AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF
REORGANIZATION ("Agreement") is made as of this
14th day of March, 2011, by and among Xxxxx Xxxxx
Municipals Trust ("Municipals Trust"), a Massachusetts
business trust, on behalf of its series Xxxxx Xxxxx
Michigan Municipal Income Fund ("Michigan Fund") and
Xxxxx Xxxxx Rhode Island Municipal Income Fund
("Rhode Island Fund") and Municipals Trust, on behalf of
its series Xxxxx Xxxxx National Municipal Income Fund.
Xxxxx Xxxxx Michigan Municipal Income Fund and
Xxxxx Xxxxx Rhode Island Municipal Income Fund, are
collectively referred to herein as the "Acquired Funds",
and Xxxxx Xxxxx National Municipal Income Fund is
referred to herein as the "Acquiring Fund".
WITNESSETH
WHEREAS, Municipals Trust is registered under
the Investment Company Act of 1940, as amended (the
"1940 Act") as open-end management investment
company authorized to issue an unlimited number of
shares of beneficial interest without par value in one or
more series (such as the Acquired Funds and the
Acquiring Fund), and the Trustees of Municipals Trust
have divided the shares of the Acquired Funds and the
Acquiring Fund into multiple classes, including Class A,
Class B, Class C and Class I shares ("Acquired Fund
Shares" and "Acquiring Fund Shares");
WHEREAS, Municipals Trust desires to provide
for the reorganization of the Acquired Funds through the
acquisition by the Acquiring Fund of substantially all of
the assets of the Acquired Funds in exchange for the
Acquiring Fund Shares in the manner set forth herein;
and
WHEREAS, it is intended that the reorganization
described in this Agreement shall be a reorganization
within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the
mutual promises herein contained, the parties hereto
agree as follows:
1. Definitions
1.1 The term "1933 Act" shall mean the
Securities Act of 1933, as amended.
1.2 The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.3 The term "Acquired Funds Municipals Trust N-
1A" shall mean the registration statement, as amended,
on Form N-1A of Municipals Trust with respect to the
Acquired Funds in effect on the date hereof or on the
Closing Date, as the context may require.
1.4 The term "Agreement" shall mean this
Agreement and Plan of Reorganization.
1.5 The term "Assumed Liabilities" shall
mean all liabilities, expenses, costs, charges and
receivables of the Acquired Funds as of the Close of
Trading on the New York Stock Exchange on the
Valuation Date. Included therein for the Acquiring Fund
Class B and Class C shall be the uncovered distribution
charges under the Acquired Funds Class B and Class C
Distribution Plans, or, if lower, the amount of contingent
deferred sales charges that would be paid by all the
Acquired Funds Class B and Class C shareholders if
they redeemed on the Closing Date; such amount shall
be treated as uncovered distribution charges under the
Acquiring Fund Class B and Class C Distribution Plans.
1.6 The term "Business Day" shall mean any day
that the New York Stock Exchange is open.
1.7 The term "Close of Trading on the NYSE" shall
mean the close of regular trading on the New York Stock
Exchange, which is usually 4:00 p.m. Eastern Time.
1.8 The term "Closing" shall mean the
closing of the transaction contemplated by this
Agreement.
1.9 The term "Closing Date" shall mean
September 23, 2011, provided all necessary approvals
have been received, or such other date as may be
agreed by the parties on which the Closing is to take
place.
1.10 The term "Commission" shall mean the
Securities and Exchange Commission.
1.11 The term "Custodian" shall mean State
Street Bank and Trust Company.
1.12 The term "Delivery Date" shall mean the
date contemplated by Section 3.3 of this Agreement.
1.13 The term "Municipals Trust N-14" shall
mean Municipals Trust's registration statement on Form
N-14, including a Joint Proxy Statement/Prospectus as
may be amended, that describes the transactions
contemplated by this Agreement and registers the
Acquiring Fund Shares to be issued in connection with
this transaction.
1.14 The term "NYSE" shall mean the New
York Stock Exchange.
1.15 The term "Proxy Statement" shall mean
the Joint Proxy Statement/Prospectus furnished to the
Acquired Funds shareholders in connection with this
transaction.
1.16 The term "Securities List" shall mean the
list of those securities and other assets owned by
Municipals Trust, on behalf of Michigan Fund and
Rhode Island Fund, on the Delivery Date.
1.17 The term "Valuation Date" shall mean the
day of the Closing Date.
2. Transfer and Exchange of Assets
2.1 Reorganization the Acquired Funds. At
the Closing, subject to the requisite approval of the
Acquired Funds' shareholders and the terms and
conditions set forth herein, Municipals Trust shall
transfer all of the assets of the Acquired Funds and
assign all Assumed Liabilities to the Acquiring Fund, and
the Acquiring Fund shall acquire such assets and shall
assume such Assumed Liabilities upon delivery by the
Acquiring Fund to the Acquired Funds on the Closing
Date of Class A, Class B, Class C and Class I Acquiring
Fund Shares (including, if applicable, fractional shares)
having an aggregate net asset value equal to the value
of the assets so transferred, assigned and delivered,
less the Assumed Liabilities, all determined and adjusted
as provided in Section 2.2. Upon delivery of the assets,
the Acquiring Fund will receive good and marketable title
thereto free and clear of all liens.
2.2 Computation of Net Asset Value. The
net asset value per share of the Acquiring Fund Shares
and the net value of the assets of the Acquired Fund
subject to this Agreement shall, in each case, be
determined as of the Close of Trading on the NYSE on
the Valuation Date, after the declaration and payment of
any dividend on that date. The net asset value of the
Acquiring Fund Shares shall be computed in the manner
set forth in the Acquiring Fund Municipals Trust N-1A. In
determining the value of the securities transferred by the
Acquired Funds to the Acquiring Fund, such assets shall
be priced in accordance with the policies and
procedures described in the Acquiring Fund Municipals
Trust N-1A.
3. Closing Date, Valuation Date and Delivery
3.1 Closing Date. The Closing shall be at
the offices of Xxxxx Xxxxx Management, Xxx
Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000 immediately after
the close of business on the Closing Date. All acts
taking place at Closing shall be deemed to take place
simultaneously as of the close of business on the
Closing Date unless otherwise agreed in writing by the
parties.
3.2 Valuation Date. Pursuant to Section 2.2, the net
value of the assets of the Acquired Funds and the net
asset value per share of the Acquiring Fund shall be
determined as of the Close of Trading on the NYSE on
the Valuation Date, after the declaration and payment of
any dividend on that date. The stock transfer books of
Municipals Trust with respect to the Acquired Funds will
be permanently closed, and sales of the Acquired Funds
Shares shall be suspended, as of the close of business
of Municipals Trust on the Valuation Date. Redemption
requests thereafter received by Municipals Trust with
respect to the Acquired Funds shall be deemed to be
redemption requests for the Acquiring Fund Shares to
be distributed to shareholders of the Acquired Funds
under this Agreement provided that the transactions
contemplated by this Agreement are consummated.
In the event that trading on the NYSE or
on another exchange or market on which securities held
by the Acquired Funds are traded shall be disrupted on
the Valuation Date so that, in the judgment of Municipals
Trust, accurate appraisal of the net assets of the
Acquired Funds to be transferred hereunder or the
assets of the Acquiring Fund is impracticable, the
Valuation Date shall be postponed until the first
Business Day after the day on which trading on such
exchange or in such market shall, in the judgment of
Municipals Trust, have been resumed without disruption.
In such event, the Closing Date shall be postponed until
one Business Day after the Valuation Date.
3.3 Delivery of Assets. After the close of
business on the Valuation Date, Municipals Trust shall
issue instructions providing for the delivery of all of its
assets held on behalf of the Acquired Funds to the
Custodian to be held for the account of the Acquiring
Fund, effective as of the Closing. The Acquiring Fund
may inspect such securities at the offices of the
Custodian prior to the Valuation Date.
4. Acquired Fund Distributions and Termination
4.1 As soon as reasonably practicable after the
Closing Date, Municipals Trust shall pay or make
provisions for the payment of all of the debts and taxes
of the Acquired Funds and distribute all remaining
assets, if any, to shareholders of the Acquired Funds,
and the Acquired Funds shall thereafter be terminated
under Massachusetts law.
At, or as soon as may be practicable following
the Closing Date, Municipals Trust on behalf of the
Acquired Funds shall distribute the Class A, Class B,
Class C and Class I the Acquiring Fund Shares it
received from the Acquiring Fund to the shareholders of
the Acquired Funds and shall instruct the Acquiring Fund
as to the amount of the pro rata interest of each of the
Acquired Funds shareholders as of the close of
business on the Valuation Date (such shareholders to be
certified as such by the transfer agent for Municipals
Trust, to be registered on the books of the Acquiring
Fund, in full and fractional the Acquiring Fund Shares, in
the name of each such shareholder, and the Acquiring
Fund agrees promptly to transfer the Acquiring Fund
Shares then credited to the account of the Acquired
Funds on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in
the names of the Acquired Funds shareholders in
accordance with said instruction. Each Acquired Funds
shareholder shall receive shares of the corresponding
class of the Acquiring Fund to the class of the Acquired
Funds held by such shareholder. All issued and
outstanding Acquired Funds Shares shall thereupon be
canceled on the books of Municipals Trust. The
Acquiring Fund shall have no obligation to inquire as to
the correctness of any such instruction, but shall, in
each case, assume that such instruction is valid, proper
and correct.
5. The Acquired Fund Securities
On the Delivery Date, Municipals Trust on behalf
of the Acquired Funds shall deliver the Securities List
and tax records. Such records shall be made available
to the Acquiring Fund prior to the Closing Date for
inspection by the Treasurer (or his or her designee).
Notwithstanding the foregoing, it is expressly
understood that the Acquired Funds may hereafter until
the close of business on the Valuation Date sell any
securities owned by it in the ordinary course of its
business as a series of an open-end, management
investment company.
6. Liabilities and Expenses
The Acquiring Fund shall acquire all liabilities of
the Acquired Funds, whether known or unknown, or
contingent or determined. Municipals Trust will
discharge all known liabilities of the Acquired Funds, so
far as may be possible, prior to the Closing Date. The
Acquired Funds shall bear the expenses of carrying out
this Agreement.
7. Municipals Trust Representations and Warranties
Municipals Trust, on behalf of Michigan Fund
and Rhode Island Fund and on behalf of the Acquiring
Fund, hereby represents, warrants and agrees as
follows:
7.1 Legal Existence. Municipals Trust are
each a business trust duly organized and validly existing
under the laws of the Commonwealth of Massachusetts.
Michigan Fund, Rhode Island Fund and the Acquiring
Fund are each validly existing series of Municipals Trust.
Municipals Trust is authorized to issue an unlimited
number of shares of beneficial interest of the Acquiring
Fund.
7.2 Registration under 1940 Act. Municipals Trust
are each duly registered as an open-end management
investment companies under the 1940 Act and such
registration is in full force and effect.
7.3 Financial Statements. The statement of assets
and liabilities and the schedule of portfolio investments
and the related statements of operations and changes in
net assets of Michigan Fund dated July 31, 2010 and
January 31, 2011 (unaudited) and of the Rhode Island
Fund and the Acquiring Fund dated September 30, 2010
and March 31, 2011 (unaudited), fairly present the
financial condition of the Acquired Funds and the
Acquiring Fund as of said dates in conformity with
generally accepted accounting principles.
7.4 No Contingent Liabilities. There are no
known contingent liabilities of the Acquired Funds or the
Acquiring Fund not disclosed and there are no legal,
administrative or other proceedings pending, or to the
knowledge of Municipals Trust threatened, against the
Acquired Funds or the Acquiring Fund which would
materially affect its financial condition.
7.5 Requisite Approvals. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated herein, have been authorized
by the Board of Trustees of Municipals Trust by vote
taken at a meeting of such Board duly called and held
on March 14, 2011. No approval of the shareholders of
the Acquiring Fund is required in connection with this
Agreement or the transaction contemplated hereby. The
Agreement has been executed and delivered by a duly
authorized officer of Municipals Trust and is a valid and
legally binding obligation of each of the Acquired Funds
and the Acquiring Fund enforceable in accordance with
its terms.
7.6 No Material Violations. Municipals Trust
are not, and the execution, delivery and performance of
this Agreement will not result, in a material violation of
any provision of their Declaration of Trust or By-Laws,
as each may be amended, of Municipals Trust or of any
agreement, indenture, instrument, contract, lease or
other undertaking to which Municipals Trust is a party or
by which it is bound.
7.7 Taxes and Related Filings. Except
where failure to do so would not have a material adverse
effect on the Acquired Funds or the Acquiring Fund,
each of the Acquired Funds and the Acquiring Fund has
filed or will file or obtain valid extensions of filing dates
for all required federal, state and local tax returns and
reports for all taxable years through and including its
current taxable year and no such filings are currently
being audited or contested by the Internal Revenue
Service or state or local taxing authority and all federal,
state and local income, franchise, property, sales,
employment or other taxes or penalties payable
pursuant to such returns have been paid or will be paid,
so far as due. Each of the Acquired Funds and the
Acquiring Fund has elected to be treated as a "regulated
investment company" for federal tax purposes, has
qualified as such for each taxable year of its operations
and will qualify as such as of the Closing Date.
7.8 Good and Marketable Title. On the
Closing Date, each Acquired Fund will have good and
marketable title to its assets, free and clear of all liens,
mortgages, pledges, encumbrances, charges, claims
and equities whatsoever, and full right, power and
authority to sell, assign, transfer and deliver such assets
and shall deliver such assets to the Acquiring Fund.
Upon delivery of such assets, the Acquiring Fund will
receive good and marketable title to such assets, free
and clear of all liens, mortgages, pledges,
encumbrances, charges, claims and equities, except as
to adverse claims under Article 8 of the Uniform
Commercial Code of which the Acquiring Fund has
notice and necessary documentation at or prior to the
time of delivery.
7.9 Acquiring Fund N-1A Not Misleading.
The Municipals Trust N-1A conforms on the date of the
Agreement, and will conform on the date of the Proxy
Statement and the Closing Date, in all material respects
to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the
Commission thereunder and does not include 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 materially misleading.
7.10 Proxy Statement. The Proxy Statement
delivered to the Acquired Funds shareholders in
connection with this transaction (both at the time of
delivery to such shareholders in connection with the
meeting of shareholders and at all times subsequent
thereto and including the Closing Date) in all material
respects, conforms to the applicable requirements of
the 1934 Act and the 1940 Act and the rules and
regulations of the Commission thereunder, and will not
include any untrue statement of a material fact or omit to
state any material fact required to be stated thereon or
necessary to make statements therein, in light of the
circumstances under which they were made, not
materially misleading.
7.11 Books and Records. Each of Acquired
Funds and the Acquiring Fund have maintained all
records required under Section 31 of the 1940 Act and
rules thereunder.
8. Conditions Precedent to Closing
The obligations of the parties hereto shall be
conditioned on the following:
8.1 Representations and Warranties. The
representations and warranties of the parties made
herein will be true and correct as of the date of this
Agreement and on the Closing Date.
8.2 Shareholder Approval. The Agreement and the
transactions contemplated herein shall have been
approved by the requisite vote of the holders of the
Acquired Funds Shares in accordance with the 1940 Act
and the Declaration of Trust and By-Laws, each as
amended, of Municipals Trust.
8.3 Pending or Threatened Proceedings.
On the Closing Date, no action, suit or other proceeding
shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated
herein.
8.4 Registration Statement. The Municipals
Trust N-14 shall have become effective under the 1933
Act; no stop orders suspending the effectiveness of
such Municipals Trust N-14 shall have been issued; and,
to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have
been instituted or be pending, threatened or
contemplated under the 1933 Act. The Proxy Statement
has been delivered to each shareholder of record of the
Acquired Funds as of June 16, 2011 in accordance with
the provisions of the 1934 Act and the rules thereunder.
8.5 Declaration of Dividend. Municipals
Trust shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the
effect of distributing to the Acquired Funds
shareholders all of the Acquired Funds' investment
company taxable income (as defined in Section 852 of
the Code) (computed without regard to any deduction
for dividends paid) for the final taxable period of the
Acquired Funds, all of its net capital gain realized in the
final taxable period of the Acquired Funds (after
reduction for any capital loss carryforward) and all of
the excess of (i) its interest income excludable from
gross income under Section 103(a) of the Code over (ii)
its deductions disallowed under Sections 265 and
171(a)(2) of the Code for the final taxable period of the
Acquired Funds.
8.6 State Securities Laws. The parties shall
have received all permits and other authorizations
necessary, if any, under state securities laws to
consummate the transactions contemplated herein.
8.7 Performance of Covenants. Each party shall
have performed and complied in all material respects
with each of the agreements and covenants required by
this Agreement to be performed or complied with by
each such party prior to or at the Valuation Date and the
Closing Date.
8.8 Due Diligence. Municipals Trust shall
have had reasonable opportunity to have its officers
and agents review the records of the Acquired Funds.
8.9 No Material Adverse Change. From the
date of this Agreement, through the Closing Date, there
shall not have been:
* any change in the business, results of
operations, assets or financial condition or the manner
of conducting the business of the Acquired Funds or the
Acquiring Fund (other than changes in the ordinary
course of its business, including, without limitation,
dividends and distributions in the ordinary course and
changes in the net asset value per share) which has had
a material adverse effect on such business, results of
operations, assets or financial condition, except in all
instances as set forth in the financial statements;
* any loss (whether or not
covered by insurance) suffered by the Acquired Funds
or the Acquiring Fund materially and adversely affecting
of the Acquired Funds or the Acquiring Fund, other than
depreciation of securities;
* issued by Municipals Trust to any person any
option to purchase or other right to acquire shares of
any class of the Acquired Funds or the Acquiring Fund
Shares (other than in the ordinary course of Municipals
Trust business as an open-end management investment
company);
* any indebtedness incurred by the Acquired
Funds or the Acquiring Fund for borrowed money or any
commitment to borrow money entered into by the
Acquired Funds or the Acquiring Fund except as
permitted in the Acquired Municipals Trust N-1A or the
Acquiring fund Municipals Trust N-1A and disclosed in
financial statements required to be provided under this
Agreement;
* any amendment to the Declaration of Trust or
By-Laws of Municipals Trust that will adversely affect
the ability of Municipals Trust to comply with the terms
of this Agreement; or
* any grant or imposition of any lien, claim,
charge or encumbrance upon any asset of the Acquired
Funds except as provided in the Acquired Funds
Municipals Trust N-1A so long as it will not prevent
Municipals Trust from complying with Section 7.8.
8.10 Lawful Sale of Shares. On the Closing
Date, the Acquiring Fund Shares to be issued pursuant
to Section 2.1 of this Agreement will be duly authorized,
duly and validly issued and outstanding, and fully paid
and non-assessable by Municipals Trust, and conform in
all substantial respects to the description thereof
contained in the Municipals Trust N-14 and Proxy
Statement furnished to the Acquired Funds shareholders
and the Acquiring Fund Shares to be issued pursuant to
paragraph 2.1 of this Agreement will be duly registered
under the 1933 Act by the Municipals Trust N-14 and will
be offered and sold in compliance with all applicable
state securities laws.
8.11 Documentation and Other Actions.
Municipals Trust shall have executed such documents
and shall have taken such other actions, if any, as
reasonably requested to fully effectuate the transactions
contemplated hereby.
9. Addresses
All notices required or permitted to be given
under this Agreement shall be given in writing to Xxxxx
Xxxxx Municipals Trust, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx,
XX 00000 (Attention: Chief Legal Officer), or at such
other place as shall be specified in written notice given
by either party to the other party to this Agreement and
shall be validly given if mailed by first-class mail,
postage prepaid.
10. Termination
This Agreement may be terminated by either
party upon the giving of written notice to the other, if
any of the representations, warranties or conditions
specified in Sections 7 or 8 hereof have not been
performed or do not exist on or before December 31,
2011. In the event of termination of this Agreement
pursuant to this provision, neither party (nor its officers,
Trustees or shareholders) shall have any liability to the
other.
11. Miscellaneous
This Agreement shall be governed by, construed
and enforced in accordance with the laws of the
Commonwealth of Massachusetts. Municipals Trust
represent that there are no brokers or finders entitled to
receive any payments in connection with the
transactions provided for herein. Municipals Trust
represent that this Agreement constitutes the entire
agreement between the parties as to the subject matter
hereof. The representations, warranties and covenants
contained in this Agreement or in any document
delivered pursuant hereto or in connection herewith shall
not survive the consummation of the transactions
contemplated hereunder. The Section headings
contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall
be executed in any number of counterparts, each of
which shall be deemed an original. Whenever used
herein, the use of any gender shall include all genders.
In the event that any provision of this Agreement is
unenforceable at law or in equity, the remainder of the
Agreement shall remain in full force and effect.
12. Amendments
At any time prior to or after approval of this
Agreement by the Acquired Funds shareholders (i) the
parties hereto may, by written agreement and without
shareholder approval, amend any of the provisions of
this Agreement, and (ii) either party may waive without
such approval any default by the other party or the
failure to satisfy any of the conditions to its obligations
(such waiver to be in writing); provided, however, that
following shareholder approval, no such amendment
may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to
be received by the Acquired Funds shareholders under
this Agreement to the detriment of such shareholders
without their further approval. The failure of a party
hereto to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a
waiver of any such provision, nor in any way to affect
the validity of this Agreement or any part hereof or the
right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this
Agreement shall be held to be a waiver of any other or
subsequent breach.
13. Massachusetts Business Trust
References in this Agreement to Municipals
Trust mean and refer to the Trustees from time to time
serving under its Declarations of Trust on file with the
Secretary of the Commonwealth of Massachusetts, as
the same may be amended from time to time, pursuant
to which they conduct their businesses. It is expressly
agreed that the obligations of Municipals Trust
hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees
of each Trust personally, but bind only the trust property
of the Trust as provided in said Declaration of Trust.
The execution and delivery of this Agreement has been
authorized by the respective trustees and signed by an
authorized officer of Municipals Trust, acting as such,
and neither such authorization by such trustees nor such
execution and delivery by such officer shall be deemed
to have been made by any of them but shall bind only
the trust property of each Trust as provided in such
Declaration of Trust. No series of Municipals Trust shall
be liable for the obligations of any other series.
IN WITNESS WHEREOF, each of the parties
hereto has caused this Agreement to be executed by
their officers thereunto duly authorized, as of the day
and year first above written.
ATTEST: XXXXX
XXXXX MUNICIPALS TRUST
(on
behalf of Xxxxx Xxxxx Michigan Municipal Income Fund
and
Xxxxx Xxxxx Rhode Island Municipal Income
Fund)
/s/Xxxxxxx X. Gemma By:
/s/Xxxxxx X. Xxxxxxx
Xxxxxxx X. Gemma, Secretary
Xxxxxx X. Xxxxxxx, President
XXXXX
XXXXX MUNICIPALS TRUST
(on
behalf of Xxxxx Xxxxx National Municipal Income Fund)
/s/Xxxxxxx X. Gemma By:
/s/Xxxxxx X. Xxxxxxx
Xxxxxxx X. Gemma, Secretary
Xxxxxx X. Xxxxxxx, President
