation of the
Reorganization under Section 25(c) of the 1940 Act, and no other legal,
administrative or other proceeding shall have been instituted or threatened
which would materially adversely affect the financial condition of SWIOF or
would prohibit the Reorganization.
(n) That LADIF shall have received from the Commission such orders
or interpretations as Willkie Farr & Gallagher, as counsel to LADIF, deems
reasonably necessary or desirable under the 1933 Act and the 1940 Act in
connection with the Reorganization, provided that such counsel shall have
requested such orders as promptly as practicable, and all such orders shall be
in full force and effect.
(o) That all proceedings taken by SWIOF and its counsel in
connection with the Reorganization and all documents incidental thereto shall be
satisfactory in form and substance to LADIF.
(p) That prior to the Exchange Date, SWIOF shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its stockholders all of its net investment
company taxable income for the period from May 1, 1996 to and including the
Exchange Date, if any (computed without regard to any deduction or dividends
paid), and all of its net capital gain, if any, realized for the period from May
1, 1996 to and including the Exchange Date.
(q) In addition, LADIF shall have received from Price Waterhouse LLP
a letter addressed to LADIF and SWIOF on the Exchange Date, in form and
substance satisfactory to LADIF and SWIOF, to the effect that on the basis of
limited procedures agreed upon by the LADIF and SWIOF (but not an examination in
accordance with generally accepted auditing standards) (i) the data utilized in
the calculations of the projected expense ratio appearing in the N-14
Registration Statement agree with underlying accounting records of LADIF and
SWIOF or to written estimates by management of LADIF or SWIOF, as the case may
be and were found to be mathematically correct and (ii) the calculations of the
net asset values per share of LADIF and SWIOF as of the Valuation Date were
determined in accordance with generally accepted accounting practices and the
portfolio valuation practices of LADIF.
(r) SWIOF shall have executed the Articles of Transfer.
10. Termination, Postponement and Waivers.
(a) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated and the Reorganization abandoned at
any time (whether before or after adoption thereof by the stockholders of SWIOF
and or the approval of the issuance of the LADIF Common Stock by the LADIF
stockholders) prior to the Exchange Date, (i) by mutual written
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consent of the Boards of Directors of SWIOF and LADIF; (ii) by the Board of
Directors of SWIOF if any condition of SWIOF's obligations set forth in Section
8 of this Agreement has not been fulfilled or waived by the Board of Directors
of SWIOF; or (iii) by the Board of Directors of LADIF if any condition of
LADIF's obligations set forth in Section 9 of this Agreement has not been
fulfilled or waived by the Board of Directors of LADIF.
(b) If the transactions contemplated by this Agreement have not been
consummated by April 30, 1998, this Agreement automatically shall terminate on
that date, unless a later date is mutually agreed to by the Boards of Directors
of SWIOF and LADIF.
(c) In the event of termination of this Agreement pursuant to the
provisions hereof, the same shall become void and have no further effect, and
there shall not be any liability on the part of either SWIOF or LADIF or persons
who are their directors, trustees, officers, agents or stockholders in respect
of this Agreement.
(d) At any time prior to the Exchange Date, any of the terms or
conditions of this Agreement (other than Section 8(g) or Section 9(h) may be
waived by the Board of Directors of either SWIOF or LADIF, respectively
(whichever is entitled to the benefit thereof), if, in the judgment of such
Board after consultation with its counsel, such action or waiver will not have a
material adverse effect on the benefits intended under this Agreement to their
respective stockholders, on behalf of which such action is taken.
(e) The respective representations and warranties contained in
Sections 1 and 2 of this Agreement shall expire with, and be terminated by, the
consummation of the Reorganization, and neither SWIOF nor LADIF nor any of their
officers, directors or trustees, agents or stockholders shall have any liability
with respect to such representations or warranties after the Exchange Date. This
provision shall not protect any officer, director or trustee, agent or
stockholder of SWIOF or LADIF against any liability to the entity for which that
officer, director or trustee, agent or stockholder so acts or to its
stockholders to which that officer, director or trustee, agent or stockholder
otherwise would be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties in the conduct of such office.
(f) If any order or orders of the Commission with respect to this
Agreement shall be issued prior to the Exchange Date and shall impose any terms
or conditions which are determined by action of the Boards of Directors of SWIOF
and LADIF to be acceptable, such terms and conditions shall be binding as if a
part of this Agreement without further vote or approval of the stockholders of
SWIOF and LADIF, unless such terms and conditions shall result in a change in
the method of computing the number of shares of LADIF Common Stock to be issued
to SWIOF in which event, unless such terms and conditions shall have been
included in the proxy solicitation materials furnished to the stockholders of
SWIOF and LADIF prior to the meeting at which the Reorganization shall have been
approved by the SWIOF stockholders or in at which the issuance of the LADIF
Common Stock was approved by the LADIF stockholders, this Agreement shall not be
consummated and shall terminate unless SWIOF and LADIF promptly shall call
special meetings of stockholders at which such conditions so imposed shall be
submitted for approval.
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11. Indemnification. (a) SWIOF hereby agrees to indemnify and hold
LADIF harmless from all loss, liability and expense (including reasonable
counsel fees and expenses in connection with the contest of any claim) which
LADIF may incur or sustain by reason of the fact that (i) LADIF shall be
required to pay any corporate obligation of SWIOF, whether consisting of tax
deficiencies or otherwise, based upon a claim or claims against SWIOF which were
omitted or not fairly reflected in the financial statements to be delivered to
LADIF in connection with the Reorganization; (ii) any covenant has been breached
in any material respect; or (iii) any claim is made alleging that (a) the N-14
Registration Statement included any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (b) the Proxy Statement and
Prospectus delivered to the stockholders of SWIOF and forming a part of the N-14
Registration Statement included any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except insofar as such claim is based on written information furnished to SWIOF
by LADIF.
(b) LADIF hereby agrees to indemnify and hold SWIOF harmless from
all loss, liability and expenses (including reasonable counsel fees and expenses
in connection with the contest of any claim) which SWIOF may incur or sustain by
reason of the fact that (i) any covenant has been breached in any material
respect or (ii) any claim is made alleging that (a) the N-14 Registration
Statement included any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, not misleading or (b) the Proxy Statement and Prospectus
delivered to the stockholders of LADIF and forming a part of the N-14
Registration Statement included any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except insofar as such claim is based on written information furnished to LADIF
by SWIOF.
(c) In the event that any claim is made against LADIF in respect of
which indemnity may be sought by LADIF from SWIOF under Section 11(a) of this
Agreement, or in the event that any claim is made against SWIOF in respect of
which indemnity may be sought by SWIOF from LADIF under Section 11(b) of this
Agreement, then the party seeking indemnification (the "Indemnified Party"),
with reasonable promptness and before payment of such claim, shall give written
notice of such claim to the other party (the "Indemnifying Party"). If no
objection as to the validity of the claim is made in writing to the Indemnified
Party by the Indemnifying Party within thirty (30) days after the giving of
notice hereunder, then the Indemnified Party may pay such claim and shall be
entitled to reimbursement therefor, pursuant to this Agreement. If, prior to the
termination of such thirty-day period, objection in writing as to the validity
of such claim is made to the Indemnified Party, the Indemnified Party shall
withhold payment thereof until the validity of such claim is established (i) to
the satisfaction of the Indemnifying Party, or (ii) by a final determination of
a court of competent jurisdiction, whereupon the Indemnified Party may pay such
claim and shall be entitled to reimbursement thereof, pursuant to this
Agreement, or (iii) with respect to any tax claims, within seven calendar days
following the earlier of (A) an agreement between SWIOF and LADIF that an
indemnity amount is payable, (B) an assessment of a tax by a taxing authority,
or (C) a "determination" as defined in Section 1313(a) of the Code. For purposes
of this Section 11, the term "assessment" shall have the same meaning as used in
Chapter 63 of the Code and Treasury Regulations thereunder, or any comparable
provision under
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the laws of the appropriate taxing authority. In the event of any objection by
the Indemnifying Party, the Indemnifying Party promptly shall investigate the
claim, and if it is not satisfied with the validity thereof, the Indemnifying
Party shall conduct the defense against such claim. All costs and expenses
incurred by the Indemnifying Party in connection with such investigation and
defense of such claim shall be borne by it. These indemnification provisions are
in addition to, and not in limitation of, any other rights the parties may have
under applicable law.
12. Other Matters. (a) Pursuant to Rule 145 under the 1933 Act, and
in connection with the issuance of any shares to any person who at the time of
the Reorganization is, to its knowledge, an affiliate of a party to the
Reorganization pursuant to Rule 145(c), LADIF will cause to be affixed upon the
certificate(s) issued to such person (if any) a legend as follows:
THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE SECURITIES ACT OF 1933 OR (II) IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO [SCUDDER GLOBAL HIGH INCOME FUND, INC./THE
LATIN AMERICA DOLLAR INCOME FUND, INC.], SUCH REGISTRATION IS NOT
REQUIRED.
and, further, that stop transfer instructions will be issued to LADIF's transfer
agent with respect to such shares. SWIOF will provide LADIF on the Exchange Date
with the name of any SWIOF stockholder who is to the knowledge of SWIOF an
affiliate of it on such date.
(b) All covenants, agreements, representations and warranties made
under this Agreement and any certificates delivered pursuant to this Agreement
shall be deemed to have been material and relied upon by each of the parties,
notwithstanding any investigation made by them or on their behalf.
(c) Any notice, report or demand required or permitted by any
provision of this Agreement shall be in writing and shall be deemed to have been
given if delivered or mailed, first class postage prepaid, addressed to SWIOF or
LADIF, in either case at c/o Scudder, Stevens & Clark, Inc., 345 Park Avenue,
New York, New York 10154, Attn: Bruce Goldfarb, Vice President.
(d) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the Reorganization, constitutes the
only understanding with respect to the Reorganization, may not be changed except
by a letter of agreement signed by each party and shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said state.
(e) This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be deemed to be an original
but all such counterparts together shall constitute but one instrument.
(f) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof of any rights or obligations
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hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
[Balance of page intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed on its behalf by its duly authorized officers all as of the date first
written above.
SCUDDER WORLD INCOME
OPPORTUNITIES FUND, INC.
Attest:
/s/ Kathryn L. Quirk /s/ Lynn S. Birdsong
By:_______________________________ By:_______________________________
Name: Kathryn L. Quirk Name: Lynn S. Birdsong
Title: Vice President Title: President
THE LATIN AMERICA DOLLAR INCOME
FUND, INC.
Attest:
/s/ Kathryn L. Quirk /s/ Lynn S. Birdsong
By:_______________________________ By:_______________________________
Name: Kathryn L. Quirk Name: Lynn S. Birdsong
Title: Vice President Title: President
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