AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF MARCH 10, 2000 IS AMONG
XXXXXXX NATIONAL MUNICIPAL INTERMEDIATE FUND ("NATIONAL MUNICIPAL FUND"),
XXXXXXX MARYLAND MUNICIPAL INTERMEDIATE FUND AND XXXXXXX VIRGINIA MUNICIPAL
INTERMEDIATE FUND (TOGETHER, THE "STATE MUNICIPAL FUNDS"). THE NATIONAL
MUNICIPAL FUND AND THE STATE MUNICIPAL FUNDS ARE SERIES OF THE XXXXXXX MUNICIPAL
FUND, INC. ("XXXXXXX").
IN CONSIDERATION OF THE MUTUAL PROMISES CONTAINED IN THIS AGREEMENT, THE PARTIES
AGREE AS FOLLOWS:
1. SHAREHOLDER APPROVAL
APPROVAL BY SHAREHOLDERS. A MEETING OF THE SHAREHOLDERS OF THE STATE MUNICIPAL
FUNDS SHALL BE CALLED AND HELD FOR THE PURPOSE OF ACTING ON AND AUTHORIZING THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT AND PLAN OF REORGANIZATION (THE
"AGREEMENT" OR "PLAN"). NATIONAL MUNICIPAL FUND SHALL FURNISH TO THE STATE
MUNICIPAL FUNDS SUCH DATA AND INFORMATION AS SHALL BE REASONABLY REQUESTED BY
THE STATE MUNICIPAL FUNDS FOR INCLUSION IN THE INFORMATION TO BE FURNISHED TO
THEIR SHAREHOLDERS IN CONNECTION WITH THE MEETING.
2. REORGANIZATION
(A) PLAN OF REORGANIZATION. THE STATE MUNICIPAL FUNDS WILL CONVEY, TRANSFER,
AND DELIVER TO NATIONAL MUNICIPAL FUND ALL OF THE THEN-EXISTING ASSETS OF THE
STATE MUNICIPAL FUNDS AT THE CLOSING PROVIDED FOR IN SECTION 2(B) OF THIS
AGREEMENT (THE "CLOSING"). IN CONSIDERATION THEREOF, NATIONAL MUNICIPAL FUND
AGREES AT THE CLOSING:
(I) TO ASSUME AND PAY, TO THE EXTENT THAT THEY EXIST ON OR AFTER THE
EFFECTIVE TIME OF THE REORGANIZATION (AS DEFINED IN SECTION 2(B)), ALL OF THE
STATE MUNICIPAL FUNDS' OBLIGATIONS AND LIABILITIES, WHETHER ABSOLUTE, ACCRUED,
CONTINGENT, OR OTHERWISE; AND
(II) TO DELIVER TO THE STATE MUNICIPAL FUNDS IN EXCHANGE FOR THE ASSETS THE
NUMBER OF FULL AND FRACTIONAL SHARES OF COMMON STOCK OF NATIONAL MUNICIPAL FUND
("NATIONAL MUNICIPAL FUND SHARES") TO BE DETERMINED AS FOLLOWS: IN ACCORDANCE
WITH SECTION 3 OF THIS AGREEMENT, THE NUMBER OF SHARES SHALL BE DETERMINED BY
DIVIDING THE PER SHARE NET ASSET VALUE OF THE STATE MUNICIPAL FUNDS SHARES
(ROUNDED TO THE NEAREST MILLION) BY THE NET ASSET VALUE PER SHARE OF NATIONAL
MUNICIPAL FUND (ROUNDED TO THE NEAREST MILLION) AND MULTIPLYING THE QUOTIENT BY
THE NUMBER OF OUTSTANDING SHARES OF THE STATE MUNICIPAL FUNDS AS OF THE CLOSE OF
BUSINESS ON THE CLOSING DATE. IT IS EXPRESSLY AGREED THAT THERE WILL BE NO SALES
CHARGE TO STATE MUNICIPAL FUNDS, OR TO ANY OF THE SHAREHOLDERS OF THE STATE
MUNICIPAL FUNDS UPON DISTRIBUTION OF NATIONAL MUNICIPAL FUND SHARES TO THEM.
(B) CLOSING AND EFFECTIVE TIME OF THE REORGANIZATION. THE CLOSING SHALL
OCCUR AT THE EFFECTIVE TIME OF THE REORGANIZATION, WHICH SHALL BE EITHER:
(I) THE LATER OF RECEIPT OF ALL NECESSARY REGULATORY APPROVALS AND THE FINAL
ADJOURNMENT OF THE MEETING OF SHAREHOLDERS OF THE STATE MUNICIPAL FUNDS AT WHICH
THE PLAN WILL BE CONSIDERED, OR
(II) SUCH LATER DATE AS THE PARTIES MAY MUTUALLY AGREE.
3. VALUATION OF NET ASSETS
(A) THE VALUE OF STATE MUNICIPAL FUNDS' NET ASSETS TO BE TRANSFERRED TO
NATIONAL MUNICIPAL FUND UNDER THIS AGREEMENT SHALL BE COMPUTED AS OF THE CLOSE
OF BUSINESS ON THE BUSINESS DAY IMMEDIATELY PRECEDING THE CLOSING DATE
(HEREINAFTER THE "VALUATION DATE") USING THE VALUATION PROCEDURES AS SET FORTH
IN NATIONAL MUNICIPAL FUND 'S PROSPECTUS.
(B) THE NET ASSET VALUE PER SHARE OF NATIONAL MUNICIPAL FUND SHARES FOR
PURPOSES OF SECTION 2 OF THIS AGREEMENT SHALL BE DETERMINED AS OF THE CLOSE OF
BUSINESS ON THE VALUATION DATE BY NATIONAL MUNICIPAL FUND 'S CONTROLLER USING
THE SAME VALUATION PROCEDURES AS SET FORTH IN NATIONAL MUNICIPAL FUND 'S
PROSPECTUS.
(C) A COPY OF THE COMPUTATION SHOWING IN REASONABLE DETAIL THE VALUATION OF
STATE MUNICIPAL FUNDS' NET ASSETS TO BE TRANSFERRED TO NATIONAL MUNICIPAL FUND
PURSUANT TO PARAGRAPH 2 OF THIS AGREEMENT, CERTIFIED BY THE CONTROLLER OF STATE
MUNICIPAL FUNDS, SHALL BE FURNISHED BY THE STATE MUNICIPAL FUNDS TO NATIONAL
MUNICIPAL FUND AT THE CLOSING. A COPY OF THE COMPUTATION SHOWING IN REASONABLE
DETAIL THE DETERMINATION OF THE NET ASSET VALUE PER SHARE OF NATIONAL MUNICIPAL
FUND SHARES PURSUANT TO PARAGRAPH 2 OF THIS AGREEMENT, CERTIFIED BY THE
CONTROLLER OF NATIONAL MUNICIPAL FUND, SHALL BE FURNISHED BY NATIONAL MUNICIPAL
FUND TO THE STATE MUNICIPAL FUNDS AT THE CLOSING.
4. LIQUIDATION AND DISSOLUTION
(A) AS SOON AS PRACTICABLE AFTER THE CLOSING DATE, THE STATE MUNICIPAL FUNDS
WILL DISTRIBUTE PRO RATA TO THE STATE MUNICIPAL FUNDS' SHAREHOLDERS OF RECORD AS
OF THE CLOSE OF BUSINESS ON THE CLOSING DATE THE SHARES OF NATIONAL MUNICIPAL
FUND RECEIVED BY THE STATE MUNICIPAL FUNDS PURSUANT TO THIS SECTION. SUCH
LIQUIDATION AND DISTRIBUTION WILL BE ACCOMPANIED BY THE ESTABLISHMENT OF
SHAREHOLDER ACCOUNTS ON THE SHARE RECORDS OF NATIONAL MUNICIPAL FUND IN THE
NAMES OF EACH SUCH SHAREHOLDER OF STATE MUNICIPAL FUNDS, REPRESENTING THE
RESPECTIVE PRO RATA NUMBER OF FULL SHARES AND FRACTIONAL INTERESTS IN SHARES OF
NATIONAL MUNICIPAL FUND DUE TO EACH. NO SUCH SHAREHOLDER ACCOUNTS SHALL BE
ESTABLISHED BY NATIONAL MUNICIPAL FUND OR ITS TRANSFER AGENT FOR NATIONAL
MUNICIPAL FUND EXCEPT PURSUANT TO WRITTEN INSTRUCTIONS FROM STATE MUNICIPAL
FUNDS, AND THE STATE MUNICIPAL FUNDS AGREE TO PROVIDE ON THE CLOSING DATE
INSTRUCTIONS TO TRANSFER TO A SHAREHOLDER ACCOUNT FOR EACH FORMER THE STATE
MUNICIPAL FUNDS SHAREHOLDER A PRO RATA SHARE OF THE NUMBER OF SHARES OF NATIONAL
MUNICIPAL FUND RECEIVED PURSUANT TO SECTION 2(A) OF THIS AGREEMENT.
(B) PROMPTLY AFTER THE DISTRIBUTION DESCRIBED IN SECTION 4(A) ABOVE,
APPROPRIATE NOTIFICATION WILL BE MAILED BY NATIONAL MUNICIPAL FUND OR ITS
TRANSFER AGENT TO EACH SHAREHOLDER OF THE STATE MUNICIPAL FUNDS RECEIVING SUCH
DISTRIBUTION OF SHARES OF NATIONAL MUNICIPAL FUND INFORMING SUCH SHAREHOLDER OF
THE NUMBER OF SUCH SHARES DISTRIBUTED TO SUCH SHAREHOLDER AND CONFIRMING THE
REGISTRATION THEREOF IN SUCH SHAREHOLDER'S NAME.
(C) FOLLOWING THE CLOSING DATE AND UNTIL SURRENDERED, EACH OUTSTANDING SHARE
CERTIFICATE REPRESENTING SHARES OF THE STATE MUNICIPAL FUNDS SHALL BE DEEMED FOR
ALL PURPOSES TO EVIDENCE OWNERSHIP OF SHARES OF NATIONAL MUNICIPAL FUND THAT THE
HOLDER IS ENTITLED TO RECEIVE IN EXCHANGE FOR THE CERTIFICATE. THE SHARES OF
NATIONAL MUNICIPAL FUND THAT THE HOLDER IS ENTITLED TO RECEIVE WITH RESPECT TO
STATE MUNICIPAL FUNDS' SHARE CERTIFICATES NOT YET SURRENDERED WILL BE HELD BY
NATIONAL MUNICIPAL FUND 'S TRANSFER AGENT ON BEHALF OF THE SHAREHOLDER, BUT MAY
NOT BE TRANSFERRED OR REDEEMED UNTIL SURRENDER OF STATE MUNICIPAL FUNDS' SHARE
CERTIFICATES IN PROPER FORM FOR TRANSFER TO NATIONAL MUNICIPAL FUND 'S TRANSFER
AGENT OR, IN LIEU THEREOF, THE POSTING OF A LOST CERTIFICATE BOND OR OTHER
SURETY INSTRUMENT DEEMED ACCEPTABLE TO NATIONAL MUNICIPAL FUND 'S TRANSFER
AGENT. ALL OF NATIONAL MUNICIPAL FUND 'S DISTRIBUTIONS ATTRIBUTABLE TO THE
SHARES REPRESENTED BY THE SHARE CERTIFICATES OF THE STATE MUNICIPAL FUNDS
RETAINED BY SHAREHOLDERS WILL BE PAID TO THE SHAREHOLDER IN CASH OR INVESTED IN
ADDITIONAL SHARES OF NATIONAL MUNICIPAL FUND AT THE NET ASSET VALUE IN EFFECT ON
THE RESPECTIVE PAYMENT DATES IN ACCORDANCE WITH INSTRUCTIONS PREVIOUSLY GIVEN BY
THE SHAREHOLDER TO STATE MUNICIPAL FUNDS' TRANSFER AGENT.
SHARE CERTIFICATES REPRESENTING HOLDINGS OF SHARES OF NATIONAL MUNICIPAL
FUND SHALL NOT BE ISSUED UNLESS REQUESTED BY THE SHAREHOLDER AND, IF SUCH A
REQUEST IS MADE, SHARE CERTIFICATES OF NATIONAL MUNICIPAL FUND WILL BE ISSUED
ONLY FOR FULL SHARES OF NATIONAL MUNICIPAL FUND AND ANY FRACTIONAL INTERESTS IN
SHARES SHALL BE CREDITED IN THE SHAREHOLDER'S ACCOUNT WITH NATIONAL MUNICIPAL
FUND.
(D) AS PROMPTLY AS IS PRACTICABLE AFTER THE LIQUIDATION OF STATE MUNICIPAL
FUNDS, AND IN NO EVENT LATER THAN 12 MONTHS FROM THE DATE OF THIS AGREEMENT, THE
STATE MUNICIPAL FUNDS SHALL BE TERMINATED PURSUANT TO THE PROVISIONS OF THE PLAN
AND XXXXXXX'X ARTICLES OF INCORPORATION.
(E) IMMEDIATELY AFTER THE CLOSING DATE, THE SHARE TRANSFER BOOKS OF THE
STATE MUNICIPAL FUNDS SHALL BE CLOSED AND NO TRANSFER OF SHARES SHALL THEREAFTER
BE MADE ON THOSE BOOKS.
5. ARTICLES OF INCORPORATION AND BY-LAWS
(A) ARTICLES OF INCORPORATION. THE ARTICLES OF INCORPORATION OF XXXXXXX,
WHICH GOVERNS ITS SERIES NATIONAL MUNICIPAL FUND, AS IN EFFECT IMMEDIATELY PRIOR
TO THE EFFECTIVE TIME OF THE REORGANIZATION SHALL CONTINUE TO BE THE ARTICLES OF
INCORPORATION UNTIL AMENDED AS PROVIDED BY LAW.
(B) BY-LAWS. THE BY-LAWS OF XXXXXXX, WHICH GOVERN ITS SERIES NATIONAL
MUNICIPAL FUND, IN EFFECT AT THE EFFECTIVE TIME OF THE REORGANIZATION SHALL
CONTINUE TO BE THE BY-LAWS UNTIL THE SAME SHALL THEREAFTER BE ALTERED, AMENDED,
OR REPEALED IN ACCORDANCE WITH THE TRUST INDENTURE OR SAID BY-LAWS.
6. REPRESENTATIONS AND WARRANTIES OF NATIONAL MUNICIPAL FUND
(A) ORGANIZATION, EXISTENCE, ETC. NATIONAL MUNICIPAL FUND IS A DULY
ORGANIZED SERIES OF XXXXXXX, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF THE STATE OF MARYLAND, AND HAS THE POWER TO CARRY ON ITS BUSINESS AS IT
IS NOW BEING CONDUCTED. CURRENTLY, NATIONAL MUNICIPAL FUND IS NOT QUALIFIED TO
DO BUSINESS AS A FOREIGN CORPORATION UNDER THE LAWS OF ANY JURISDICTION.
NATIONAL MUNICIPAL FUND HAS ALL NECESSARY FEDERAL, STATE AND LOCAL AUTHORIZATION
TO OWN ALL OF ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS NOW
BEING CONDUCTED.
(B) REGISTRATION AS INVESTMENT COMPANY. XXXXXXX, OF WHICH NATIONAL MUNICIPAL
FUND IS A SERIES, IS REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE
"ACT") AS AN OPEN-END NONDIVERSIFIED MANAGEMENT INVESTMENT COMPANY. ITS
REGISTRATION HAS NOT BEEN REVOKED OR RESCINDED AND IS IN FULL FORCE AND EFFECT.
(C) CAPITALIZATION. NATIONAL MUNICIPAL FUND HAS AN UNLIMITED NUMBER OF
SHARES OF BENEFICIAL INTEREST, NO PAR VALUE, OF WHICH AS OF MARCH 31, 2000, [#]
SHARES WERE OUTSTANDING, AND NO SHARES WERE HELD IN THE TREASURY OF NATIONAL
MUNICIPAL FUND. ALL OF THE OUTSTANDING SHARES OF NATIONAL MUNICIPAL FUND HAVE
BEEN DULY AUTHORIZED AND ARE VALIDLY ISSUED, FULLY PAID, AND NON-ASSESSABLE.
SINCE NATIONAL MUNICIPAL FUND IS A SERIES OF AN OPEN-END INVESTMENT COMPANY
ENGAGED IN THE CONTINUOUS OFFERING AND REDEMPTION OF ITS SHARES, THE NUMBER OF
OUTSTANDING SHARES MAY CHANGE PRIOR TO THE EFFECTIVE TIME OF THE REORGANIZATION.
(D) FINANCIAL STATEMENTS. THE FINANCIAL STATEMENTS OF NATIONAL MUNICIPAL
FUND FOR THE YEAR ENDED DECEMBER 31, 1999 ("NATIONAL MUNICIPAL FUND FINANCIAL
STATEMENTS"), PREVIOUSLY DELIVERED TO STATE MUNICIPAL FUNDS, FAIRLY PRESENT THE
FINANCIAL POSITION OF NATIONAL MUNICIPAL FUND AS OF DECEMBER 31, 1999, AND THE
RESULTS OF ITS OPERATIONS AND CHANGES IN ITS NET ASSETS FOR THE YEAR THEN ENDED.
(E) SHARES TO BE ISSUED UPON REORGANIZATION. NATIONAL MUNICIPAL FUND SHARES
TO BE ISSUED IN CONNECTION WITH THE REORGANIZATION HAVE BEEN DULY AUTHORIZED AND
UPON CONSUMMATION OF THE REORGANIZATION WILL BE VALIDLY ISSUED, FULLY PAID AND
NON-ASSESSABLE.
(F) AUTHORITY RELATIVE TO THIS AGREEMENT. XXXXXXX HAS THE POWER TO ENTER
INTO THE PLAN ON BEHALF OF ITS SERIES NATIONAL MUNICIPAL FUND AND TO CARRY OUT
ITS OBLIGATIONS UNDER THIS AGREEMENT. THE EXECUTION AND DELIVERY OF THE PLAN AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HAVE BEEN DULY AUTHORIZED BY
THE BOARD OF DIRECTORS OF XXXXXXX AND NO OTHER PROCEEDINGS BY XXXXXXX ARE
NECESSARY TO AUTHORIZE ITS OFFICERS TO EFFECTUATE THE PLAN AND THE TRANSACTIONS
CONTEMPLATED. NATIONAL MUNICIPAL FUND IS NOT A PARTY TO OR OBLIGATED UNDER ANY
CHARTER, BY-LAW, INDENTURE, OR CONTRACT PROVISION OR ANY OTHER COMMITMENT OR
OBLIGATION, OR SUBJECT TO ANY ORDER OR DECREE WHICH WOULD BE VIOLATED BY ITS
EXECUTING AND CARRYING OUT THE PLAN.
(G) LIABILITIES. THERE ARE NO LIABILITIES OF XXXXXXX ON BEHALF OF ITS SERIES
NATIONAL MUNICIPAL FUND, WHETHER OR NOT DETERMINED OR DETERMINABLE, OTHER THAN
LIABILITIES DISCLOSED OR PROVIDED FOR IN NATIONAL MUNICIPAL FUND FINANCIAL
STATEMENTS AND LIABILITIES INCURRED IN THE ORDINARY COURSE OF BUSINESS
SUBSEQUENT TO DECEMBER 31, 1999, OR OTHERWISE PREVIOUSLY DISCLOSED TO STATE
MUNICIPAL FUNDS, NONE OF WHICH HAS BEEN MATERIALLY ADVERSE TO THE BUSINESS,
ASSETS OR RESULTS OF OPERATIONS OF NATIONAL MUNICIPAL FUND.
(H) LITIGATION. TO THE KNOWLEDGE OF NATIONAL MUNICIPAL FUND THERE ARE NO
CLAIMS, ACTIONS, SUITS, OR PROCEEDINGS, PENDING OR THREATENED, WHICH WOULD
ADVERSELY AFFECT NATIONAL MUNICIPAL FUND OR ITS ASSETS OR BUSINESS, OR WHICH
WOULD PREVENT OR HINDER CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
(I) CONTRACTS. EXCEPT FOR CONTRACTS AND AGREEMENTS PREVIOUSLY DISCLOSED TO
THE STATE MUNICIPAL FUNDS UNDER WHICH NO DEFAULT EXISTS, NATIONAL MUNICIPAL FUND
IS NOT A PARTY TO OR SUBJECT TO ANY MATERIAL CONTRACT, DEBT INSTRUMENT, PLAN,
LEASE, FRANCHISE, LICENSE, OR PERMIT OF ANY KIND OR NATURE WHATSOEVER.
(J) TAXES. THE FEDERAL INCOME TAX RETURNS OF NATIONAL MUNICIPAL FUND HAVE
BEEN FILED FOR ALL TAXABLE YEARS TO AND INCLUDING DECEMBER 31, 1999, AND ALL
TAXES PAYABLE PURSUANT TO SUCH RETURNS HAVE BEEN PAID. NATIONAL MUNICIPAL FUND
HAS QUALIFIED AS A REGULATED INVESTMENT COMPANY UNDER THE INTERNAL REVENUE CODE
IN RESPECT TO EACH TAXABLE YEAR OF NATIONAL MUNICIPAL FUND SINCE COMMENCEMENT OF
ITS OPERATIONS.
(K) REGISTRATION STATEMENT. NATIONAL MUNICIPAL FUND SHALL HAVE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 ("SECURITIES ACT") RELATING TO THE
SHARES OF CAPITAL STOCK OF NATIONAL MUNICIPAL FUND ISSUABLE UNDER THIS
AGREEMENT. AT THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE, THE
REGISTRATION STATEMENT:
(I) WILL COMPLY IN ALL MATERIAL RESPECTS WITH THE PROVISIONS OF THE
SECURITIES ACT AND THE RULES AND REGULATIONS OF THE COMMISSION THEREUNDER (THE
"REGULATIONS"), AND
(II) WILL NOT CONTAIN AN UNTRUE STATEMENT OF MATERIAL FACT OR OMIT TO STATE
A MATERIAL ACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING.
FURTHER, AT THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE, AT THE TIME
OF THE SHAREHOLDERS' MEETING REFERRED TO IN SECTION 1, AND AT THE EFFECTIVE TIME
OF THE REORGANIZATION, THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
INCLUDED THEREIN, AS AMENDED OR SUPPLEMENTED BY ANY AMENDMENTS OR SUPPLEMENTS
FILED BY NATIONAL MUNICIPAL FUND, WILL NOT CONTAIN AN UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS
THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING; PROVIDED, HOWEVER, THAT NONE OF THE REPRESENTATIONS AND WARRANTIES
IN THIS SUBSECTION SHALL APPLY TO STATEMENTS IN OR OMISSIONS FROM THE
REGISTRATION STATEMENT OR PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
MADE IN RELIANCE UPON AND IN CONFORMITY WITH INFORMATION FURNISHED BY THE STATE
MUNICIPAL FUNDS FOR USE IN THE REGISTRATION STATEMENT OR PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION AS PROVIDED IN SECTION 7(K).
7. REPRESENTATIONS AND WARRANTIES OF STATE MUNICIPAL FUNDS
(A) ORGANIZATION, EXISTENCE, ETC. THE STATE MUNICIPAL FUNDS ARE DULY
ORGANIZED SERIES OF XXXXXXX, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF THE STATE OF MARYLAND, AND HAVE POWER TO CARRY ON THEIR BUSINESS AS IT
IS NOW BEING CONDUCTED. CURRENTLY, THE STATE MUNICIPAL FUNDS ARE NOT QUALIFIED
TO DO BUSINESS AS A FOREIGN CORPORATION UNDER THE LAWS OF ANY JURISDICTION. THE
STATE MUNICIPAL FUNDS HAVE ALL NECESSARY FEDERAL, STATE AND LOCAL AUTHORIZATION
TO OWN ALL OF THEIR PROPERTIES AND ASSETS AND TO CARRY ON THEIR BUSINESS AS NOW
BEING CONDUCTED.
(B) REGISTRATION AS INVESTMENT COMPANY. XXXXXXX, OF WHICH THE STATE
MUNICIPAL FUNDS ARE SERIES, IS REGISTERED UNDER THE ACT AS AN OPEN-END
NONDIVERSIFIED MANAGEMENT INVESTMENT COMPANY. ITS REGISTRATION HAS NOT BEEN
REVOKED OR RESCINDED AND IS IN FULL FORCE AND EFFECT.
(C) CAPITALIZATION. THE STATE MUNICIPAL FUNDS HAVE AN UNLIMITED NUMBER OF
SHARES OF BENEFICIAL INTEREST, NO PAR VALUE, OF WHICH AS OF MARCH 31, 2000, [#]
SHARES WERE OUTSTANDING, AND NO SHARES WERE HELD IN THE TREASURY OF STATE
MUNICIPAL FUNDS. ALL OF THE OUTSTANDING SHARES OF THE STATE MUNICIPAL FUNDS HAVE
BEEN DULY AUTHORIZED AND ARE VALIDLY ISSUED, FULLY PAID, AND NON-ASSESSABLE.
SINCE THE STATE MUNICIPAL FUNDS ARE SERIES OF OPEN-END INVESTMENT COMPANIES
ENGAGED IN THE CONTINUOUS OFFERING AND REDEMPTION OF THEIR SHARES, THE NUMBER OF
OUTSTANDING SHARES OF THE STATE MUNICIPAL FUNDS MAY CHANGE PRIOR TO THE
EFFECTIVE DATE OF THE REORGANIZATION.
(D) FINANCIAL STATEMENTS. THE FINANCIAL STATEMENTS OF THE STATE MUNICIPAL
FUNDS FOR THE YEAR ENDED DECEMBER 31, 1999 ("THE STATE MUNICIPAL FUNDS FINANCIAL
STATEMENTS"), PREVIOUSLY DELIVERED TO NATIONAL MUNICIPAL FUND, FAIRLY PRESENT
THE FINANCIAL POSITION OF THE STATE MUNICIPAL FUNDS AS OF DECEMBER 31, 1999, AND
THE RESULTS OF THEIR OPERATIONS AND CHANGES IN THEIR NET ASSETS FOR THE YEAR
THEN ENDED.
(E) AUTHORITY RELATIVE TO THE PLAN. XXXXXXX HAS THE POWER TO ENTER INTO THE
PLAN ON BEHALF OF THE STATE MUNICIPAL FUNDS AND TO CARRY OUT THEIR OBLIGATIONS
UNDER THIS AGREEMENT. THE EXECUTION AND DELIVERY OF THE PLAN AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HAVE BEEN DULY AUTHORIZED BY THE
DIRECTORS OF XXXXXXX AND, EXCEPT FOR APPROVAL BY THE HOLDERS OF THEIR CAPITAL
STOCK, NO OTHER PROCEEDINGS BY XXXXXXX ARE NECESSARY TO AUTHORIZE THEIR OFFICERS
TO EFFECTUATE THE PLAN AND THE TRANSACTIONS CONTEMPLATED. THE STATE MUNICIPAL
FUNDS ARE NOT A PARTY TO OR OBLIGATED UNDER ANY CHARTER, BY-LAW, INDENTURE, OR
CONTRACT PROVISION OR ANY OTHER COMMITMENT OR OBLIGATION, OR SUBJECT TO ANY
ORDER OR DECREE, WHICH WOULD BE VIOLATED BY THEIR EXECUTING AND CARRYING OUT THE
PLAN.
(F) LIABILITIES. THERE ARE NO LIABILITIES OF THE STATE MUNICIPAL FUNDS
WHETHER OR NOT DETERMINED OR DETERMINABLE, OTHER THAN LIABILITIES DISCLOSED OR
PROVIDED FOR IN THE STATE MUNICIPAL FUNDS FINANCIAL STATEMENTS AND LIABILITIES
INCURRED IN THE ORDINARY COURSE OF BUSINESS SUBSEQUENT TO DECEMBER 31, 1999, OR
OTHERWISE PREVIOUSLY DISCLOSED TO NATIONAL MUNICIPAL FUND, NONE OF WHICH HAS
BEEN MATERIALLY ADVERSE TO THE BUSINESS, ASSETS, OR RESULTS OF OPERATIONS OF
STATE MUNICIPAL FUNDS.
(G) LITIGATION. TO THE KNOWLEDGE OF THE STATE MUNICIPAL FUNDS, THERE ARE NO
CLAIMS, ACTIONS, SUITS, OR PROCEEDINGS, PENDING OR THREATENED, WHICH WOULD
ADVERSELY AFFECT THE STATE MUNICIPAL FUNDS OR THEIR ASSETS OR BUSINESS, OR WHICH
WOULD PREVENT OR HINDER CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
(H) CONTRACTS. EXCEPT FOR CONTRACTS AND AGREEMENTS PREVIOUSLY DISCLOSED TO
NATIONAL MUNICIPAL FUND UNDER WHICH NO DEFAULT EXISTS, XXXXXXX, ON BEHALF OF THE
STATE MUNICIPAL FUNDS, IS NOT A PARTY TO OR SUBJECT TO ANY MATERIAL CONTRACT,
DEBT INSTRUMENT, PLAN, LEASE, FRANCHISE, LICENSE, OR PERMIT OF ANY KIND OR
NATURE WHATSOEVER.
(I) TAXES. THE FEDERAL INCOME TAX RETURNS OF THE STATE MUNICIPAL FUNDS HAVE
BEEN FILED FOR ALL TAXABLE YEARS TO AND INCLUDING THE TAXABLE YEAR ENDED
DECEMBER 31, 1999, AND ALL TAXES PAYABLE PURSUANT TO SUCH RETURNS HAVE BEEN
PAID. THE STATE MUNICIPAL FUNDS HAVE QUALIFIED AS A REGULATED INVESTMENT COMPANY
UNDER THE INTERNAL REVENUE CODE WITH RESPECT TO EACH PAST TAXABLE YEAR OF THE
STATE MUNICIPAL FUNDS SINCE COMMENCEMENT OF THEIR OPERATIONS.
(J) PORTFOLIO SECURITIES. ALL SECURITIES TO BE LISTED IN THE SCHEDULE OF
INVESTMENTS OF THE STATE MUNICIPAL FUNDS AS OF THE EFFECTIVE TIME OF THE
REORGANIZATION WILL BE OWNED BY XXXXXXX ON BEHALF OF THE STATE MUNICIPAL FUNDS
FREE AND CLEAR OF ANY LIENS, CLAIMS, CHARGES, OPTIONS, AND ENCUMBRANCES, EXCEPT
AS INDICATED IN THE SCHEDULE. EXCEPT AS SO INDICATED, NONE OF THE SECURITIES IS,
OR AFTER THE REORGANIZATION AS CONTEMPLATED BY THIS AGREEMENT WILL BE, SUBJECT
TO ANY LEGAL OR CONTRACTUAL RESTRICTIONS ON DISPOSITION (INCLUDING RESTRICTIONS
AS TO THE PUBLIC OFFERING OR SALE OF THE SECURITIES UNDER THE SECURITIES ACT),
AND ALL THE SECURITIES ARE OR WILL BE READILY MARKETABLE.
(K) REGISTRATION STATEMENT. THE STATE MUNICIPAL FUNDS WILL COOPERATE WITH
NATIONAL MUNICIPAL FUND IN CONNECTION WITH THE REGISTRATION STATEMENT REFERRED
TO IN SECTION 6(K) OF THIS AGREEMENT, AND WILL FURNISH TO NATIONAL MUNICIPAL
FUND THE INFORMATION RELATING TO THE STATE MUNICIPAL FUNDS REQUIRED BY THE
SECURITIES ACT AND ITS REGULATIONS TO BE SET FORTH IN THE REGISTRATION STATEMENT
(INCLUDING THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION). AT THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE, THE REGISTRATION STATEMENT,
INSOFAR AS IT RELATES TO STATE MUNICIPAL FUNDS:
(I) WILL COMPLY IN ALL MATERIAL RESPECTS WITH THE PROVISIONS OF THE SECURITIES
ACT AND ITS REGULATIONS, AND
(II) WILL NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A
MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING.
FURTHER, AT THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE, AT THE TIME
OF THE SHAREHOLDERS' MEETING REFERRED TO IN SECTION I AND AT THE EFFECTIVE TIME
OF THE REORGANIZATION, THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION,
AS AMENDED OR SUPPLEMENTED BY ANY AMENDMENTS OR SUPPLEMENTS FILED BY NATIONAL
MUNICIPAL FUND, INSOFAR AS IT RELATES TO STATE MUNICIPAL FUNDS, WILL NOT CONTAIN
AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT
NECESSARY TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES
UNDER WHICH THEY WERE MADE, NOT MISLEADING; PROVIDED, HOWEVER, THAT THE
REPRESENTATIONS AND WARRANTIES IN THIS SUBSECTION SHALL APPLY ONLY TO STATEMENTS
IN OR OMISSIONS FROM THE REGISTRATION STATEMENT OR PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION MADE IN RELIANCE UPON AND IN CONFORMITY WITH INFORMATION
FURNISHED BY THE STATE MUNICIPAL FUNDS FOR USE IN THE REGISTRATION STATEMENT OR
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION AS PROVIDED IN THIS SECTION
7(K).
8. CONDITIONS TO OBLIGATIONS OF STATE MUNICIPAL FUNDS
THE OBLIGATIONS OF THE STATE MUNICIPAL FUNDS UNDER THIS AGREEMENT WITH RESPECT
TO THE CONSUMMATION OF THE REORGANIZATION ARE SUBJECT TO THE SATISFACTION OF THE
FOLLOWING CONDITIONS:
(A) SHAREHOLDER APPROVAL. THE PLAN SHALL HAVE BEEN APPROVED BY THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF
CAPITAL STOCK OF STATE MUNICIPAL FUNDS.
(B) REPRESENTATIONS, WARRANTIES AND, AGREEMENTS. AS OF THE EFFECTIVE TIME OF
THE REORGANIZATION, NATIONAL MUNICIPAL FUND SHALL HAVE COMPLIED WITH EACH OF ITS
RESPONSIBILITIES UNDER THIS AGREEMENT, EACH OF THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT SHALL BE TRUE IN ALL MATERIAL RESPECTS,
AND THERE SHALL HAVE BEEN NO MATERIAL ADVERSE CHANGE IN THE FINANCIAL CONDITION,
RESULTS OF OPERATIONS, BUSINESS, PROPERTIES, OR ASSETS OF NATIONAL MUNICIPAL
FUND SINCE DECEMBER 31, 1999. AS OF THE EFFECTIVE TIME OF THE REORGANIZATION,
THE STATE MUNICIPAL FUNDS SHALL HAVE RECEIVED A CERTIFICATE FROM NATIONAL
MUNICIPAL FUND SATISFACTORY IN FORM AND SUBSTANCE TO THE STATE MUNICIPAL FUNDS
INDICATING THAT IT HAS MET THE TERMS STATED IN THIS SECTION.
(C) REGULATORY APPROVAL. THE REGISTRATION STATEMENT REFERRED TO IN SECTION
6(K) SHALL HAVE BEEN DECLARED EFFECTIVE BY THE COMMISSION AND NO STOP ORDERS
UNDER THE SECURITIES ACT PERTAINING THERETO SHALL HAVE BEEN ISSUED; ALL
NECESSARY ORDERS OF EXEMPTION UNDER THE ACT WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT SHALL HAVE BEEN GRANTED BY THE COMMISSION; AND
ALL APPROVALS, REGISTRATIONS, AND EXEMPTIONS UNDER FEDERAL AND STATE LAWS
CONSIDERED TO BE NECESSARY SHALL HAVE BEEN OBTAINED.
(D) TAX OPINION. THE STATE MUNICIPAL FUNDS SHALL HAVE RECEIVED THE OPINION
OF COUNSEL, DATED THE EFFECTIVE TIME OF THE REORGANIZATION, ADDRESSED TO AND IN
FORM AND SUBSTANCE SATISFACTORY TO STATE MUNICIPAL FUNDS, AS TO CERTAIN OF THE
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION UNDER THE INTERNAL REVENUE
CODE TO THE STATE MUNICIPAL FUNDS AND THEIR SHAREHOLDERS. FOR PURPOSES OF
RENDERING ITS OPINION, COUNSEL MAY RELY EXCLUSIVELY AND WITHOUT INDEPENDENT
VERIFICATION, AS TO FACTUAL MATTERS, ON THE STATEMENTS MADE IN THE PLAN, THE
PROXY STATEMENT WHICH WILL BE DISTRIBUTED TO THE SHAREHOLDERS OF THE STATE
MUNICIPAL FUNDS IN CONNECTION WITH THE REORGANIZATION, AND ON SUCH OTHER WRITTEN
REPRESENTATIONS AS THE STATE MUNICIPAL FUNDS AND NATIONAL MUNICIPAL FUND,
RESPECTIVELY, WILL HAVE VERIFIED AS OF THE EFFECTIVE TIME OF THE REORGANIZATION.
THE OPINION OF COUNSEL WILL BE TO THE EFFECT THAT, BASED ON THE FACTS AND
ASSUMPTIONS STATED THEREIN, FOR FEDERAL INCOME TAX PURPOSES:
(I) NEITHER THE STATE MUNICIPAL FUNDS NOR NATIONAL MUNICIPAL FUND WILL
RECOGNIZE ANY GAIN OR LOSS UPON THE TRANSFER OF THE ASSETS OF THE STATE
MUNICIPAL FUNDS TO AND THE ASSUMPTION OF THEIR LIABILITIES BY NATIONAL MUNICIPAL
FUND IN EXCHANGE FOR NATIONAL MUNICIPAL FUND SHARES AND UPON THE DISTRIBUTION
(WHETHER ACTUAL OR CONSTRUCTIVE) OF NATIONAL MUNICIPAL FUND SHARES TO ITS
SHAREHOLDERS IN EXCHANGE FOR THEIR SHARES OF CAPITAL STOCK OF STATE MUNICIPAL
FUNDS;
(II) THE SHAREHOLDERS OF THE STATE MUNICIPAL FUNDS WHO RECEIVE NATIONAL
MUNICIPAL FUND SHARES PURSUANT TO THE REORGANIZATION WILL NOT RECOGNIZE ANY GAIN
OR LOSS UPON THE EXCHANGE (WHETHER ACTUAL OR CONSTRUCTIVE) OF THEIR SHARES OF
CAPITAL STOCK OF THE STATE MUNICIPAL FUNDS FOR NATIONAL MUNICIPAL FUND SHARES
(INCLUDING ANY FRACTIONAL SHARE INTERESTS THEY ARE DEEMED TO HAVE RECEIVED)
PURSUANT TO THE REORGANIZATION;
(III) THE BASIS OF NATIONAL MUNICIPAL FUND SHARES RECEIVED BY STATE
MUNICIPAL FUNDS' SHAREHOLDERS WILL BE THE SAME AS THE BASIS OF THE SHARES OF
CAPITAL STOCK OF THE STATE MUNICIPAL FUNDS SURRENDERED IN THE EXCHANGE; AND
(IV) THE BASIS OF THE STATE MUNICIPAL FUNDS' ASSETS ACQUIRED BY NATIONAL
MUNICIPAL FUND WILL BE THE SAME AS THE BASIS OF SUCH ASSETS TO THE STATE
MUNICIPAL FUNDS IMMEDIATELY PRIOR TO THE REORGANIZATION.
9. CONDITIONS TO OBLIGATIONS OF NATIONAL MUNICIPAL FUND
THE OBLIGATIONS OF NATIONAL MUNICIPAL FUND UNDER THIS AGREEMENT WITH RESPECT TO
THE CONSUMMATION OF THE REORGANIZATION ARE SUBJECT TO THE SATISFACTION OF THE
FOLLOWING CONDITIONS:
(A) REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. AS OF THE EFFECTIVE TIME OF
THE REORGANIZATION, THE STATE MUNICIPAL FUNDS SHALL HAVE COMPLIED WITH EACH OF
THEIR OBLIGATIONS UNDER THIS AGREEMENT, EACH OF THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT SHALL BE TRUE IN ALL MATERIAL RESPECTS,
AND THERE SHALL HAVE BEEN NO MATERIAL ADVERSE CHANGE IN THE FINANCIAL CONDITION,
RESULTS OF OPERATIONS, BUSINESS, PROPERTIES OR ASSETS OF THE STATE MUNICIPAL
FUNDS SINCE DECEMBER 31, 1999. NATIONAL MUNICIPAL FUND SHALL HAVE RECEIVED A
CERTIFICATE FROM THE STATE MUNICIPAL FUNDS SATISFACTORY IN FORM AND SUBSTANCE TO
NATIONAL MUNICIPAL FUND INDICATING THAT THEY HAVE MET THE TERMS STATED IN THIS
SECTION.
(B) REGULATORY APPROVAL. ALL NECESSARY ORDERS OF EXEMPTION UNDER THE ACT
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL HAVE BEEN
GRANTED BY THE COMMISSION, AND ALL APPROVALS, REGISTRATIONS, AND EXEMPTIONS
UNDER STATE SECURITIES LAWS CONSIDERED TO BE NECESSARY SHALL HAVE BEEN OBTAINED.
(C) TAX OPINION. NATIONAL MUNICIPAL FUND SHALL HAVE RECEIVED THE OPINION OF
COUNSEL, DATED THE EFFECTIVE TIME OF THE REORGANIZATION, ADDRESSED TO AND IN
FORM AND SUBSTANCE SATISFACTORY TO NATIONAL MUNICIPAL FUND, AS TO CERTAIN OF THE
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION UNDER THE INTERNAL REVENUE
CODE TO THE STATE MUNICIPAL FUNDS AND THE SHAREHOLDERS OF STATE MUNICIPAL FUNDS.
FOR PURPOSES OF RENDERING ITS OPINION, COUNSEL MAY RELY EXCLUSIVELY AND WITHOUT
INDEPENDENT VERIFICATION, AS TO FACTUAL MATTERS, ON THE STATEMENTS MADE IN THE
PLAN, THE PROXY STATEMENT WHICH WILL BE DISTRIBUTED TO THE SHAREHOLDERS OF THE
STATE MUNICIPAL FUNDS IN CONNECTION WITH THE REORGANIZATION, AND ON SUCH OTHER
WRITTEN REPRESENTATIONS AS THE STATE MUNICIPAL FUNDS AND NATIONAL MUNICIPAL
FUND, RESPECTIVELY, WILL HAVE VERIFIED AS OF THE EFFECTIVE TIME OF THE
REORGANIZATION. THE OPINION OF COUNSEL WILL BE TO THE EFFECT THAT, BASED ON THE
FACTS AND ASSUMPTIONS STATED THEREIN, FOR FEDERAL INCOME TAX PURPOSES:
(I) NEITHER THE STATE MUNICIPAL FUNDS NOR NATIONAL MUNICIPAL FUND WILL
RECOGNIZE ANY GAIN OR LOSS UPON THE TRANSFER OF THE ASSETS OF THE STATE
MUNICIPAL FUNDS TO, AND THE ASSUMPTION OF THEIR LIABILITIES BY, NATIONAL
MUNICIPAL FUND IN EXCHANGE FOR NATIONAL MUNICIPAL FUND SHARES AND UPON THE
DISTRIBUTION (WHETHER ACTUAL OR CONSTRUCTIVE) OF NATIONAL MUNICIPAL FUND SHARES
TO ITS SHAREHOLDERS IN EXCHANGE FOR THEIR SHARES OF BENEFICIAL INTEREST OF STATE
MUNICIPAL FUNDS;
(II) THE SHAREHOLDERS OF THE STATE MUNICIPAL FUNDS WHO RECEIVE NATIONAL
MUNICIPAL FUND SHARES PURSUANT TO THE REORGANIZATION WILL NOT RECOGNIZE ANY GAIN
OR LOSS UPON THE EXCHANGE (WHETHER ACTUAL OR CONSTRUCTIVE) OF THEIR SHARES OF
CAPITAL STOCK OF THE STATE MUNICIPAL FUNDS FOR NATIONAL MUNICIPAL FUND SHARES
(INCLUDING ANY FRACTIONAL SHARE INTERESTS THEY ARE DEEMED TO HAVE RECEIVED)
PURSUANT TO THE REORGANIZATION;
(III) THE BASIS OF NATIONAL MUNICIPAL FUND SHARES RECEIVED BY STATE
MUNICIPAL FUNDS' SHAREHOLDERS WILL BE THE SAME AS THE BASIS OF THE SHARES OF
CAPITAL STOCK OF THE STATE MUNICIPAL FUNDS SURRENDERED IN THE EXCHANGE; AND
(IV) THE BASIS OF THE STATE MUNICIPAL FUNDS ASSETS ACQUIRED BY NATIONAL
MUNICIPAL FUND WILL BE THE SAME AS THE BASIS OF SUCH ASSETS TO THE STATE
MUNICIPAL FUNDS IMMEDIATELY PRIOR TO THE REORGANIZATION.
10. AMENDMENTS, TERMINATIONS, NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS
(A) THE PARTIES HERETO MAY, BY AGREEMENT IN WRITING AUTHORIZED BY THE BOARD
OF DIRECTORS OF XXXXXXX, AMEND THE PLAN AT ANY TIME BEFORE OR AFTER APPROVAL OF
THE PLAN BY SHAREHOLDERS OF STATE MUNICIPAL FUNDS, BUT AFTER SUCH APPROVAL, NO
AMENDMENT SHALL BE MADE THAT SUBSTANTIALLY CHANGES THE TERMS OF THIS AGREEMENT.
(B) AT ANY TIME PRIOR TO THE EFFECTIVE TIME OF THE REORGANIZATION, ANY OF
THE PARTIES MAY BY WRITTEN INSTRUMENT SIGNED BY IT: (I) WAIVE ANY INACCURACIES
IN THE REPRESENTATIONS AND WARRANTIES MADE PURSUANT TO THIS AGREEMENT, AND (II)
WAIVE COMPLIANCE WITH ANY OF THE COVENANTS OR CONDITIONS MADE FOR ITS BENEFIT
PURSUANT TO THIS AGREEMENT.
(C) THE STATE MUNICIPAL FUNDS MAY TERMINATE THE PLAN AT ANY TIME PRIOR TO
THE EFFECTIVE TIME OF THE REORGANIZATION BY NOTICE TO NATIONAL MUNICIPAL FUND
IF: (I) A MATERIAL CONDITION TO THEIR PERFORMANCE UNDER THIS AGREEMENT OR A
MATERIAL COVENANT OF NATIONAL MUNICIPAL FUND CONTAINED IN THIS AGREEMENT IS NOT
FULFILLED ON OR BEFORE THE DATE SPECIFIED FOR THE FULFILLMENT THEREOF, OR (II) A
MATERIAL DEFAULT OR MATERIAL BREACH OF THE PLAN IS MADE BY NATIONAL MUNICIPAL
FUND.
(D) NATIONAL MUNICIPAL FUND MAY TERMINATE THE PLAN AT ANY TIME PRIOR TO THE
EFFECTIVE TIME OF THE REORGANIZATION BY NOTICE TO THE STATE MUNICIPAL FUNDS IF:
(I) A MATERIAL CONDITION TO ITS PERFORMANCE UNDER THIS AGREEMENT OR A MATERIAL
COVENANT OF THE STATE MUNICIPAL FUNDS CONTAINED IN THIS AGREEMENT IS NOT
FULFILLED ON OR BEFORE THE DATE SPECIFIED FOR THE FULFILLMENT THEREOF, OR (II) A
MATERIAL DEFAULT OR MATERIAL BREACH OF THE PLAN IS MADE BY STATE MUNICIPAL
FUNDS.
(E) THE PLAN MAY BE TERMINATED BY EITHER PARTY AT ANY TIME PRIOR TO THE
EFFECTIVE TIME OF THE REORGANIZATION UPON NOTICE TO THE OTHER PARTY, WHETHER
BEFORE OR AFTER APPROVAL BY THE SHAREHOLDERS OF STATE MUNICIPAL FUNDS, WITHOUT
LIABILITY ON THE PART OF EITHER PARTY HERETO OR THEIR RESPECTIVE DIRECTORS,
OFFICERS, OR SHAREHOLDERS, AND SHALL BE TERMINATED WITHOUT LIABILITY AS OF THE
CLOSE OF BUSINESS ON DECEMBER 31, 1999, IF THE EFFECTIVE TIME OF THE
REORGANIZATION IS NOT ON OR PRIOR TO SUCH DATE.
(F) NO REPRESENTATIONS, WARRANTIES, OR COVENANTS IN OR PURSUANT TO THE PLAN
SHALL SURVIVE THE REORGANIZATION.
11. EXPENSES
THE STATE MUNICIPAL FUNDS AND NATIONAL MUNICIPAL FUND WILL BEAR THEIR OWN
EXPENSES INCURRED IN CONNECTION WITH THIS REORGANIZATION.
12. GENERAL
THIS PLAN SUPERSEDES ALL PRIOR AGREEMENTS BETWEEN THE PARTIES (WRITTEN OR ORAL),
IS INTENDED AS A COMPLETE AND EXCLUSIVE STATEMENT OF THE TERMS OF THE PLAN
BETWEEN THE PARTIES AND MAY NOT BE CHANGED OR TERMINATED ORALLY. THE PLAN MAY BE
EXECUTED IN ONE OR MORE COUNTERPARTS, ALL OF WHICH SHALL BE CONSIDERED ONE AND
THE SAME AGREEMENT, AND SHALL BECOME EFFECTIVE WHEN ONE OR MORE COUNTERPARTS
HAVE BEEN EXECUTED BY EACH PARTY AND DELIVERED TO EACH OF THE PARTIES HERETO.
THE HEADINGS CONTAINED IN THE PLAN ARE FOR REFERENCE PURPOSES ONLY AND SHALL NOT
AFFECT IN ANY WAY THE MEANING OR INTERPRETATION OF THE PLAN. NOTHING IN THE
PLAN, EXPRESSED OR IMPLIED, IS INTENDED TO CONFER UPON ANY OTHER PERSON ANY
RIGHTS OR REMEDIES BY REASON OF THE PLAN.
IN WITNESS WHEREOF, THE STATE MUNICIPAL FUNDS AND NATIONAL MUNICIPAL FUND HAVE
CAUSED THE PLAN TO BE EXECUTED ON THEIR BEHALF BY THEIR CHAIRMAN, PRESIDENT, OR
A VICE PRESIDENT, AND THEIR SEALS TO BE AFFIXED HERETO AND ATTESTED BY THEIR
RESPECTIVE SECRETARY OR ASSISTANT SECRETARY, ALL AS OF THE DAY AND YEAR FIRST
ABOVE WRITTEN, AND TO BE DELIVERED AS REQUIRED.
(SEAL) MARYLAND MUNICIPAL INTERMEDIATE FUND
BY: _________________________ BY: _______________________________
XXXXXXX X. XXXXXXXX, PRESIDENT
(SEAL) VIRGINIA MUNICIPAL INTERMEDIATE FUND
BY: _________________________ BY: _______________________________
XXXXXXX X. XXXXXXXX, PRESIDENT
(SEAL) NATIONAL MUNICIPAL INTERMEDIATE FUND
BY: _________________________ BY: _______________________________
XXXXXXX X. XXXXXXXXX, SENIOR VICE PRESIDENT
