EXHIBIT (4)
ECLIPSE FUNDS INC.
AGREEMENT AND PLAN OF REORGANIZATION
MAINSTAY ICAP EQUITY FUND AND
MAINSTAY ALL CAP VALUE FUND
The Boards of Directors of ICAP Funds, Inc. and Eclipse Funds Inc., each a
Maryland corporation, deem it advisable that the MainStay ICAP Equity Fund (the
"Acquiring Fund ") and the MainStay All Cap Value Fund (the "Acquired Fund "),
series of ICAP Funds, Inc. and Eclipse Funds Inc., respectively, engage in the
reorganization described below.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1) of the United States
Internal Revenue Code of 1986, as amended ("Code"). The reorganization and
liquidation will consist of the transfer of all of the assets of the Acquired
Fund to the Acquiring Fund in exchange solely for Class A, Class C and Class I
shares of beneficial interest of the Acquiring Fund ("Acquiring Fund Shares"),
the assumption by the Acquiring Fund of all liabilities of the Acquired Fund,
and the distribution of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in complete liquidation of the Acquired Fund, as provided herein
("Reorganization"), all upon the terms and conditions hereinafter set forth in
this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are each a series of an
open-end, registered investment company of the management type and the Acquired
Fund owns securities that generally are assets of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Board of Directors of ICAP Funds, Inc. has determined, with
respect to the Acquiring Fund, that the exchange of all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired Fund by the Acquiring Fund is in the best interests of the
Acquiring Fund and its shareholders and that the interests of the existing
shareholders of the Acquiring Fund would not be diluted as a result of this
transaction; and
WHEREAS, the Board of Directors of Eclipse Funds Inc. has determined, with
respect to the Acquired Fund, that the exchange of all of the assets of the
Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of
the Acquired Fund by the Acquiring Fund is in the best interests of the Acquired
Fund and its shareholders and that the interests of the existing shareholders of
the Acquired Fund would not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
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1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN
EXCHANGE FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND
LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1 Subject to the requisite approval of the Acquired Fund's shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund agrees to
transfer all of its respective assets, as set forth in paragraph 1.2, to the
Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (i) to
deliver to the Acquired Fund the number of full and fractional Class A, Class C
and Class I Acquiring Fund Shares, determined by dividing the value of the
Acquired Fund's net assets with respect to each corresponding class (Class A,
Class B, Class C and Class I, respectively (Class B shares of the Acquired Fund
will be exchanged for Class A shares of the Acquiring Fund)), computed in the
manner and as of the time and date set forth in paragraph 2.1, by the net asset
value of one Acquiring Fund Share of the corresponding class, computed in the
manner and as of the time and date set forth in paragraph 2.2; and (ii) to
assume all liabilities of the Acquired Fund, as set forth in paragraph 1.3. Such
transactions shall take place on the date of the closing provided for in
paragraph 3.1 ("Closing Date").
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all assets and property, including, without limitation, all
cash, securities, commodities and futures interests and dividends or interests
receivable that are owned by the Acquired Fund and any deferred or prepaid
expenses shown as an asset on the books of the Acquired Fund on the Closing Date
(collectively, "Assets").
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
also assume all of the liabilities of the Acquired Fund, whether accrued or
contingent, known or unknown, existing at the Valuation Date as defined in
paragraph 2.1 (collectively, "Liabilities"). On or as soon as practicable prior
to the Closing Date, the Acquired Fund will declare and pay to its shareholders
of record one or more dividends and/or other distributions so that it will have
distributed substantially all (and in no event less than 98%) of its investment
company taxable income (computed without regard to any deduction for dividends
paid) and realized net capital gain, if any, for the current taxable year
through the Closing Date.
1.4 Immediately after the transfer of assets provided for in paragraph 1.1,
the Acquired Fund will distribute to its respective shareholders of record with
respect to each class of shares, determined as of immediately after the close of
business on the Closing Date ("Acquired Fund Shareholders"), on a pro rata basis
within that class, the Acquiring Fund Shares of the corresponding class received
by the Acquired Fund pursuant to paragraph 1.1, and will completely liquidate.
Such distribution and liquidation will be accomplished, with respect to each
class of the Acquired Fund's shares, by the transfer of the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of the Acquiring Fund in
the names of the Acquired Fund Shareholders. The aggregate net asset value of
Class A, Class C and Class I Acquiring Fund Shares to be so credited to Class A
/ Class B, Class C and Class I Acquired Fund Shareholders, respectively, shall,
with respect to each class, be equal to the aggregate net asset value of the
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shares of beneficial interest of the Acquired Fund ("Acquired Fund Shares") of
the corresponding class owned by Acquired Fund Shareholders on the Closing Date.
All issued and outstanding shares of the Acquired Fund will simultaneously be
redeemed and canceled on the books of the Acquired Fund, although share
certificates representing interests in Class A, Class B, Class C and Class I
shares of the Acquired Fund will represent a number of the corresponding class
of Acquiring Fund Shares after the Closing Date, as determined in accordance
with paragraph 2.3. The Acquiring Fund shall not issue certificates representing
the Class A, Class C and Class I Acquiring Fund Shares in connection with such
exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's Transfer Agent, as defined in paragraph 3.3.
1.6 Any reporting responsibility of the Acquired Fund, including, but not
limited to, the responsibility for filing regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission ("Commission"), any
state securities commission, and any Federal, state or local tax authorities or
any other relevant regulatory authority, is and shall remain the responsibility
of the Acquired Fund.
2. VALUATION
2.1 The value of the Assets shall be the value of such Assets computed as
of immediately after the close of business of the New York Stock Exchange and
after the declaration of any dividends on the Closing Date (such time and date
being hereinafter called the "Valuation Date"), using the valuation procedures
set forth in the then-current prospectus and statement of additional information
with respect to the Acquired Fund, and valuation procedures established by the
Acquired Fund's Board.
2.2 The net asset value of an Acquiring Fund Share shall be the net asset
value per share computed with respect to that class as of the Valuation Date,
using the valuation procedures set forth in the Acquiring Fund's then-current
prospectus and statement of additional information, and valuation procedures
established by the Acquiring Fund's Board.
2.3 The number of the Class A, Class C and Class I Acquiring Fund Shares to
be issued (including fractional shares, if any) in exchange for the Acquired
Fund's Assets shall be determined with respect to each such class by dividing
the value of the net assets with respect to the Class A, Class B, Class C and
Class I of the Acquired Fund, as the case may be, determined using the same
valuation procedures referred to in paragraph 2.1, by the net asset value of an
Acquiring Fund Share, determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made by State Street Bank & Trust
Company in its capacity as accounting agent for the Acquired Fund and the
Acquiring Fund, and approved by New York Life Investment Management LLC in its
capacity as administrator for the Acquired Fund and the Acquiring Fund, and
shall be subject to confirmation by each Fund's record keeping agent and by each
Fund's independent accountants.
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3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be July 26, 2007 or such other date as the
parties may agree. All acts taking place at the closing of the transactions
provided for in this Agreement ("Closing") shall be deemed to take place
simultaneously as of immediately after the close of business on the Closing Date
unless otherwise agreed to by the parties. The close of business on the Closing
Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be held at the
offices of the Funds or at such other time and/or place as the parties may
agree.
3.2 Eclipse Funds Inc. shall direct State Street Bank & Trust Company, as
custodian for the Acquired Fund ("Custodian"), to deliver, at the Closing, a
certificate of an authorized officer stating that (i) the Assets shall have been
delivered in proper form to the Acquiring Fund within two business days prior to
or on the Closing Date, and (ii) all necessary taxes in connection with the
delivery of the Assets, including all applicable Federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
The Acquired Fund's portfolio securities represented by a certificate or other
written instrument shall be presented by the Custodian to those persons at the
Custodian who have primary responsibility for the safekeeping of the assets of
the Acquiring Fund, which Custodian also serves as the custodian for the
Acquiring Fund. Such presentation shall be made for examination no later than
five business days preceding the Closing Date, and shall be transferred and
delivered by the Acquired Fund as of the Closing Date for the account of the
Acquiring Fund duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof. The Custodian shall deliver to those persons
at the Custodian who have primary responsibility for the safekeeping of the
assets of the Acquiring Fund as of the Closing Date by book entry, in accordance
with the customary practices of the Custodian and of each securities depository,
as defined in Rule 17f-4 under the Investment Company Act of 1940, as amended
("1940 Act"), in which the Acquired Fund's Assets are deposited, the Acquired
Fund's Assets deposited with such depositories. The cash to be transferred by
the Acquired Fund shall be delivered by wire transfer of Federal funds on the
Closing Date.
3.3 Eclipse Funds Inc. shall direct NYLIM Service Company, LLC, in its
capacity as transfer agent for the Acquired Fund ("Transfer Agent"), to deliver
at the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund Shareholders and the number
and percentage ownership of outstanding Class A, Class B, Class C, and Class I
shares owned by each such shareholder immediately prior to the Closing.
The Acquiring Fund shall issue and deliver to the Secretary of the Acquired
Fund prior to the Closing Date a confirmation evidencing that the appropriate
number of Acquiring Fund Shares will be credited to the Acquired Fund on the
Closing Date, or provide other evidence satisfactory to the Acquired Fund as of
the Closing Date that such Acquiring Fund Shares have been credited to the
Acquired Fund's accounts on the books of the Acquiring Fund. At the Closing each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
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3.4 In the event that on the Valuation Date (a) the New York Stock Exchange
or another primary trading market for portfolio securities of the Acquiring Fund
or the Acquired Fund (each, an "Exchange") shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the judgment of the
Board of the Funds, accurate appraisal of the value of the net assets of the
Acquired Fund or the Acquiring Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as has been fully disclosed to the Acquiring Fund in a written
instrument executed by an officer of Eclipse Funds Inc., Eclipse Funds Inc., on
behalf of the Acquired Fund, represents and warrants to the Acquiring Fund, as
follows:
(a) The Acquired Fund is duly organized as a series of Eclipse Funds Inc.,
which is a corporation duly organized, validly existing and in good standing
under the laws of Maryland, with power under Eclipse Funds Inc.'s Articles of
Incorporation and Bylaws, as amended from time to time, to own all of its Assets
and to carry on its business as it is now being conducted; and
(b) Eclipse Funds Inc. is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
Class A, Class B, Class C and Class I Acquired Fund Shares under the Securities
Act of 1933, as amended ("1933 Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the Securities Exchange Act of 1934, as amended ("1934 Act"), and
the 1940 Act, and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information of the
Acquired Fund and each prospectus and statement of additional information of the
Acquired Fund used at all times prior to the date of this Agreement conforms or
conformed at the time of its use 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 or did not at the time of its use 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;
(e) On the Closing Date, Eclipse Funds Inc., on behalf of the Acquired
Fund, will have good and marketable title to the Assets and full right, power,
and authority to sell, assign, transfer and deliver such Assets hereunder free
of any liens or other encumbrances, and upon delivery and payment for such
Assets, ICAP Funds, Inc., on behalf of the Acquiring Fund, will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof,
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including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund;
(f) Eclipse Funds Inc. is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of its Articles of Incorporation or By-Laws, or of any agreement,
indenture, instrument, contract, lease or other undertaking to which Eclipse
Funds Inc., on behalf of the Acquired Fund, is a party or by which it is bound,
or (ii) the acceleration of any obligation, or the imposition of any penalty,
under any agreement, indenture, instrument, contract, lease, judgment or decree
to which Eclipse Funds Inc., on behalf of the Acquired Fund, is a party or by
which it is bound;
(g) All material contracts or other commitments of the Acquired Fund (other
than this Agreement and certain investment contracts, including options,
futures, and forward contracts) will terminate without liability to the Acquired
Fund on or prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by ICAP Funds,
Inc., on behalf of the Acquiring Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Acquired Fund or
any of its properties or assets that, if adversely determined, would materially
and adversely affect its financial condition or the conduct of its business.
Eclipse Funds Inc., on behalf of the Acquired Fund, knows of no facts which
might form the basis for the institution of such proceedings and is not a party
to or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated;
(i) The Statement of Assets and Liabilities, Statements of Operations and
Changes in Net Assets, and Schedule of Investments of the Acquired Fund at
October 31, 2006 have been audited by KPMG LLP, independent accountants, and are
in accordance with accounting principles generally accepted in the United States
of America ("GAAP") consistently applied, and such statements (copies of which
have been furnished to the Acquiring Fund) present fairly, in all material
respects, the financial condition of the Acquired Fund as of such date in
accordance with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(j) Since October 31, 2006, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this subparagraph (j), a
decline in net asset value per share of Acquired Fund Shares due to declines in
market values of securities held by the Acquired Fund, the discharge of the
Acquired Fund's liabilities, or the redemption of the Acquired Fund's shares by
shareholders of the Acquired Fund shall not constitute a material adverse
change;
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(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been (or will be) eligible to and has computed (or will
compute) its Federal income tax under Section 852 of the Code, and will have
distributed all of its investment company taxable income and net capital gain
(as defined in the Code) that has accrued through the Closing Date, and before
the Closing Date will have declared dividends sufficient to distribute all of
its investment company taxable income and net capital gain for the period ending
on the Closing Date;
(m) All issued and outstanding shares of the Acquired Fund are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Acquired Fund and have been offered and sold in every
state and the District of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws.
All of the issued and outstanding shares of the Acquired Fund will, at the time
of Closing, be held by the persons and in the amounts set forth in the records
of the Transfer Agent, on behalf of the Acquired Fund, as provided in paragraph
3.3. The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Acquired Fund, nor
is there outstanding any security convertible into any of the Acquired Fund's
shares;
(n) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action, if any,
on the part of the Board of the Funds, on behalf of the Acquired Fund, and,
subject to the approval of the shareholders of the Acquired Fund, this Agreement
will constitute a valid and binding obligation of the Company, on behalf of the
Acquired Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights and to general equity
principles;
(o) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or to be
filed with any Federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto;
and
(p) The combined proxy statement and prospectus ("Proxy Statement") to be
included in the Registration Statement referred to in paragraph 5.6, insofar as
it relates to the Acquired Fund, will, on the effective date of the Registration
Statement and on the Closing Date (i) not contain
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any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not materially
misleading, provided, however, that the representations and warranties of this
subparagraph (p) shall not apply to statements in or omissions from the Proxy
Statement and the Registration Statement made in reliance upon and in conformity
with information that was furnished by the Acquiring Fund for use therein, and
(ii) 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.
4.2 Except as has been fully disclosed to the Acquired Fund in a written
instrument executed by an officer of ICAP Funds, Inc., ICAP Funds, Inc., on
behalf of the Acquiring Fund, represents and warrants to the Acquired Fund, as
follows:
(a) The Acquiring Fund is duly organized as series of ICAP Funds, Inc.,
which is a corporation duly organized, validly existing, and in good standing
under the laws of the Maryland with power under its Articles of Incorporation
and By-Laws to own all of its properties and assets and to carry on its business
as it is now being conducted;
(b) ICAP Funds, Inc. is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
the Class A, Class C and Class I Acquiring Fund Shares under the 1933 Act, is in
full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information of the
Acquiring Fund and each prospectus and statement of additional information of
the Acquiring Fund used at all times prior to the date of this Agreement
conforms or conformed at the time of its use 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 or did not at the time of
its use 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;
(e) On the Closing Date, ICAP Funds, Inc., on behalf of the Acquiring Fund,
will have good and marketable title to the Acquiring Fund's assets, free of any
liens or other encumbrances, except those liens or encumbrances as to which the
Acquired Fund has received notice and necessary documentation at or prior to the
Closing;
(f) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of ICAP Funds, Inc.'s Articles of Incorporation or By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
ICAP Funds, Inc., on behalf of the Acquiring Fund, is a party or
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by which it is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument, contract,
lease, judgment or decree to which ICAP Funds, Inc., on behalf of the Acquiring
Fund, is a party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by Eclipse
Funds Inc., on behalf of the Acquired Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to the Acquiring Fund's knowledge, threatened against ICAP
Funds, Inc., on behalf of the Acquiring Fund, or any of the Acquiring Fund's
properties or assets that, if adversely determined, would materially and
adversely affect the Acquiring Fund's financial condition or the conduct of its
business. ICAP Funds, Inc., on behalf of the Acquiring Fund, knows of no facts
which might form the basis for the institution of such proceedings and is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects the Acquiring
Fund's business or its ability to consummate the transactions herein
contemplated;
(h) The Statement of Assets and Liabilities, Statements of Operations and
Changes in Net Assets and Schedule of Investments of the Acquiring Fund at
December 31, 2006 have been audited by KPMG LLP, independent accountants, and
are in accordance with GAAP consistently applied, and such statements (copies of
which have been furnished to the Acquired Fund) present fairly, in all material
respects, the financial condition of the Acquiring Fund as of such date in
accordance with GAAP, and there are no known contingent liabilities of the
Acquiring Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(i) Since December 31, 2006, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquired Fund. For purposes of this subparagraph (i), a
decline in net asset value per share of the Acquiring Fund's shares due to
declines in market values of securities held by the Acquiring Fund, the
discharge of the Acquiring Fund's liabilities, or the redemption of the
Acquiring Fund's shares by shareholders of the Acquiring Fund, shall not
constitute a material adverse change;
(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquiring Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(k) For each taxable year of its operation (including the taxable year that
includes the Closing Date), the Acquiring Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been eligible to (or will be eligible to) and has
computed (or will compute) its Federal income tax under Section 852 of the
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Code, and has distributed all of its investment company taxable income and net
capital gain (as defined in the Code) for periods ending prior to the Closing
Date;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Acquiring Fund and have been offered and sold in every
state and the District of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws.
The Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquiring Fund Shares, nor is there
outstanding any security convertible into any Acquiring Fund Shares;
(m) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action, if any,
on the part of the Board of Directors of ICAP Funds, Inc., on behalf of the
Acquiring Fund, and this Agreement will constitute a valid and binding
obligation of the Acquiring Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) The Class A, Class C and Class I Acquiring Fund Shares to be issued and
delivered to the Acquired Fund, for the account of the Acquired Fund
Shareholders, pursuant to the terms of this Agreement, will on the Closing Date
have been duly authorized and, when so issued and delivered, will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and non-assessable
by the Acquiring Fund; and
(o) The information to be furnished by the Acquiring Fund for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) The Proxy Statement to be included in the Registration Statement (and
any amendment or supplement thereto), insofar as it relates to the Acquiring
Fund and the Acquiring Fund Shares, will, from the effective date of the
Registration Statement through the date of the meeting of shareholders of the
Acquired Fund contemplated therein and on the Closing Date (i) not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading,
provided, however, that the representations and warranties of this subparagraph
(p) shall not apply to statements in or omissions from the Proxy Statement and
the Registration Statement made in reliance upon and in conformity with
information that was furnished by the Acquired Fund for use therein, and (ii)
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.
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5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 The Acquiring Fund and the Acquired Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions, and any other distribution
that may be advisable.
5.2 Eclipse Funds Inc. will call a meeting of the shareholders of the
Acquired Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Class A, Class C and Class I
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof, other than in accordance with the
terms of this Agreement.
5.4 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.6. The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of the Proxy Statement (referred to in
paragraph 4.1(p)) to be included in a Registration Statement on Form N-14
("Registration Statement"), in compliance with the 1933 Act, the 1934 Act and
the 1940 Act, in connection with the meeting of the shareholders of the Acquired
Fund to consider approval of this Agreement and the transactions contemplated
herein.
5.7. As soon as is reasonably practicable after the Closing, the Acquired
Fund will make a liquidating distribution to its respective shareholders
consisting of the Class A, Class C and Class I Acquiring Fund Shares received at
the Closing.
5.8 The Acquiring Fund and the Acquired Fund shall each use their
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.9 Eclipse Funds Inc., on behalf of the Acquired Fund, covenants that it
will, from time to time, as and when reasonably requested by the Acquiring Fund,
execute and deliver or cause to be executed and delivered all such assignments
and other instruments, and will take or cause to be taken such further action as
ICAP Funds, Inc. on behalf of the Acquiring Fund, may reasonably deem necessary
or desirable in order to vest in and confirm (a) Eclipse Funds Inc.'s, on behalf
of the Acquired Fund, title to and possession of the Acquiring Fund Shares to be
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delivered hereunder, and (b) ICAP Funds Inc.'s, on behalf of the Acquiring Fund,
title to and possession of all the Assets and otherwise to carry out the intent
and purpose of this Agreement.
5.10 The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of Eclipse Funds Inc., on behalf of the Acquired Fund, to
consummate the transactions provided for herein shall be subject, at Eclipse
Funds Inc.'s election, to the performance by ICAP Funds Inc., on behalf of the
Acquiring Fund, of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of ICAP Funds Inc., on behalf of
the Acquiring Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
6.2. ICAP Funds Inc., on behalf of the Acquiring Fund, shall have delivered
to the Acquired Fund a certificate executed in the name of the Acquiring Fund by
its President or Vice President and its Treasurer or Assistant Treasurer, in a
form reasonably satisfactory to Eclipse Funds Inc., and dated as of the Closing
Date, to the effect that the representations and warranties of ICAP Funds, Inc.,
on behalf of the Acquiring Fund, made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as Eclipse Funds
Inc. shall reasonably request;
6.3. ICAP Funds, Inc., on behalf of the Acquiring Fund, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by ICAP Funds, Inc., on
behalf of the Acquiring Fund, on or before the Closing Date; and
6.4. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Class A, Class C and Class I Acquiring Fund Shares
to be issued in connection with the Reorganization after such number has been
calculated in accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of ICAP Funds, Inc., on behalf of the Acquiring Fund, to
complete the transactions provided for herein shall be subject, at ICAP Funds,
Inc.'s election, to the performance by Eclipse Funds Inc., on behalf of the
Acquired Fund, of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
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7.1. All representations and warranties of Eclipse Funds Inc., on behalf of
the Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
7.2. Eclipse Funds Inc. shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's Assets and liabilities, as of the Closing Date,
certified by the Treasurer of Eclipse Funds Inc.;
7.3. Eclipse Funds Inc., on behalf of the Acquired Fund, shall have
delivered to the Acquiring Fund a certificate executed in the name of the
Acquired Fund by its President or Vice President and its Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to the Acquiring Fund and dated as
of the Closing Date, to the effect that the representations and warranties of
Eclipse Funds Inc., on behalf of the Acquired Fund, made in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as ICAP Funds, Inc. shall reasonably request;
7.4 Eclipse Funds Inc., on behalf of the Acquired Fund, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by Eclipse Funds Inc., on
behalf of the Acquired Fund, on or before the Closing Date;
7.5 The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Class A, Class C and Class I Acquiring Fund Shares
to be issued in connection with the Reorganization after such number has been
calculated in accordance with paragraph 1.1; and
7.6 The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of their investment company taxable income and all of their net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing Date; and (ii) any undistributed investment
company taxable income and net realized capital gains from any period to the
extent not otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND
THE ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to Eclipse Funds Inc., on behalf of the
Acquired Fund, or ICAP Funds, Inc., on behalf of the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of Eclipse Funds Inc.'s Articles
of Incorporation and By-Laws, applicable
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Maryland law and the 1940 Act, and certified copies of the resolutions
evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, the Eclipse Funds Inc. and ICAP
Funds, Inc., on behalf of either the Acquired Fund or the Acquiring Fund,
respectively, may not waive the conditions set forth in this paragraph 8.1;
8.2 On the Closing Date no action, suit or other proceeding shall be
pending or, to Eclipse Funds Inc.'s or ICAP Funds, Inc.'s knowledge, threatened
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;
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
Eclipse Funds Inc. and ICAP Funds, Inc. to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions;
8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof 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; and
8.5 The parties shall have received the opinion of counsel to Eclipse Funds
Inc., on behalf of the Acquired Fund, substantially to the effect that, based
upon certain facts, assumptions, and representations, the transaction
contemplated by this Agreement shall constitute a tax-free reorganization for
Federal income tax purposes. The delivery of such opinion is conditioned upon
receipt by counsel to Eclipse Funds Inc. of representations it shall request of
Eclipse Funds Inc. Notwithstanding anything herein to the contrary, Eclipse
Funds Inc. and ICAP Funds, Inc., on behalf of either the Acquired Fund or the
Acquiring Fund, respectively, may not waive the condition set forth in this
paragraph 8.5.
9. INDEMNIFICATION
9.1 ICAP Funds, Inc., out of the Acquiring Fund's assets and property,
agrees to indemnify and hold harmless the Acquired Fund from and against any and
all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which the Acquired Fund may become subject, insofar as such
loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Acquiring Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
9.2 Eclipse Funds Inc., out of the Acquired Fund's assets and property,
agrees to indemnify and hold harmless the Acquiring Fund from and against any
and all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which the Acquiring Fund may become subject,
14
insofar as such loss, claim, damage, liability or expense (or actions with
respect thereto) arises out of or is based on any breach by the Acquired Fund of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
10. BROKERAGE FEES AND EXPENSES
10.1 The Acquiring Fund and the Acquired Fund, represent and warrant to
each other that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
10.2 The expenses relating to the proposed Reorganization will be borne
equally by New York Life Investment Management LLC and the Acquired Fund. No
such expenses shall be borne by the Acquiring Fund, except for brokerage fees
and expenses incurred in connection with the Reorganization. The costs of the
Reorganization shall include, but not be limited to, costs associated with
obtaining any necessary order of exemption from the 1940 Act, if any,
preparation of the Registration Statement, printing and distributing the Proxy
Statement, legal fees, accounting fees, securities registration fees, and
expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by another person of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 ICAP Funds, Inc. and Eclipse Funds Inc. agree that they have not made
any representation, warranty or covenant, on behalf of either the Acquiring Fund
or the Acquired Fund, respectively, not set forth herein and that this Agreement
constitutes the entire agreement between the parties.
11.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of the Acquired
Fund and Acquiring Fund in Sections 9.1 and 9.2 shall survive the Closing.
12. TERMINATION
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned by resolution of the Board of Directors of Eclipse Funds Inc.
or ICAP Funds, Inc., on behalf of either the Acquired Fund or the Acquiring
Fund, respectively, at any time prior to the Closing Date, if circumstances
should develop that, in the opinion of the Board, make proceeding with the
Agreement inadvisable.
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13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be deemed necessary or advisable by the authorized officers of Eclipse Funds
Inc. or ICAP Funds, Inc., on behalf of either the Acquired Fund or the Acquiring
Fund, respectively; provided, however, that following the meeting of the
shareholders of the Acquired Fund called by Eclipse Funds Inc., pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of Class A, Class C and Class
I Acquiring Fund Shares to be issued to the Class A /Class B, Class C and Class
I Acquired Fund Shareholders, respectively, under this Agreement to the
detriment of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, electronic delivery (i.e., e-mail) personal service or prepaid or
certified mail addressed to the Funds, 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, X.X.
00000, Attn: Xxxxxxxxxx X. X. Xxxxxxxx, in each case with a copy to Dechert LLP,
0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attn: Sander M. Bieber.
15. HEADINGS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to its principles of conflicts
of laws.
15.3 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
Except as expressly provided otherwise in this Plan, NYLIM and the Acquired
Fund will equally pay or cause to be paid all out-of-pocket fees and expenses
incurred in connection with the transactions contemplated under this Plan,
including, but not limited to, accountants' fees, legal fees, registration fees,
printing expenses, transfer taxes (if any) and the fees of banks and transfer
agents.
* * *
16
IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
executed as of the 26th day of July, 2007.
ICAP Funds, Inc. Eclipse Funds Inc.
on behalf of the Acquiring Fund: on behalf of the Acquired Fund:
MainStay ICAP Equity Fund MainStay All Cap Value Fund
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------------- ---------------------------------
Xxxxxxx X. Xxxxxx Xxxx X. Xxxxxxxxxx
President Treasurer and Principal Financial
and Accounting Officer
New York Life Investment Management LLC agrees to the provisions set forth in
the last paragraph of this Plan.
New York Life Investment Management LLC
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive
Officer
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