BlackRock Municipal Income Investment Trust
File No. 811-10333
Item No. 77Q1(g) (Merger Agreement) -- Attachment
Attached please find an exhibit to Sub-Item 77Q1(g) of Form N-SAR, a copy of
the Agreement and Plan of Reorganization between BlackRock Municipal Bond
Investment Trust and BlackRock Municipal Income Investment Trust.
Exhibit 77Q1(g)
AGREEMENT AND PLAN OF REORGANIZATION
February 2, 2016
In order to consummate the reorganization contemplated herein (the
"Reorganization") and in consideration of the promises and the covenants and
agreements hereinafter set forth, and intending to be legally bound, BlackRock
Municipal Bond Investment Trust, a registered non-diversified closed-end
investment company, File No. 811-21054, (the "Target Fund") and BlackRock
Municipal Income Investment Trust, a registered non-diversified closed-end
investment company, File No. 811-10333 (the "Acquiring Fund" and together with
the Target Fund, the "Funds"), each hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUND.
The Acquiring Fund represents and warrants to, and agrees with, the
Target Fund that:
(a) The Acquiring Fund is a statutory trust duly formed, validly
existing and in good standing in conformity with the Delaware Statutory Trust
Act (the "DSTA"), and has the power to own all of its assets and to carry out
this Agreement. The Acquiring Fund has all necessary federal, state and local
authorizations to carry on its business as it is now being conducted and to
carry out this Agreement.
(b) The Acquiring Fund is duly registered under the Investment Company
Act of 1940, as amended (the "1940 Act") as a non-diversified, closed-end
management investment company and such registration has not been revoked or
rescinded and is in full force and effect.
(c) The Acquiring Fund has full power and authority to enter into and
perform its obligations under this Agreement subject, in the case of the
consummation of the Reorganization to the approval and adoption of this
Agreement and
the issuance of additional Acquiring Fund VRDP Shares(as defined in
Section 1(n) herein) in connection with the Reorganization by the holders of
the Acquiring Fund VRDP Shares ("Acquiring Fund VRDP Holders") voting as a
separate class, and
in the case of the issuance of additional Acquiring Fund Common
Shares (as defined in Section 1(n) herein) in connection with the
Reorganization to the approval of such issuance of additional Acquiring Fund
Common Shares by the common shareholders of the Acquiring Fund ("Acquiring
Fund Common Shareholders" and together with the Acquiring Fund VRDP Holders,
the "Acquiring Fund Shareholders") and the Acquiring Fund VRDP Holders
voting as a single class, in each case as described in Sections 9(a) and
(b) hereof.
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The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action of the Acquiring Fund's Board of
Trustees, and this Agreement constitutes a valid and binding contract of the
Acquiring Fund enforceable against the Acquiring Fund 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 court decisions with respect thereto.
(d) The Acquiring Fund has provided or made available (including by
electronic format) to the Target Fund the most recent audited annual financial
statements of the Acquiring Fund, which have been prepared in accordance with
generally accepted accounting principles in the United States of America ("US
GAAP") consistently applied and have been audited by Deloitte & Touche LLP,
each Fund's independent registered public accounting firm, and such statements
fairly present the financial condition and the results of operations of the
Acquiring Fund as of the respective dates indicated and the results of
operations and changes in net assets for the periods indicated, and there are
no liabilities of the Acquiring Fund whether actual or contingent and whether
or not determined or determinable as of such date that are required to be
disclosed but are not disclosed in such statements.
(e) An unaudited statement of assets, capital and liabilities of the
Acquiring Fund and an unaudited schedule of investments of the Acquiring Fund,
each as of the Valuation Time (as defined in Section 3(e) herein) (together,
the "Acquiring Fund Closing Financial Statements"), will be provided or made
available (including by electronic format) to the Target Fund, at or prior to
the Closing Date (as defined in Section 7(a) herein), for the purpose of
determining the number of Acquiring Fund Shares (as defined in Section 1(n)
herein) to be issued to the Target Fund shareholders (the "Target Fund
Shareholders") pursuant to Section 3 of this Agreement; the Acquiring Fund
Closing Financial Statements will fairly present the financial position of the
Acquiring Fund as of the Valuation Time in conformity US GAAP consistently
applied.
(f) There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Acquiring Fund, threatened against it which
assert liability on the part of the Acquiring Fund or which materially affect
its financial condition or its ability to consummate the Reorganization. The
Acquiring Fund 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 the Acquiring
Fund is a party that have not been disclosed in the N-14 Registration Statement
(as defined in Section 1(k) herein) or that will not otherwise be disclosed to
the Target Fund prior to the Valuation Time.
(h) The Acquiring Fund is not obligated under any provision of its
agreement and declaration of trust or bylaws, each as amended to the date
hereof, and is not a party to any contract or other commitment or obligation,
and is not subject to any order or decree, which would be violated by its
execution of or performance under this Agreement, except insofar as the
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Funds have mutually agreed to amend such contract or other commitment or
obligation to cure any potential violation as a condition precedent to the
Reorganization.
(i) The Acquiring Fund has no known liabilities of a material amount,
contingent or otherwise, other than those shown on the Acquiring Fund's Annual
Report for the fiscal year ended July 31, 2015, those incurred since the date
thereof in the ordinary course of its business as an investment company, and
those incurred in connection with the Reorganization. As of the Valuation Time,
the Acquiring Fund will advise the Target Fund of all known liabilities,
contingent or otherwise, whether or not incurred in the ordinary course of
business, existing or accrued as of such time, except to the extent disclosed
in the Acquiring Fund Closing Financial Statements or to the extent already
known by the Target Fund.
(j) No consent, approval, authorization or order of any court or
government authority is required for the consummation by the Acquiring Fund 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, as
amended (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) or the rules of the New York Stock Exchange, each of which will have been
obtained on or prior to the Closing Date.
(k) The registration statement filed by the Acquiring Fund on Form N-14,
which includes the proxy statement for the common shareholders of the Target
Fund and the Acquiring Fund with respect to the transactions contemplated
herein (the "Joint Proxy Statement/Prospectus"), and any supplement or
amendment thereto or to the documents included or incorporated by reference
therein (collectively, as so amended or supplemented, the "N-14 Registration
Statement"), on its effective date, at the time of the shareholder meeting
called to vote on this Agreement and on the Closing Date, insofar as it relates
to the Acquiring Fund, (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 Joint Proxy Statement/Prospectus 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 the Acquiring
Fund for use in the N-14 Registration Statement.
(l) The proxy statement for the Acquiring Fund VRDP Holders and the
Target Fund VRDP Holders with respect to the transactions contemplated herein,
and any supplement or amendment thereto (the "Preferred Shares Proxy
Statement") or to the documents included or incorporated by reference therein,
at the time of the shareholder meeting called to vote on this Agreement and on
the Closing Date, insofar as it relates to the Acquiring Fund, (i) complied or
will comply in all material respects with the provisions of 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 in light of the circumstances under which they were
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made, not misleading; provided, however, that the representations and
warranties in this subsection only shall apply to statements in or omissions
from the Preferred Shares Proxy Statement made in reliance upon and in
conformity with information furnished by the Acquiring Fund for use in the
Preferred Shares Proxy Statement.
(m) The Acquiring Fund has filed, or intends to file, or has obtained
extensions to file, all federal, state and local tax returns which 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
Closing Date occurs. All tax liabilities of the Acquiring Fund have been
adequately provided for on its books, and no tax deficiency or liability of the
Acquiring 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, up to and including the taxable year
in which the Closing Date occurs.
(n) The Acquiring Fund is authorized to issue an unlimited number of
common shares of beneficial interest, par value $0.001 per share (the
"Acquiring Fund Common Shares") and 342 preferred shares of beneficial interest
of Series W-7 Variable Rate Demand Preferred Shares or any other series of
Variable Rate Demand Preferred Shares ("VRDP Shares"), par value $0.001 per
share and liquidation preference $100,000 per share ("Acquiring Fund VRDP
Shares" and together with Acquiring Fund Common Shares, the "Acquiring Fund
Shares"). Each outstanding Acquiring Fund Share is fully paid and
nonassessable, except as provided by the Acquiring Fund's agreement and
declaration of trust, and has the voting rights provided by the Acquiring
Fund's agreement and declaration of trust and applicable law.
(o) The books and records of the Acquiring Fund made available to the
Target Fund and/or its counsel are substantially true and correct and contain
no material misstatements or omissions with respect to the operations of the
Acquiring Fund.
(p) The Acquiring Fund Shares to be issued to the Target Fund
Shareholders 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, except as provided by the Acquiring Fund's agreement and
declaration of trust or applicable law, and no Acquiring Fund Shareholder will
have any preemptive right of subscription or purchase in respect thereof.
(q) At or prior to the Closing Date, the Acquiring Fund Common Shares to
be transferred to the Target Fund for distribution to the Target Fund
Shareholders on the Closing Date will be duly qualified for offering to the
public in all states of the United States in which the sale of shares of the
Funds presently are qualified, and there will be a sufficient number of such
Acquiring Fund Common Shares registered under the 1933 Act and, as may be
necessary, with each pertinent state securities commission to permit the
transfers contemplated by this Agreement to be consummated.
(r) At or prior to the Closing Date, the Acquiring Fund will have
obtained any and all regulatory, board and shareholder approvals necessary to
issue the Acquiring Fund Shares to the Target Fund Shareholders.
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(s) The Acquiring Fund has elected to qualify and has qualified as a
regulated investment company ("RIC") within the meaning of Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code") for each of its taxable
years since its inception, and the Acquiring Fund has satisfied the
distribution requirements imposed by Section 852 of the Code to maintain RIC
status for each of its taxable years.
2. REPRESENTATIONS AND WARRANTIES OF THE TARGET FUND.
The Target Fund represents and warrants to, and agrees with, the
Acquiring Fund that:
(a) The Target Fund is a statutory trust duly formed, validly existing
and in good standing in conformity with the DSTA, and has the power to own all
of its assets and to carry out this Agreement. The Target Fund has all
necessary federal, state and local authorizations to carry on its business as
it is now being conducted and to carry out this Agreement.
(b) The Target Fund is duly registered under the 1940 Act as a
non-diversified, closed-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
(c) The Target Fund has full power and authority to enter into and
perform its obligations under this Agreement subject, in the case of
consummation of the Reorganization to the approval and adoption of this
Agreement by the Target Fund Shareholders as described in Section 8(a) hereof.
The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action of the Target Fund's Board of Trustees and
this Agreement constitutes a valid and binding contract of the Target Fund
enforceable against the Target Fund 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 court
decisions with respect thereto.
(d) The Target Fund has provided or made available (including by
electronic format) to the Acquiring Fund the most recent audited annual
financial statements of the Target Fund which have been prepared in accordance
with US GAAP consistently applied and have been audited by Deloitte & Touche
LLP, and such statements fairly present the financial condition and the results
of operations of the Target Fund as of the respective dates indicated and the
results of operations and changes in net assets for the periods indicated, and
there are no liabilities of the Target Fund whether actual or contingent and
whether or not determined or determinable as of such date that are required to
be disclosed but are not disclosed in such statements.
(e) An unaudited statement of assets, capital and liabilities of the
Target Fund and an unaudited schedule of investments of the Target Fund, each
as of the Valuation Time (together, the "Target Fund Closing Financial
Statements"), will be provided or made available (including by electronic
format) to the Acquiring Fund at or prior to the Closing Date, for the purpose
of determining the number of Acquiring Fund Shares to be issued to the Target
Fund Shareholders pursuant to Section 3 of this Agreement; the Target Fund
Closing Financial
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Statements will fairly present the financial position of the Target Fund as of
the Valuation Time in conformity with US GAAP consistently applied.
(f) There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Target Fund, threatened against it which
assert liability on the part of the Target Fund or which materially affect its
financial condition or its ability to consummate the Reorganization. The Target
Fund 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 the Target Fund
is a party that have not been disclosed in the N-14 Registration Statement or
will not otherwise be disclosed to the Acquiring Fund prior to the Valuation
Time.
(h) The Target Fund is not obligated under any provision of its
agreement and declaration of trust or bylaws, each as amended to the date
hereof, or a party to any contract or other commitment or obligation, and is
not subject to any order or decree, which would be violated by its execution of
or performance under this Agreement, except insofar as the Funds have mutually
agreed to amend such contract or other commitment or obligation to cure any
potential violation as a condition precedent to the Reorganization.
(i) The Target Fund has no known liabilities of a material amount,
contingent or otherwise, other than those shown on the Target Fund's Annual
Report for the fiscal year ended August 31, 2015, those incurred since the date
thereof in the ordinary course of its business as an investment company and
those incurred in connection with the Reorganization. As of the Valuation Time,
the Target Fund will advise the Acquiring Fund of all known liabilities,
contingent or otherwise, whether or not incurred in the ordinary course of
business, existing or accrued as of such time, except to the extent disclosed
in the Target Fund Closing Financial Statements or to the extent already known
by the Acquiring Fund.
(j) At both the Valuation Time and the Closing Date, the Target Fund
will have full right, power and authority to sell, assign, transfer and deliver
the Target Fund Investments. As used in this Agreement, the term "Target Fund
Investments" shall mean (i) the investments of the Target Fund shown on the
schedule of its investments as of the Valuation Time furnished to the Acquiring
Fund; and (ii) all other assets owned by the Target Fund or liabilities
incurred as of the Valuation Time. At the Closing Date, subject only to the
obligation to deliver the Target Fund Investments as contemplated by this
Agreement, the Target Fund will have good and marketable title to all of the
Target Fund Investments, and the Acquiring Fund will acquire all of the Target
Fund 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 or state securities laws and those imperfections of
title or encumbrances as do not materially detract from the value or use of the
Target Fund Investments or materially affect title thereto).
(k) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Target Fund of
the Reorganization, except such as may be required under the 1933 Act, the 1934
Act and the 1940 Act or state securities
7
laws (which term as used herein shall include the laws of the District of
Columbia and Puerto Rico) or the rules of the New York Stock Exchange, each of
which will have been obtained on or prior to the Closing Date.
(l) The N-14 Registration Statement, on its effective date, at the time
of the Target Fund Shareholders meeting called to vote on this Agreement and on
the Closing Date, insofar as it relates to the Target Fund (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 in light of the circumstances under which they were made,
not misleading; and the Joint Proxy Statement/Prospectus 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, 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 the Target Fund for use in the N-14 Registration Statement.
(m) The Preferred Shares Proxy Statement for the holders of the Target
Fund VRDP Shares (as defined in section 2(o) herein) ("Target Fund VRDP
Holders") with respect to the transactions contemplated herein, and any
supplement or amendment thereto or to the documents included or incorporated by
reference therein, at the time of the shareholder meeting called to vote on
this Agreement and on the Closing Date, insofar as it relates to the Target
Fund, (i) complied or will comply in all material respects with the provisions
of 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 in 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 the Target Fund for use in the N-14 Registration
Statement.
(n) The Target Fund has filed, or intends to file, or has obtained
extensions to file, all federal, state and local tax returns which 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
Closing Date occurs. All tax liabilities of the Target Fund have been
adequately provided for on its books, and no tax deficiency or liability of the
Target 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, up to and including the taxable year
in which the Closing Date occurs.
(o) The Target Fund is authorized to issue an unlimited number of common
shares of beneficial interest, par value $0.001 per share (the "Target Fund
Common Shares") and 178 preferred shares of beneficial interest of Series W-7
Variable Rate Demand Preferred Shares, par value $0.001 per share and
liquidation preference $100,000 per share ("Target Fund VRDP Shares" and
together with Target Fund Common Shares, the "Target Fund Shares"). Each
8
outstanding Target Fund Share is fully paid and nonassessable, except as
provided by the Target Fund's agreement and declaration of trust, and has the
voting rights provided by the Target Fund's agreement and declaration of trust
and applicable law.
(p) All of the issued and outstanding Target Fund Shares were offered
for sale and sold in conformity with all applicable federal and state
securities laws.
(q) The Target Fund will not sell or otherwise dispose of any of the
Acquiring Fund Common Shares to be received in the Reorganization, except in
distribution to Target Fund Shareholders as provided in Section 3 of this
Agreement.
(r) The books and records of the Target Fund made available to the
Acquiring Fund and/or its counsel are substantially true and correct and
contain no material misstatements or omissions with respect to the operations
of the Target Fund.
(s) The Target Fund has elected to qualify and has qualified as a RIC
within the meaning of Section 851 of the Code for each of its taxable years
since its inception, and the Target Fund has satisfied the distribution
requirements imposed by Section 852 of the Code to maintain RIC status for each
of its taxable years.
3. THE REORGANIZATION.
(a) Subject to receiving the requisite approvals of the Target Fund
Shareholders and the Acquiring Fund Shareholders, and to the other terms and
conditions contained herein, and in accordance with the applicable law, the
Target Fund agrees to convey, transfer and deliver to the Acquiring Fund and
the Acquiring Fund agrees to acquire from the Target Fund, on the Closing Date,
all of the Target Fund Investments (including interest accrued as of the
Valuation Time on debt instruments), and assume substantially all of the
liabilities of the Target Fund, in exchange for that number of Acquiring Fund
Shares provided in Section 4 of this Agreement. The existence of the Acquiring
Fund shall continue unaffected and unimpaired by the Reorganization and it
shall be governed by the DSTA.
(b) If the investment adviser determines that the portfolios of the
Target Fund and the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the Acquiring Fund with
respect to such investments or that the disposition of certain assets is
necessary to ensure that the resulting portfolio will meet the Acquiring Fund's
investment objective, policies and restrictions, as set forth in the Joint
Proxy Statement/Prospectus, a copy of which has been delivered (including by
electronic format) to the Target Fund, the Target Fund, if requested by the
Acquiring Fund, will dispose of a sufficient amount of such investments as may
be necessary to avoid violating such limitations as of the Closing Date.
Notwithstanding the foregoing, nothing herein will require the Target Fund to
dispose of any portion of its assets if, in the reasonable judgment of the
Target Fund's Board of Trustees or investment adviser, such disposition would
create more than an insignificant risk that the Reorganization would not be
treated as a "reorganization" described in Section 368(a) of the Code or would
otherwise not be in the best interests of the Target Fund.
(c) Prior to the Closing Date, the Target Fund shall declare a dividend
or dividends which, together with all such previous dividends, shall have the
effect of distributing
9
to its shareholders (i) all of its investment company taxable income to and
including the Closing Date, if any (computed without regard to any deduction
for dividends paid), (ii) all of its net capital gain, if any, recognized to
and including the Closing Date and (iii) the excess of its interest income
excludable from gross income under Section 103(a) of the Code, if any, over its
deductions disallowed under Sections 265 and 171(a)(2) of the Code for the
period to and including the Closing Date. The Acquiring Fund may pay amounts in
respect of such distributions ("UNII Distributions") on behalf of the Target
Fund to the Target Fund Shareholders entitled to receive such UNII
Distributions after the Closing Date as an agent out of cash or other
short-term liquid assets maturing prior to the payment date of the UNII
Distributions acquired from the Target Fund in the Reorganization, segregated
for this purpose and maintained in an amount at least equal to the remaining
payment obligations in respect of the UNII Distributions.
(d) Pursuant to this Agreement, as soon as practicable, and in no event
more than 48 hours, exclusive of Sundays and holidays, after the Closing Date,
the Target Fund will distribute all Acquiring Fund Shares received by it to its
shareholders in exchange for their Target Fund Shares. Such distributions shall
be accomplished by the opening of shareholder accounts on the share ledger
records of the Acquiring Fund in the names of and in the amounts due to the
Target Fund Shareholders based on their respective holdings in the Target Fund
as of the Valuation Time.
(e) The Valuation Time shall be at the close of business of the New York
Stock Exchange on the business day immediately preceding the Closing Date, or
such earlier or later day and time as may be mutually agreed upon in writing by
the Funds (the "Valuation Time").
(f) The Target Fund will pay or cause to be paid to the Acquiring Fund
any interest the Target Fund receives on or after the Closing Date with respect
to any of the Target Fund Investments transferred to the Acquiring Fund
hereunder.
(g) Recourse for liabilities assumed from the Target Fund by the
Acquiring Fund in the Reorganization will be limited to the net assets acquired
by the Acquiring Fund. The known liabilities of the Target Fund, as of the
Valuation Time, shall be confirmed to the Acquiring Fund pursuant to
Section 2(i) of this Agreement.
(h) The Target Fund will be terminated as soon as practicable following
the Closing Date by terminating its registration under the 1940 Act and
dissolving under the DSTA and will withdraw its authority to do business in any
state where it is registered.
(i) For U.S. federal income tax purposes, the parties to this Agreement
intend that (i) the Reorganization qualify as a reorganization within the
meaning of Section 368(a) of the Code, (ii) this Agreement constitutes a plan
of reorganization within the meaning of U.S. Treasury Regulations
Section 1.368-2(g), and (iii) the parties to this Agreement will each be a
party to such reorganization within the meaning of Section 368(b) of the Code.
4. ISSUANCE AND VALUATION OF ACQUIRING FUND SHARES IN THE REORGANIZATION.
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(a) A number of Acquiring Fund Common Shares with an aggregate net asset
value equal to the value of the assets of the Target Fund acquired in the
Reorganization determined as hereinafter provided, reduced by the amount of
liabilities of the Target Fund assumed by the Acquiring Fund in the
Reorganization, shall be issued by the Acquiring Fund to the Target Fund in
exchange for such assets of the Target Fund, which shall be determined as set
forth below. The value of each Fund's net assets shall be calculated net of the
liquidation preference (including accumulated and unpaid dividends) of all
outstanding preferred shares of such Fund.
(b) A number of Acquiring Fund VRDP Shares equal to the number of Target
Fund VRDP Shares outstanding immediately prior to the Closing Date, with the
terms described in the Preferred Shares Proxy Statement, shall be issued by the
Acquiring Fund to the Target Fund. No fractional Acquiring Fund VRDP Shares
will be issued. Each Acquiring Fund VRDP Share issued to the Target Fund in
exchange for a Target Fund VRDP Share will have a liquidation preference of
$100,000 plus any accumulated and unpaid dividends that have accrued on such
Target Fund VRDP Share up to and including the day immediately preceding the
Closing Date. The Target Fund may pay any such accumulated and unpaid dividends
prior to the Closing Date.
(c) The net asset value of the Acquiring Fund and the Target Fund, the
values of their assets, the amounts of their liabilities, and the liquidation
preference (including accumulated and unpaid dividends) of the Target Fund VRDP
Shares and the Acquiring Fund VRDP Shares shall be determined as of the
Valuation Time in accordance with the regular procedures of the investment
adviser, and no formula will be used to adjust the net asset value or
liquidation preference so determined of any Fund to take into account
differences in realized and unrealized gains and losses.
Such valuation and determination shall be made by the Acquiring Fund in
cooperation with the Target Fund and shall be confirmed in writing by the
Acquiring Fund to the Target Fund. The net asset value per share of the
Acquiring Fund Common Shares and the liquidation preference (including
accumulated and unpaid dividends) per share of the Acquiring Fund VRDP Shares
shall be determined in accordance with such procedures and the Acquiring Fund
shall certify the computations involved.
For purposes of determining the net asset value per share of Target Fund
Common Shares and the Acquiring Fund Common Shares, the value of the securities
held by the applicable Fund plus any cash or other assets (including interest
accrued but not yet received) minus all liabilities (including accrued
expenses) and the aggregate liquidation value of the outstanding Target Fund
VRDP Shares or Acquiring Fund VRDP Shares, as the case may be, shall be divided
by the total number of Target Fund Common Shares or Acquiring Fund Common
Shares, as the case may be, outstanding at such time.
(d) The Acquiring Fund shall issue to the Target Fund certificates,
share deposit receipts or book entry interests for the Acquiring Fund Common
Shares registered in the name of the Target Fund. The Target Fund shall then
distribute the Acquiring Fund Common Shares to the holders of Target Fund
Common Shares by redelivering the certificates, share deposit receipts or book
entry interests evidencing ownership of the Acquiring Fund Common
11
Shares to the transfer agent and registrar for the Acquiring Fund Common
Shares, for distribution to the holders of Target Fund Common Shares on the
basis of each such holder's proportionate interest in the aggregate net asset
value of the Target Fund Common Shares. With respect to any Target Fund
Shareholders holding certificates evidencing ownership of Target Fund Common
Shares as of the Closing Date, and subject to the Acquiring Fund being informed
thereof in writing by the Target Fund, the Acquiring Fund will not permit such
Target Fund Shareholder to receive new book entry interests of the Acquiring
Fund Common Shares, until notified by the Target Fund or its agent that such
shareholder has surrendered his or her outstanding certificates evidencing
ownership of Target Fund Common Shares or, in the event of lost certificates,
posted adequate bond. The Target Fund, at its own expense, will request its
Target Fund Shareholders to surrender their outstanding certificates evidencing
ownership of Target Fund Common Shares or post adequate bond therefor.
(e) The Acquiring Fund shall issue to the Target Fund book entry
interests for the Acquiring Fund VRDP Shares registered in the name of the
Target Fund. The Target Fund shall then distribute the Acquiring Fund VRDP
Shares to the Target Fund VRDP Holders by redelivering the book entry interests
evidencing ownership of the Acquiring Fund VRDP Shares to the transfer agent
and registrar for the Acquiring Fund VRDP Shares for distribution to the Target
Fund VRDP Holders on the basis of each holder's proportionate holdings of the
Target Fund VRDP Shares. In connection with such issuance, the Acquiring Fund
shall amend the Acquiring Fund VRDP Shares' Statement of Preferences
Establishing and Fixing the Rights and Preferences of Variable Rate Demand
Preferred Shares (the "Statement of Preferences"), Notice of Special Rate
Period and share certificates representing such VRDP Shares, in each case as of
the effective date of the Reorganization, to reflect the authorization and
issuance of additional Acquiring Fund VRDP Shares in connection with the
Reorganization.
(f) No fractional shares of Acquiring Fund Common Shares will be issued
to holders of Target Fund Common Shares unless such shares are held in a
Dividend Reinvestment Plan account. In lieu thereof, the Acquiring Fund's
transfer agent will aggregate all fractional Acquiring Fund Common Shares to be
issued in connection with the Reorganization (other than those issued to a
Dividend Reinvestment Plan account) and sell the resulting full shares on the
New York Stock Exchange at the current market price for Acquiring Fund Common
Shares for the account of all holders of such fractional interests, and each
such holder will receive such holder's PRO RATA share of the proceeds of such
sale upon surrender of such holder's certificates representing Acquiring Fund
Common Shares.
5. PAYMENT OF EXPENSES.
(a) The Target Fund and the Acquiring Fund will bear expenses incurred
in connection with the Reorganization, including but not limited to, costs
related to the preparation and distribution of materials distributed to each
Fund's Board of Trustees, expenses incurred in connection with the preparation
of this Agreement, the preparation and filing of any documents required by such
Fund's state of organization, the preparation and filing of the N-14
Registration Statement and the Preferred Shares Proxy Statement with the U.S.
Securities and Exchange Commission ("SEC"), the printing and distribution of
the Joint Proxy Statement/Prospectus, the Preferred Shares Proxy Statement and
any other materials required to be distributed to shareholders, the SEC, state
securities commission and secretary of state filing fees and legal and
12
audit fees in connection with the Reorganization, fees incurred in obtaining
the requisite consents of rating agencies, counterparties or service providers
to the VRDP Shares, legal fees incurred in connection with amending the
transaction documents for the VRDP Shares, which may include the legal fees of
counterparties and service providers to the extent applicable, legal fees
incurred preparing each Fund's board materials, attending each Fund's board
meetings and preparing the minutes, rating agency fees associated with the
ratings of the VRDP Shares in connection with the Reorganization, audit fees
associated with each Fund's financial statements, stock exchange fees, transfer
agency fees, rating agency fees, portfolio transfer taxes (if any) and any
similar expenses incurred in connection with the Reorganization, which will be
borne directly by the respective Fund incurring the expense or allocated among
the Funds based upon any reasonable methodology approved by the Boards of
Trustees of the Funds, provided, that the Acquiring Fund's investment adviser
may bear all or a portion of the reorganization expenses of each Fund. Neither
the Funds nor the investment adviser will pay any expenses of shareholders
arising out of or in connection with the Reorganization.
(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, and each Fund shall be
responsible, on a proportionate total assets basis, for all expenses incurred
in connection with the Reorganization.
6. COVENANTS OF THE FUNDS.
(a) COVENANTS OF EACH FUND.
(i) Each Fund covenants to operate its business as presently
conducted between the date hereof and the Closing Date.
(ii) Each of the Funds agrees that by the Closing Date all of its
U.S. 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.
(iii) The intention of the parties is that the transaction
contemplated by this Agreement will qualify as a "reorganization" within the
meaning of Section 368(a) of the Code. Neither the Acquiring Fund nor the
Target Fund shall take any action or cause any action to be taken
(including, without limitation, the filing of any tax return) that is
inconsistent with such treatment or results in the failure of the
transaction to qualify as a reorganization within the meaning of
Section 368(a) of the Code. At or prior to the Closing Date, the Acquiring
Fund and the Target Fund will take such action, or cause such action to be
taken, as is reasonably necessary to enable Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP ("Skadden"), special counsel to the Funds, to render the tax
opinion required herein (including, without limitation, each party's
execution of representations reasonably requested by and addressed to
Skadden).
(iv) In connection with this covenant, the Funds 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
13
audit or other proceeding in respect of taxes. The Acquiring Fund agrees to
retain for a period of ten (10) years following the Closing Date all
returns, schedules and work papers and all material records or other
documents relating to tax matters of the Target Fund for each of such Fund's
taxable periods ending on or before the Closing Date.
(v) The Acquiring Fund VRDP Shares to be transferred to the Target
Fund for distribution to Target Fund VRDP Holders on the Closing Date shall
only be distributed to Target Fund VRDP Holders in accordance with an
available exemption from registration under the 1933 Act, in a manner not
involving any public offering within the meaning of Section 4(2) of the
1933 Act.
(vi) Each Fund shall use reasonable efforts to obtain all requisite
consents and approvals necessary to consummate the Reorganization.
(b) COVENANTS OF THE ACQUIRING FUND.
(i) The Acquiring Fund will file the N-14 Registration Statement and
the Preferred Shares Proxy Statement with the SEC and will use its best
efforts to provide that the N-14 Registration Statement becomes effective as
promptly as practicable. Each Fund agrees to cooperate fully with the other,
and each will furnish to the other the information relating to itself to be
set forth in the N-14 Registration Statement and the Preferred Shares Proxy
Statement as required by the 1933 Act, the 1934 Act and the 1940 Act, and
the rules and regulations thereunder and the state securities laws.
(ii) The Acquiring Fund has no plan or intention to sell or
otherwise dispose of the Target Fund Investments, except for dispositions
made in the ordinary course of business.
(iii) Following the consummation of the Reorganization, the
Acquiring Fund will continue its business as a non-diversified, closed-end
management investment company registered under the 1940 Act.
(iv) The Acquiring Fund shall use reasonable efforts to cause the
Acquiring Fund Common Shares to be issued in the Reorganization to be
approved for listing on the New York Stock Exchange prior to the Closing
Date.
(v) The Acquiring Fund agrees to mail to its shareholders of record
entitled to vote at the special meeting of shareholders at which action is
to be considered regarding this Agreement, in sufficient time to comply with
requirements as to notice thereof, the Joint Proxy Statement/Prospectus (but
only to the Acquiring Fund Common Shareholders) and the Preferred Shares
Proxy Statement (but only to the Acquiring Fund VRDP Holders), each of 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.
(vi) The Acquiring Fund shall use reasonable efforts to cause the
Acquiring Fund VRDP Shares to be issued in connection with the
Reorganization to be rated no lower than the rating assigned to the
Acquiring Fund VRDP Shares immediately
14
prior to the Closing Date by the rating agencies then rating the Acquiring
Fund VRDP Shares.
(vii) The Acquiring Fund shall use reasonable efforts to amend the
following documents to reflect the authorization and issuance of additional
Acquiring Fund VRDP Shares in connection with the Reorganization: (1) the
Statement of Preferences; (2) the Notice of Special Rate Period for the
Acquiring Fund VRDP Shares; (3) share certificates representing Acquiring
Fund VRDP Shares; (4) the VRDP Shares Fee Agreement for the Acquiring Fund
VRDP Shares; (5) the VRDP Shares Purchase Agreement for the Acquiring Fund
VRDP Shares; (6) the VRDP Shares Remarketing Agreement for the Acquiring
Fund VRDP Shares; (7) the VRDP Shares Tender and Paying Agent Agreement for
the Acquiring Fund VRDP Shares; and (8) such other agreements, instruments
or documents relating to the Acquiring Fund VRDP Shares, in each case by the
effective date of the Reorganization and only to the extent necessary or
applicable to such agreement, instrument or document.
(c) COVENANTS OF THE TARGET FUND.
(i) The Target Fund agrees that following the consummation of the
Reorganization, it will dissolve in accordance with the DSTA and any other
applicable law, it will not make any distributions of any Acquiring Fund
Common Shares other than to its shareholders and without first paying or
adequately providing for the payment of all of its respective liabilities
not assumed by the Acquiring Fund, if any, and on and after the Closing Date
it shall not conduct any business except in connection with its termination.
(ii) The Target Fund 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 the Target Fund has ceased to be a
registered investment company.
(iii) The Target Fund agrees to mail to its shareholders of record
entitled to vote at the special meeting of shareholders at which action is
to be considered regarding this Agreement, in sufficient time to comply with
requirements as to notice thereof, the Joint Proxy Statement/Prospectus (but
only to Target Fund Common Shareholders) and the Preferred Shares Proxy
Statement (but only to Target Fund VRDP Holders), each of 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.
(iv) After the Closing Date, the Target Fund shall prepare, or cause
its agents to prepare, any U.S. federal, state or local tax returns required
to be filed by such Target Fund with respect to its final taxable year
ending with its complete liquidation and dissolution and for any prior
periods or taxable years and further shall cause such tax returns to be duly
filed with the appropriate taxing authorities. Notwithstanding the
aforementioned provisions of this subsection, any expenses incurred by the
Target Fund (other than for payment of taxes) in connection with the
preparation and filing of said tax returns after the Closing Date shall be
borne by such Target Fund to the extent such
15
expenses have been accrued by such Target Fund in the ordinary course
without regard to the Reorganization; any excess expenses shall be paid from
a liability reserve established to provide for the payment of such expenses.
(v) Upon the request of the Acquiring Fund, the Target Fund shall
use reasonable efforts to perform the following actions by the effective
date of the Reorganization or such later time as may be agreed to by the
Acquiring Fund: (a) terminate the VRDP Shares Fee Agreement, VRDP Shares
Purchase Agreement, the VRDP Shares Remarketing Agreement and the Tender and
Paying Agent Agreement and such other agreements, instruments or documents
related to the Target Fund VRDP Shares, (b) withdraw the ratings assigned to
Target Fund VRDP Shares, (c) cancel the share certificates representing
Target Fund VRDP Shares, and (d) withdraw or deregister the Target Fund VRDP
Shares from The Depository Trust Company.
7. CLOSING DATE.
(a) The closing of the Reorganization (the "Closing") shall occur prior
to the opening of the NYSE at the offices of Skadden, Four Times Square, New
York, New York 10036, or at such other time or location as may be mutually
agreed to by the Funds, on the next full business day following the Valuation
Time to occur after the satisfaction or waiver of all of the conditions set
forth in Sections 8 and 9 of this Agreement (other than the conditions that
relate to actions to be taken, or documents to be delivered at the Closing, it
being understood that the occurrence of the Closing shall remain subject to the
satisfaction or waiver of such conditions at Closing), or at such other time
and date as may be mutually agreed to by the Funds (such date, the "Closing
Date").
(b) On the Closing Date, the Target Fund shall deliver its assets that
are to be transferred, together with any other Target Fund Investments, to the
Acquiring Fund, and the Acquiring Fund shall issue the Acquiring Fund Shares as
provided in this Agreement. To the extent that any Target Fund Investments, for
any reason, are not transferable on the Closing Date, the Target Fund shall
cause such Target Fund Investments to be transferred to the Acquiring Fund's
account with its custodian at the earliest practicable date thereafter.
(c) The Target Fund will deliver to the Acquiring Fund on the Closing
Date confirmation or other adequate evidence as to the tax basis of the Target
Fund Investments delivered to the Acquiring Fund hereunder.
(d) As soon as practicable after the close of business on the Closing
Date, the Target Fund shall deliver or make available to (including by
electronic format) the Acquiring Fund a list of the names and addresses of all
of the Target Fund Shareholders of record on the Closing Date and the number of
Target Fund Shares owned by each such Target Fund Shareholder, certified to the
best of its knowledge and belief by the transfer agent for the Target Fund
Shares or by the Target Fund's Chief Executive Officer, President, any Vice
President, Chief Financial Officer, Treasurer or any Assistant Treasurer, or
Secretary or any Assistant Secretary.
8. CONDITIONS OF THE TARGET FUND.
16
The obligations of the Target Fund hereunder shall be subject to the
following conditions:
(a) That this Agreement shall have been approved by at least two-thirds
of the members of the Board of Trustees of the Target Fund and by the
affirmative vote of the Target Fund Common Shareholders and the Target Fund
VRDP Holders, voting as a single class, representing a 1940 Act Majority (as
defined below) of the outstanding shares entitled to vote on this Agreement,
and by the affirmative vote of the Target Fund VRDP Holders, voting as a
separate class, representing a 1940 Act Majority (as defined below) of the
outstanding VRDP Shares entitled to vote on this Agreement. A "1940 Act
Majority" means the affirmative vote of either (i) 67% or more of the class or
classes of Target Fund Shares entitled to vote on such proposal present at the
Target Fund's shareholder meeting where this Agreement shall be approved, if
the holders of more than 50% of the outstanding class or classes of Target Fund
Shares entitled to vote on such proposal are present or represented by proxy or
(ii) more than 50% of the outstanding class or classes of Target Fund Shares
entitled to vote on such proposal, whichever is less.
(b) That the Acquiring Fund shall have delivered (including in
electronic format) to the Target Fund (i) a copy of the resolutions approving
this Agreement and the issuance of additional Acquiring Fund Shares in
connection with the Reorganization adopted by the Board of Trustees of the
Acquiring Fund, (ii) a certificate setting forth the vote of the Acquiring Fund
VRDP Holders, voting as a separate class, approving this Agreement and the
issuance of additional Acquiring Fund VRDP Shares in connection with the
Reorganization, and the vote of the Acquiring Fund Common Shareholders and the
Acquiring Fund VRDP Holders, voting as a single class, approving the issuance
of additional Acquiring Fund Common Shares in connection with the
Reorganization, and (iii) a certificate certifying that the Acquiring Fund has
received all requisite consents and approvals necessary to consummate the
Reorganization, each certified by the Acquiring Fund's Secretary.
(c) That the Acquiring Fund shall have provided or made available
(including by electronic format) to the Target Fund the Acquiring Fund Closing
Financial Statements, together with a schedule of the Acquiring Fund's
investments, all as of the Valuation Time, certified on the Acquiring Fund's
behalf by its Chief Executive Officer, President, any Vice President, Chief
Financial Officer, Treasurer or any Assistant Treasurer, and a certificate
signed by the Acquiring Fund's Chief Executive Officer, President, any Vice
President, Chief Financial Officer, Treasurer or any Assistant Treasurer, dated
as of the Closing Date, certifying that as of the Valuation Time and as of the
Closing Date there has been no material adverse change in the financial
position of the Acquiring Fund since the date of the Acquiring Fund's most
recent Annual or Semi-Annual Report, as applicable, other than changes in its
portfolio securities since that date or changes in the market value of its
portfolio securities.
(d) That the Acquiring Fund shall have furnished to the Target Fund a
certificate signed by the Acquiring Fund's Chief Executive Officer, President,
any Vice President, Chief Financial Officer, Treasurer or any Assistant
Treasurer, dated as of the Closing Date, certifying that, as of the Valuation
Time and as of the Closing Date, all representations and warranties of the
Acquiring Fund made in this Agreement are true and correct in all material
respects with the same effect as if made at and as of such dates, and that the
Acquiring Fund has
17
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied at or prior to each of such dates.
(e) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
(f) That the Target Fund shall have received the opinion of counsel(s)
to the Acquiring Fund, dated as of the Closing Date, addressed to the Target
Fund, that substantively provides the following:
(i) based solely on its review of a certificate, and a bringdown
verification thereof, dated as of the Closing Date, from the Secretary of
State of the State of Delaware with respect to the Acquiring Fund's
existence and good standing in the State of Delaware, the Acquiring Fund is
validly existing and in good standing under the DSTA;
(ii) the Acquiring Fund is registered with the SEC as a closed-end
management investment company under the 1940 Act;
(iii) the Acquiring Fund has the statutory trust power and authority
to execute, deliver and perform all of its obligations under this Agreement
under the DSTA;
(iv) this Agreement has been duly authorized, executed and delivered
by all requisite statutory trust action on the part of the Acquiring Fund
under the DSTA;
(v) this Agreement constitutes the valid and binding obligation of
the Acquiring Fund, enforceable against the Acquiring Fund in accordance
with its terms under the laws of the State of Delaware;
(vi) neither the execution and delivery by the Acquiring Fund of this
Agreement nor the performance by the Acquiring Fund of its obligations under
this Agreement: (i) conflicts with the agreement and declaration of trust or
bylaws of the Acquiring Fund; (ii) constitutes a material violation of, or a
default under, any material contract, agreement, instrument or other
document pertaining to, or material to the business or financial condition
of, the Acquiring Fund; (iii) contravenes any material judgment, order or
decree of courts or other governmental authorities or arbitrators that are
material to the business or financial condition of the Acquiring Fund; or
(iv) violates the 1940 Act or any law, rule or regulation of the State of
Delaware;
(vii) neither the execution and delivery by the Acquiring Fund of
this Agreement nor the enforceability of this Agreement against the
Acquiring Fund requires the consent, approval, licensing or authorization
of, or any filing, recording or registration with, any governmental
authority under the 1940 Act or any law, rule or regulation of the State of
Delaware, except for those consents, approvals, licenses and authorizations
already obtained and those filings, recordings and registrations already
made; and
(viii) when the Acquiring Fund Shares have been duly entered into the
share record books of the Acquiring Fund and issued and delivered to
shareholders of the
18
Target Funds Shareholders in accordance with the terms of this Agreement,
the issuance of the Acquiring Fund Shares will have been duly authorized by
all requisite statutory trust action on the part of the Acquiring Fund under
the DSTA, and the Acquiring Fund Shares will be validly issued and fully
paid, and under the DSTA, the Target Fund Shareholders will have no
obligation to make further payments for the Acquiring Fund Shares or
contributions to the Acquiring Fund solely by reason of their ownership of
the Acquiring Fund Shares (except as provided for in the Acquiring Fund's
agreement and declaration of trust or applicable law and except for their
obligation to repay any funds wrongfully distributed to them).
(g) That the Target Fund shall have obtained an opinion from counsel for
the Acquiring Fund, dated as of the Closing Date, addressed to the Target Fund,
that the consummation of the transactions set forth in this Agreement complies
with the requirements of a reorganization as described in Section 368(a) of the
Code.
(h) That all proceedings taken by the Acquiring Fund and its counsel in
connection with the Reorganization and all documents incidental thereto shall
be satisfactory in form and substance to the Target Fund.
(i) 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 the Acquiring Fund, be contemplated by
the SEC.
(j) That the liquidity provider for the Target Fund VRDP Shares shall
have consented to this Agreement.
9. CONDITIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund hereunder shall be subject to the
following conditions:
(a) That this Agreement and the issuance of additional Acquiring Fund
VRDP Shares in connection with the Reorganization shall have been approved by
the Board of Trustees of the Acquiring Fund and by the affirmative vote of the
Acquiring Fund VRDP Holders, voting as a separate class, of a majority of the
outstanding Acquiring Fund VRDP Shares.
(b) That the issuance of additional Acquiring Fund Common Shares in
connection with the Reorganization shall have been approved by the Board of
Trustees of the Acquiring Fund and by the affirmative vote of the Acquiring
Fund Common Shareholders and the Acquiring Fund VRDP Holders, voting as a
single class, of a majority of the votes cast at the Acquiring Fund's
shareholder meeting where such issuance of additional Acquiring Fund Common
Shares shall be approved.
(c) The Target Fund shall have delivered (including in electronic
format) to the Acquiring Fund (i) a copy of the resolutions approving this
Agreement adopted by the Board of Trustees of the Target Fund, (ii) a
certificate setting forth the vote of the Target Fund Common Shareholders and
the Target Fund VRDP Holders, voting as a single class, approving this
Agreement, and the vote of the Target Fund VRDP Holders, voting as a separate
class,
19
approving this Agreement, and (iii) a certificate certifying that the Target
Fund has received all requisite consents and approvals necessary to consummate
the Reorganization, each certified by the Target Fund's Secretary.
(d) That the Target Fund shall have provided or made available
(including by electronic format) to the Acquiring Fund the Target Fund Closing
Financial Statements, together with a schedule of the Target Fund's investments
with their respective dates of acquisition and tax costs, all as of the
Valuation Time, certified on the Target Fund's behalf by its Chief Executive
Officer, President, any Vice President, Chief Financial Officer, Treasurer or
any Assistant Treasurer, and a certificate signed by Target Fund's Chief
Executive Officer, President, any Vice President, Chief Financial Officer,
Treasurer or any Assistant Treasurer, dated as of the Closing Date, certifying
that as of the Valuation Time and as of the Closing Date there has been no
material adverse change in the financial position of the Target Fund since the
date of the Target Fund's most recent Annual Report or Semi-Annual Report, as
applicable, other than changes in the Target Fund Investments since that date
or changes in the market value of the Target Fund Investments.
(e) That the Target Fund shall have furnished to the Acquiring Fund a
certificate signed by the Target Fund's Chief Executive Officer, President, any
Vice President, Chief Financial Officer, Treasurer or any Assistant Treasurer,
dated as of the Closing Date, certifying that as of the Valuation Time and as
of the Closing Date all representations and warranties of the Target Fund made
in this Agreement are true and correct in all material respects with the same
effect as if made at and as of such dates and the Target Fund 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 dates.
(f) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
(g) That the Acquiring Fund shall have received the opinion of
counsel(s) for the Target Fund, dated as of the Closing Date, addressed to the
Acquiring Fund, that substantively provides the following:
(i) based solely on its review of a certificate, and a bringdown
verification thereof, dated as of the Closing Date, from the Secretary of
State of the State of Delaware with respect to the Target Fund's existence
and good standing in the State of Delaware, the Target Fund is validly
existing and in good standing under the DSTA;
(ii) the Target Fund is registered with the SEC as a closed-end
management investment company under the 1940 Act;
(iii) the Target Fund has the statutory trust power and authority to
execute, deliver and perform all of its obligations under this Agreement
under the DSTA;
(iv) this Agreement has been duly authorized, executed and delivered
by all requisite statutory trust action on the part of the Target Fund under
the DSTA;
20
(v) this Agreement constitutes the valid and binding obligation of
the Target Fund, enforceable against the Target Fund in accordance with its
terms under the laws of the State of Delaware;
(vi) neither the execution and delivery by the Target Fund of this
Agreement nor the performance by the Target Fund of its obligations under
this Agreement: (i) conflicts with the agreement and declaration of trust or
bylaws of the Target Fund; (ii) constitutes a material violation of, or a
default under, any material contract, agreement, instrument or other
document pertaining to, or material to the business or financial condition
of, the Target Fund; (iii) contravenes any material judgment, order or
decree of courts or other governmental authorities or arbitrators that are
material to the business or financial condition of the Target Fund; or (iv)
violates the 1940 Act or any law, rule or regulation of the State of
Delaware; and
(vii) neither the execution and delivery by the Target Fund of this
Agreement nor the enforceability of this Agreement against the Target Fund
requires the consent, approval, licensing or authorization of, or any
filing, recording or registration with, any governmental authority under the
1940 Act or any law, rule or regulation of the State of Delaware, except for
those consents, approvals, licenses and authorizations already obtained and
those filings, recordings and registrations already made.
(h) That the Acquiring Fund shall have obtained an opinion from counsel
for the Target Fund, dated as of the Closing Date, addressed to the Acquiring
Fund, that the consummation of the transactions set forth in this Agreement
complies with the requirements of a reorganization as described in
Section 368(a) of the Code.
(i) That all proceedings taken by the Target Fund and its counsel in
connection with the Reorganization and all documents incidental thereto shall
be satisfactory in form and substance to the Acquiring Fund.
(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 the Target Fund, be contemplated by the
SEC.
(k) That prior to the Closing Date, the Target Fund shall have declared
a dividend or dividends which, together with all such previous dividends, shall
have the effect of distributing to its shareholders (i) all of its investment
company taxable income to and including the Closing Date, if any (computed
without regard to any deduction for dividends paid), (ii) all of its net
capital gain, if any, recognized to and including the Closing Date and (iii)
the excess of its interest income excludable from gross income under
Section 103(a) of the Code, if any, over its deductions disallowed under
Sections 265 and 171(a)(2) of the Code for the period to and including the
Closing Date. The Acquiring Fund may pay amounts in respect of such UNII
Distributions on behalf of the Target Fund to the Target Fund Shareholders
entitled to receive such UNII Distributions after the Closing Date as an agent
out of cash or other short-term liquid assets maturing prior to the payment
date of the UNII Distributions acquired from the Target Fund in the
Reorganization, segregated for this purpose and maintained in an amount at
least equal to the remaining payment obligations in respect of the UNII
Distributions.
21
(l) That the liquidity provider for the Acquiring Fund VRDP Shares shall
have consented to this Agreement and the issuance of additional Acquiring Fund
VRDP Shares in connection with the Reorganization.
(m) That the liquidity provider, remarketing agent, tender and paying
agent and the rating agencies for the Acquiring Fund VRDP Shares shall have
consented to any amendments to the Statement of Preferences, the notice of
special rate period for the special rate period in effect for the Acquiring
Fund VRDP Shares as of the Closing Date, and the share certificate of the
Acquiring Fund VRDP Shares that are necessary to reflect the issuance of
additional Acquiring Fund VRDP Shares in connection with the Reorganization,
but only to the extent such consent is required under the Related Documents (as
defined in the Statement of Preferences).
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 shareholders of the
Target Fund and the Acquiring Fund) prior to the Closing Date, or the Closing
Date may be postponed, (i) by mutual consent of the Boards of Trustees of the
Acquiring Fund and the Target Fund; (ii) by the Board of Trustees of the Target
Fund if any condition of Target Fund's obligations set forth in Section 8 of
this Agreement has not been fulfilled or waived by such Board of Trustees; and
(iii) by the Board of Trustees of the Acquiring Fund if any condition of the
Acquiring Fund's obligations set forth in Section 9 of this Agreement has not
been fulfilled or waived by such Board of Trustees.
(b) If the transactions contemplated by this Agreement have not been
consummated by December 31, 2017, this Agreement automatically shall terminate
on that date, unless a later date is mutually agreed to by the Boards of
Trustees of the Acquiring Fund and the Target Fund.
(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 any Fund or its respective
directors, trustees, officers, agents or shareholders in respect of this
Agreement other than with respect to Section 11 and payment by each Fund of its
respective expenses incurred in connection with the Reorganization.
(d) At any time prior to the Closing Date, any of the terms or
conditions of this Agreement may be waived by the Board of Trustees of the
Acquiring Fund or the Target Fund (whichever is entitled to the benefit
thereof), if, in the judgment of such Board of Trustees after consultation with
its counsel, such action or waiver will not have a material adverse effect on
the benefits intended under this Agreement to the shareholders of their
respective Fund, 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 the Funds, nor any of their
respective officers, directors, trustees, agents or shareholders shall have any
liability with respect to such representations or warranties
22
after the Closing Date. This provision shall not protect any officer, director,
trustee, agent or shareholder of either of the Funds against any liability to
the entity for which that officer, director, trustee, agent or shareholder so
acts or to its shareholders, to which that officer, director, trustee, agent or
shareholder otherwise would be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his or her duties in the
conduct of such office.
(f) If any order or orders of the SEC with respect to this Agreement
shall be issued prior to the Closing Date and shall impose any terms or
conditions which are determined by action of the Board of Trustees of the
Acquiring Fund and the Target Fund to be acceptable, such terms and conditions
shall be binding as if a part of this Agreement without further vote or
approval of the Target Fund Shareholders and the Acquiring Fund Shareholders
unless such terms and conditions shall result in a change in the method of
computing the number of Acquiring Fund Shares to be issued to the Target Fund
Shareholders, in which event, unless such terms and conditions shall have been
included in the proxy solicitation materials furnished to the Target Fund
Shareholders prior to the meeting at which the Reorganization shall have been
approved, this Agreement shall not be consummated and shall terminate unless
the Target Fund promptly shall call a special meeting of the Target Fund
Shareholders at which such conditions so imposed shall be submitted for
approval.
11. INDEMNIFICATION.
(a) Each party (an "Indemnitor") shall indemnify and hold the other and
its officers, directors, trustees, agents and persons controlled by or
controlling any of them (each an "Indemnified Party") harmless from and against
any and all losses, damages, liabilities, claims, demands, judgments,
settlements, deficiencies, taxes, assessments, charges, costs and expenses of
any nature whatsoever (including reasonable attorneys' fees) including amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees reasonably incurred by such Indemnified Party in connection with
the defense or disposition of any claim, action, suit or other proceeding,
whether civil or criminal, before any court or administrative or investigative
body in which such Indemnified Party may be or may have been involved as a
party or otherwise or with which such Indemnified Party may be or may have been
threatened (collectively, the "Losses") arising out of or related to any claim
of a breach of any representation, warranty or covenant made herein by the
Indemnitor; provided, however, that no Indemnified Party shall be indemnified
hereunder against any Losses arising directly from such Indemnified Party's (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence or (iv) reckless
disregard of the duties involved in the conduct of such Indemnified Party's
position.
(b) The Indemnified Party shall use its best efforts to minimize any
liabilities, damages, deficiencies, claims, judgments, assessments, costs and
expenses in respect of which indemnity may be sought hereunder. The Indemnified
Party shall give written notice to Indemnitor within the earlier of ten (10)
days of receipt of written notice to the Indemnified Party or thirty (30) days
from discovery by the Indemnified Party of any matters which may give rise to a
claim for indemnification or reimbursement under this Agreement. The failure to
give such notice shall not affect the right of the Indemnified Party to
indemnity hereunder unless such failure has materially and adversely affected
the rights of the Indemnitor. At any time after ten (10) days from the giving
of such notice, the Indemnified Party may, at its option, resist, settle or
otherwise compromise, or pay such claim unless it shall have received notice
from the
23
Indemnitor that the Indemnitor intends, at the Indemnitor's sole cost and
expense, to assume the defense of any such matter, in which case the
Indemnified Party shall have the right, at no cost or expense to the
Indemnitor, to participate in such defense. If the Indemnitor does not assume
the defense of such matter, and in any event until the Indemnitor states in
writing that it will assume the defense, the Indemnitor shall pay all costs of
the Indemnified Party arising out of the defense until the defense is assumed;
provided, however, that the Indemnified Party shall consult with the Indemnitor
and obtain indemnitor's prior written consent to any payment or settlement of
any such claim. The Indemnitor shall keep the Indemnified Party fully apprised
at all times as to the status of the defense. If the Indemnitor does not assume
the defense, the Indemnified Party shall keep the Indemnitor apprised at all
times as to the status of the defense. Following indemnification as provided
for hereunder, the Indemnitor shall be subrogated to all rights of the
Indemnified Party with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made.
12. OTHER MATTERS.
(a) 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.
(b) All notices hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered personally or sent by registered mail or
certified mail, postage prepaid. Notice to the Target Fund shall be addressed
to BlackRock Municipal Bond Investment Trust c/o BlackRock Advisors, LLC, 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxx, Secretary of
the Target Fund, or at such other address as the Target Fund may designate by
written notice to the Acquiring Fund. Notice to the Acquiring Fund shall be
addressed to BlackRock Municipal Income Investment Trust c/o BlackRock
Advisors, LLC, 00 Xxxx 00xx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
Xxx, Secretary of the Acquiring Fund, or at such other address and to the
attention of such other person as the Acquiring Fund may designate by written
notice to the Target Fund. Any notice shall be deemed to have been served or
given as of the date such notice is delivered personally or mailed.
(c) This Agreement supersedes all previous correspondence and oral
communications between the Funds 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 Fund and shall be governed by
and construed in accordance with the laws of the State of Delaware applicable
to agreements made and to be performed in said state.
(d) This Agreement may be amended or modified by the parties hereto
prior to the Closing Date, by action taken or authorized by their respective
Boards of Trustees at any time before or after adoption of this Agreement and
approval of the Reorganization by the Target Fund Shareholders or the Acquiring
Fund Shareholders, but, after any such adoption and approval, no amendment or
modification shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
or modified except by an instrument in writing signed on behalf of each of the
Funds.
24
(e) This Agreement is not intended to confer upon any person other than
the parties hereto (or their respective successors and assigns) any rights,
remedies, obligations or liabilities hereunder. If any provision of this
Agreement shall be held or made invalid by statute rule, regulation, decision
of a tribunal or otherwise, the remainder of this Agreement shall not be
affected thereby and, to such extent, the provisions of this Agreement shall be
deemed severable provided that this Agreement shall be deemed modified to give
effect to the fullest extent permitted under applicable law to the intentions
of the party as reflected by this Agreement prior to the invalidity of such
provision.
(f) It is expressly agreed that the obligations of the Funds hereunder
shall not be binding upon any of their respective directors, trustees,
shareholders, nominees, officers, agents, or employees personally, but shall
bind only the property of the respective Fund. The execution and delivery of
this Agreement has been authorized by the Boards of Trustees of the Acquiring
Fund and the Target Fund and signed by an authorized officer of each of the
Acquiring Fund and the Target Fund, acting as such, and neither such
authorization by such Board of Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of each Fund.
(g) 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.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to
be executed and delivered by their duly authorized officers as of the day and
year first written above.
BLACKROCK MUNICIPAL INCOME INVESTMENT TRUST
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
BLACKROCK MUNICIPAL BOND INVESTMENT TRUST
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
26
