77-M
LMP FUNDS TRUST
LMP CALIFORNIA TAX FREE BOND FUND (LI35)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION
(Agreement) is made as of this 8th day of September,
2006, by and among ▇▇▇▇ ▇▇▇▇▇ Partners California
Municipals Fund, Inc., a Maryland corporation (the
Acquiring Fund), with its principal place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Salomon Funds Trust, a Massachusetts business
trust (the Acquired Entity), with its principal
place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, on behalf of its series Salomon Brothers
California Tax Free Bond Fund (the Acquired Fund),
and, solely for purposes of paragraph 10.2 hereof,
▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC.
WHEREAS, each of the Acquired Fund and the
Acquiring Fund is a series or the sole series of an
open-end management investment company registered
pursuant to the Investment Company Act of 1940, as
amended (the 1940 Act);
WHEREAS, it is intended that, for United States
federal income tax purposes (i) the transactions
contemplated by this Agreement shall qualify as a
reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the
Code) and (ii) this Agreement shall constitute a
plan of reorganization within the meaning of Treasury
Regulation Section 1.368-2(g);
WHEREAS, the reorganization will consist of
(1) the sale, assignment, conveyance, transfer and
delivery of all of the property and assets of the
Acquired Fund to the Acquiring Fund in exchange solely
for classes of shares of common stock of the Acquiring
Fund (the Acquiring Fund Shares) corresponding to
the classes of outstanding shares of beneficial
interest of the Acquired Fund (the Acquired Fund
Shares), as described herein, (2) the assumption by
the Acquiring Fund of all liabilities of the Acquired
Fund, and (3) the distribution of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in
complete liquidation of the Acquired Fund, as provided
herein (the Reorganization), all upon the terms and
conditions hereinafter set forth in this Agreement;
WHEREAS, the Acquired Fund currently owns
securities that are generally assets of the character
in which the Acquiring Fund is permitted to invest;
WHEREAS, the Board of Directors of the Acquiring
Fund (the Acquiring Fund Board) has determined that
the sale, assignment, conveyance, transfer and
delivery of all of the property and 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 will not be diluted as a result of this
transaction;
WHEREAS, the Board of Trustees of the Acquired
Entity (the Acquired Entity Board) has determined,
with respect to the Acquired Fund, that the sale,
assignment, conveyance, transfer and delivery of all
of the property and 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 will 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:
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 requisite approvals and the other
terms and conditions herein set forth and on the basis
of the representations and warranties contained
herein, the Acquired Entity, on behalf of the Acquired
Fund, agrees to sell, assign, convey, transfer and
deliver all of its property and assets, as set forth
in paragraph 1.2, to the Acquiring Fund, and the
Acquiring Fund agrees in exchange therefor: (a) to
deliver to the Acquired Fund the number of full and
fractional Acquiring Fund Shares corresponding to each
class of the Acquired Fund Shares as of the time and
date set forth in paragraph 3.1, determined by
dividing the value of the Acquired Funds net assets
with respect to each class of the Acquired 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 share of the corresponding class of Acquiring Fund
Shares (computed in the manner and as of the time and
date set forth in paragraph 2.2); and (b) to assume
all liabilities of the Acquired Fund. Such
transactions shall take place on a closing date as
provided for in paragraph 3.1 (the Closing Date).
For purposes of this Agreement, the Class A, Class B,
Class C and Class O shares of the Acquired Fund
correspond to the Class A, Class B, Class C and Class
Y shares of the Acquiring Fund, respectively, and the
term Acquiring Fund Shares should be read to include
each such class of shares of the Acquiring Fund.
1.2 The property and assets of the Acquired
Entity, attributable to the Acquired Fund, to be sold,
assigned, conveyed, transferred and delivered to and
acquired by the Acquiring Fund, shall consist of all
assets and property of every kind and nature of the
Acquired Fund, including, without limitation, all
rights, receivables (including dividend, interest and
other receivables), cash, cash equivalents, claims
(whether absolute or contingent, known or unknown),
securities, commodities and futures interests, good
will and other intangible property, any deferred or
prepaid expenses and all interests, rights, privileges
and powers, the Acquired Fund owns at the Valuation
Date (as defined in paragraph 2.1) (collectively,
Assets). The Acquiring Fund shall assume all of the
liabilities and obligations of the Acquired Fund,
including, without limitation, all indemnification
obligations of the Acquired Fund with respect to the
current and former members of the Acquired Entity
Board and officers of the Acquired Entity, whether
accrued or contingent, known or unknown, existing at
the Valuation Date (collectively, Liabilities). The
Acquired Fund will sell, assign, convey, transfer and
deliver to the Acquiring Fund any rights, stock
dividends, or other securities received by the
Acquired Fund after the Closing Date as stock
dividends or other distributions on or with respect to
the property and assets transferred, which rights,
stock dividends, and other securities shall be deemed
included in the property and assets transferred to the
Acquiring Fund at the Closing Date and shall not be
separately valued, in which case any such distribution
that remains unpaid as of the Closing Date shall be
included in the determination of the value of the
assets of the Acquired Fund acquired by the Acquiring
Fund.
1.3 The Acquired Fund will make reasonable
efforts to discharge all of its known Liabilities
prior to the Valuation Date.
1.4 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 of its investment
company taxable income as defined in the Code
(computed without regard to any deduction for
dividends paid) and realized net capital gain as
defined in the Code (after deduction for any available
capital loss carryover), if any, for all tax periods
ending on or before the Closing Date (and treating the
current taxable year as ending on the Closing Date)
such that the Acquired Fund will have no tax liability
under Section 852 or Section 4982 for the current and
any prior tax periods.
1.5 Immediately following the actions
contemplated by paragraph 1.1, the Acquired Entity
shall take such actions necessary to complete the
liquidation of the Acquired Fund. To complete the
liquidation, the Acquired Entity, on behalf of the
Acquired Fund, shall (a) distribute to the latters
shareholders of record with respect to each class of
Acquired Fund Shares as of 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 Entity, on behalf of
the Acquired Fund, pursuant to paragraph 1.1 and
(b) completely liquidate and dissolve in accordance
with Massachusetts law. Such distribution and
liquidation shall be accomplished, with respect to
each class of Acquired Fund Shares, by the transfer of
the corresponding 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 each class of Acquiring Fund Shares to be so
credited to each corresponding class of Acquired Fund
Shareholders shall, with respect to each class, be
equal to the aggregate net asset value of the Acquired
Fund Shares of each corresponding class owned by
Acquired Fund Shareholders on the Closing Date. All
issued and outstanding Acquired Fund Shares will be
canceled on the books of the Acquired Fund. The
Acquiring Fund shall not issue certificates
representing any class of Acquiring Fund Shares in
connection with such exchange.
1.6 Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Funds transfer
agent.
1.7 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 Entity, on behalf of the Acquired Fund.
The Acquiring Fund shall fully cooperate to the extent
necessary or desirable for these responsibilities to
be discharged.
2. VALUATION
2.1 The value of the Assets and the amount of the
Liabilities shall be determined as of the time for
calculation of net asset value as set forth in the
then-current prospectus for the Acquired Fund, and
after the declaration of any dividends by the Acquired
Fund, on the Closing Date (such time and date being
hereinafter called the Valuation Date), computed
using the valuation procedures established by the
Acquired Entity Board. All computations of value and
amounts shall be made by (a) State Street Bank and
Trust Company, in its capacity as accounting agent for
the Acquired Fund, or (b) in the case of securities
subject to fair valuation, in accordance with the
valuation procedures of the Acquired Entity adopted in
good faith by the Acquired Entity Board. All
computations of value and amounts pursuant to this
paragraph 2.1 shall be subject to confirmation by the
Acquiring Funds independent registered public
accounting firm.
2.2. The net asset value per share of each class
of Acquiring Fund Shares shall be determined to the
nearest full cent on the Valuation Date, using the
valuation procedures established by the Acquiring Fund
Board. All computations of value shall be made by
(a) State Street Bank and Trust Company, in its
capacity as accounting agent for the Acquiring Fund,
or (b) in the case of securities subject to fair
valuation, in accordance with the valuation procedures
of the Acquiring Fund adopted in good faith by the
Acquiring Fund Board. All computations of value
pursuant to this paragraph 2.2 shall be subject to
confirmation by the Acquired Fund?s independent
registered public accounting firm.
2.3 The number of Acquiring Fund Shares of each
class to be issued in exchange for the Assets shall be
determined with respect to each such class by dividing
the value of the net assets with respect to each class
of Acquired Fund Shares, determined using the same
valuation procedures referred to in paragraph 2.1, by
the net asset value of an Acquiring Fund Share of the
corresponding class, determined using the same
valuation procedures referred to in paragraph 2.2.
3. CLOSING AND CLOSING DATE
3.1 Subject to the terms and conditions set forth
herein, the Closing Date shall be March 2, 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 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 or
such later time on that date as the Acquired Funds
net asset value and/or the net asset value per share
of each class of shares of the Acquiring Fund is
calculated in accordance with paragraph 2.2 and after
the declaration of any dividends. The Closing shall be
held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP or
at such other time and/or place as the parties may
agree.
3.2 The Acquired Entity shall direct State Street
Bank and Trust Company (the Custodian) to transfer
ownership of the Assets from the accounts of the
Acquired Fund that the Custodian maintains as
custodian for the Acquired Fund to the accounts of the
Acquiring Fund that the Custodian maintains as
custodian for the Acquiring Fund and to deliver to the
Acquiring Fund, at the Closing, a certificate of an
authorized officer stating that (i) the Assets of the
Acquired Fund have been so transferred as of the
Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets of the
Acquired Fund, including all applicable federal and
state stock transfer stamps, if any, have been paid or
provision for payment has been made.
3.3 The Acquired Entity shall direct PFPC Inc.,
in its capacity as transfer agent for the Acquired
Fund (Transfer Agent), to deliver to the Acquiring
Fund at the Closing a certificate of an authorized
officer stating that its records contain the name and
address of each Acquired Fund Shareholder and the
number and percentage ownership of each outstanding
class of Acquired Fund Shares owned by each such
shareholder immediately prior to the Closing. The
Acquiring Fund shall deliver to the Secretary of the
Acquired Fund a confirmation evidencing that (a) the
appropriate number of Acquiring Fund Shares have been
credited to the Acquired Funds account on the books
of the Acquiring Fund pursuant to paragraph 1.1 prior
to the actions contemplated by paragraph 1.4 and
(b) the appropriate number of Acquiring Fund Shares
have been credited to the accounts of the Acquired
Fund Shareholders on the books of the Acquiring Fund
pursuant to paragraph 1.4. At the Closing, each party
shall deliver to the other party such bills of sale,
checks, assignments, share certificates, if any,
receipts or other documents as the other party or its
counsel may reasonably request.
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 accurate appraisal of the
value of the net assets of the Acquired Fund or the
Acquiring Fund is impracticable (in the judgment of
the Acquiring Fund Board with respect to the Acquiring
Fund and the Acquired Entity Board with respect to the
Acquired Fund), the Closing Date shall be postponed
until the first Friday (that is also a 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 Schedule 4.1 of this Agreement, the
Acquired Entity, on behalf of the Acquired Fund,
represents and warrants to the Acquiring Fund as
follows:
(a) The Acquired Fund is duly established as
a series of the Acquired Entity, which is a
business trust duly organized, validly existing
and in good standing under the laws of the
Commonwealth of Massachusetts, with power under
its Declaration of Trust, as amended and/or
supplemented (the Acquired Entity Declaration),
to own all of its assets and to carry on its
business as it is being conducted as of the date
hereof. The Acquired Entity is duly qualified to
do business as a foreign trust in each
jurisdiction in which the conduct of its business
makes such qualification necessary except where
the failure to so qualify would not have a
material adverse effect on the condition
(financial or otherwise), business, properties,
net assets or results of operations of the
Acquired Entity. The Acquired Entity has all
necessary federal, state and local authorization
to carry on its business as now being conducted
and to fulfill the terms of this Agreement,
except as set forth in paragraph 4.1(c).
(b) The Acquired Entity is a registered open-
end management investment company, and its
registration with the Commission as an investment
company under the 1940 Act, and the registration
of each class of 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 may be required under the 1933
Act, the Securities Exchange Act of 1934 (1934
Act), the ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ securities laws and
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(d) The current prospectus and statement of
additional information of the Acquired Fund (true
and correct copies of which have been delivered
to the Acquiring Fund) and each prospectus and
statement of additional information of the
Acquired Fund used during the three (3) years
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, the Acquired Entity,
on behalf of the Acquired Fund, will have good
and marketable title to the Assets and full
right, power and authority to sell, assign,
convey, transfer and deliver such Assets
hereunder free of any liens or other
encumbrances, and upon delivery and payment for
the Assets, the Acquiring Fund will acquire good
and marketable title thereto, subject to no
restrictions on the full transfer thereof,
excluding such restrictions as might arise under
the 1933 Act.
(f) The Acquired Fund is not engaged
currently, and the execution, delivery and
performance of this Agreement by the Acquired
Entity, on behalf of the Acquired Fund, will not
result, in a material violation of Massachusetts
law or of the Acquired Entity Declaration or the
by-laws of the Acquired Entity, or of any
agreement, indenture, instrument, contract, lease
or other undertaking to which the Acquired
Entity, on behalf of the Acquired Fund, is a
party or by which it is bound, and the execution,
delivery and performance of this Agreement by the
Acquired Entity, on behalf of the Acquired Fund,
will not result in the acceleration of any
material obligation, or the imposition of any
material penalty, under any agreement, indenture,
instrument, contract, lease, judgment or decree
to which the Acquired Entity, 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, certain investment contracts,
including options, futures, swaps and forward
contracts, the indemnification agreements of the
current and former members of the Acquired Entity
Board, and those contracts listed in Schedule
4.1) will terminate without liability to the
Acquired Fund on or prior to the Closing Date.
Each contract listed in Schedule 4.1 is a valid,
binding and enforceable obligation of the
Acquired Fund and, to the Acquired Funds
knowledge, the other parties thereto (assuming
due authorization, execution and delivery by the
other parties thereto) and the assignment by the
Acquired Fund to the Acquiring Fund of each such
contract will not result in the termination of
such contract, any breach or default thereunder
by the Acquired Fund or the imposition of any
penalty thereunder.
(h) No litigation or administrative
proceeding or investigation of or before any
court or governmental body is presently pending
or, to the Acquired Entitys knowledge,
threatened against the Acquired Entity, with
respect to 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 the
Acquired Funds business. The Acquired Entity, on
behalf of the Acquired Fund, 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 Acquired
Funds business or the Acquired Entitys ability
to consummate the transactions herein
contemplated on behalf of the Acquired Fund.
(i) The Statement of Assets and Liabilities,
Statements of Operations and Changes in Net
Assets and Schedule of Investments of the
Acquired Fund as at the last day of and for the
most recently completed fiscal year of the
Acquired Fund prior to the date of this
Agreement, have been audited by KPMG LLP, an
independent registered public accounting firm,
and are in accordance with accounting principles
generally accepted in the United States of
America (GAAP) consistently applied, and such
statements (true and correct 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
and for such period in accordance with GAAP, and
there are no known contingent, accrued or other
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
that are not disclosed therein. The Statement of
Assets and Liabilities, Statements of Operations
and Changes in Net Assets and Schedule of
Investments (unaudited) of the Acquired Fund as
at the last day of and for the most recently
completed fiscal half year of the Acquired Fund
following the date of the audited annual
statements referenced above are in accordance
with GAAP consistently applied, and such
statements (true and correct copies of which have
been furnished to the Acquiring Fund) present
fairly, in all material respects, the financial
condition of the Acquired Fund, and all known
contingent, accrued or other 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 are
disclosed therein.
(j) Since the last day of the most recently
completed fiscal year of the Acquired Fund prior
to the date of this Agreement, there has not been
any material adverse change in the Acquired
Funds 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 for money
borrowed maturing more than one year from the
date such indebtedness was incurred. 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
Acquired Fund liabilities, or the redemption of
Acquired Fund Shares by shareholders of the
Acquired Fund shall not constitute a material
adverse change.
(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 Entitys
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 current taxable year, assuming
such year ends on the Closing Date), the Acquired
Fund has met (or will meet) the requirements of
Subchapter M of Chapter 1 of the Code for
qualification and treatment as a regulated
investment company, has elected to be treated as
such, and has been (or will be) eligible to
compute and has computed (or will compute) its
federal income tax under Section 852 of the Code,
and on or before the Closing Date, will have
distributed or will have declared dividends
intended to be sufficient to distribute
substantially all of (i) the excess of (x) its
investment income excludible from gross income
under Section 103 of the Code over (y) its
deductions disallowed under Sections 265 and 171
of the Code (net tax-exempt income), (ii) its
investment company taxable income (as defined in
the Code) (computed without regard to any
deduction for dividends paid) and (iii) any net
capital gain (after reduction for any allowable
capital loss carryover) (as defined in the Code)
that has accrued or been recognized,
respectively, through the Closing Date such that
for all tax periods ending on or before the
Closing Date (and treating the current tax year
as ending on the Closing Date) the Acquired Fund
will not have any tax liability under Section 852
or Section 4982.
(m) All issued and outstanding Acquired Fund
Shares are, and on the Closing Date will be, duly
authorized and validly and legally issued and
outstanding, fully paid and non-assessable by the
Acquired Entity and have been offered and sold in
any state, territory or the District of Columbia
in compliance in all material respects with
applicable registration requirements of all
applicable federal and state securities laws. All
of the issued and outstanding Acquired Fund
Shares 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 Acquired Fund Shares,
nor is there outstanding any security convertible
into any of the Acquired Fund Shares.
(n) The Acquired Fund will review its assets
to ensure that at any time after its shareholders
have approved this Agreement and prior to the
Closing Date its assets do not include any assets
that the Acquiring Fund is not permitted, or
reasonably believes to be unsuitable for it, to
acquire, including without limitation any
security that, prior to its acquisition by the
Acquired Fund, is unsuitable for the Acquiring
Fund to acquire.
(o) The execution, delivery and performance
of this Agreement, and the transactions
contemplated herein, have been duly authorized by
all necessary action on the part of the Acquired
Entity Board, on behalf of the Acquired Fund, and
this Agreement constitutes a valid and binding
obligation of the Acquired Entity, 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.
(p) The combined proxy statement and
prospectus (Proxy Statement) to be included in
the Registration Statement (as defined in
paragraph 5.6), insofar as it relates to the
Acquired Fund, 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,
will (i) not contain any statement which, at the
time and in light of the circumstances under
which it is made, is false or misleading with
respect to any material fact, or which omits to
state any material fact necessary in order to
make the statements therein not false or
misleading (provided that this representation and
warranty shall not apply to statements in or
omissions from the Proxy 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. The information to be furnished by
the Acquired Fund for use in registration
statements and other documents filed or to be
filed with any federal, state or local regulatory
authority, 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.
4.2 Except as has been fully disclosed to the
Acquired Entity in Schedule 4.2 to this Agreement, the
Acquiring Fund represents and warrants to the Acquired
Entity and the Acquired Fund as follows:
(a) The Acquiring Fund is a corporation duly
organized, validly existing and in good standing
under the laws of the State of Maryland, with the
power under its Articles of Incorporation, as
amended and/or supplemented (the Acquiring Fund
Charter), to own all of its assets and to carry
on its business as it is being conducted as of
the date hereof. The Acquiring Fund is duly
qualified to do business as a foreign corporation
in each jurisdiction in which the conduct of its
business makes such qualification necessary
except where the failure to so qualify would not
have a material adverse effect on the condition
(financial or otherwise), business, properties,
net assets or results of operations of the
Acquiring Fund. The Acquiring Fund has all
necessary federal, state and local authorization
to carry on its business as now being conducted
and to fulfill the terms of this Agreement except
as described in paragraph 4.2(c).
(b) The Acquiring Fund is a registered open-
end management investment company, and its
registration with the Commission as an investment
company under the 1940 Act, and the registration
of each class of Acquiring Fund Shares under the
1933 Act, is in full force and effect or will be
in full force and effect as of the Closing Date.
(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 may be required under the 1933
Act, the 1934 Act, the 1940 Act, state securities
laws and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(d) The current prospectus and statement of
additional information of the Acquiring Fund
(true and correct copies of which have been
delivered to the Acquired Entity) and each
prospectus and statement of additional
information of the Acquiring Fund used during the
three (3) years 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) The Acquiring Fund is not engaged
currently, and the execution, delivery and
performance of this Agreement by the Acquiring
Fund will not result, in a material violation of
Maryland law or of the Acquiring Fund Charter or
the by-laws of the Acquiring Fund, or of any
agreement, indenture, instrument, contract, lease
or other undertaking to which the Acquiring Fund
is a party or by which it is bound, and the
execution, delivery and performance of this
Agreement by the Acquiring Fund will not result
in the acceleration of any material obligation,
or the imposition of any material penalty, under
any agreement, indenture, instrument, contract,
lease, judgment or decree to which the Acquiring
Fund is a party or by which it is bound.
(f) No litigation or administrative
proceeding or investigation of or before any
court or governmental body is presently pending
or, to the Acquiring Funds knowledge, threatened
against the Acquiring Fund or any of its
properties or assets, that, if adversely
determined, would materially and adversely affect
its financial condition or the conduct of such
Acquiring Funds business. The Acquiring Fund 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 Funds business or the
Acquiring Funds ability to consummate the
transactions herein contemplated.
(g) The Statement of Assets and Liabilities,
Statements of Operations and Changes in Net
Assets and Schedule of Investments of the
Acquiring Fund as at the last day of and for the
most recently completed fiscal year of the
Acquiring Fund prior to the date of this
Agreement, have been audited by KPMG LLP, an
independent registered public accounting firm,
and are in accordance with GAAP consistently
applied, and such statements (true and correct
copies of which have been furnished to the
Acquired Entity) present fairly, in all material
respects, the financial condition of the
Acquiring Fund as of such date and for such
period in accordance with GAAP, and there are no
known contingent, accrued or other 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 that are not
disclosed therein. The Statement of Assets and
Liabilities, Statements of Operations and Changes
in Net Assets and Schedule of Investments
(unaudited) of the Acquiring Fund as at the last
day of and for the most recently completed fiscal
half year of the Acquiring Fund following the
date of the audited annual statements referenced
above will be when sent to Acquiring Fund
shareholders in the regular course in accordance
with GAAP consistently applied, and such
statements (true and correct copies of which will
be furnished to the Acquired Entity) will present
fairly, in all material respects, the financial
condition of the Acquiring Fund, and all known
contingent, accrued or other 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 will be
disclosed therein.
(h) Since the last day of the most recently
completed fiscal year of the Acquiring Fund prior
to the date of this Agreement, there has not been
any material adverse change in the Acquiring
Funds 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 for money
borrowed maturing more than one year from the
date such indebtedness was incurred. For the
purposes of this subparagraph (h), a decline in
net asset value per share of Acquiring Fund
Shares due to declines in market values of
securities held by the Acquiring Fund, the
discharge of Acquiring Fund liabilities, or the
redemption of Acquiring Fund Shares by
shareholders of the Acquiring Fund shall not
constitute a material adverse change.
(i) 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 Funds
knowledge, no such return is currently under
audit and no assessment has been asserted with
respect to such returns.
(j) 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
Chapter 1 of the Code for qualification and
treatment as a regulated investment company,
has elected to be treated as such, and has been
(or will be) eligible to compute and has computed
(or will compute) its federal income tax under
Section 852 of the Code, and will have
distributed (or will distribute pursuant to the
provisions of Section 855 of the Code)
substantially all of (i) its net tax-exempt
income, (ii) its investment company taxable
income (computed without regard to any deduction
for dividends paid) (as defined in the Code) and
(iii) any net capital gain (after reduction for
any capital loss carryover) (as defined in the
Code) for taxable years ending prior to the
Closing Date such that for all those years the
Acquiring Fund will have no tax liability under
Section 852 or Section 4982.
(k) All issued and outstanding Acquiring Fund
Shares are, and on the Closing Date will be, duly
authorized and validly and legally issued and
outstanding, fully paid and non-assessable by the
Acquiring Fund and will have been offered and
sold in any state, territory or the District of
Columbia in compliance in all material respects
with applicable registration requirements of all
applicable federal 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. All of the Acquiring
Fund Shares to be issued and delivered to the
Acquired Entity, for the account of the Acquired
Fund Shareholders, pursuant to this Agreement,
will on the Closing Date have been duly
authorized and, when so issued and delivered,
will be duly and validly and legally issued
Acquiring Fund Shares and be fully paid and non-
assessable by the Acquiring Fund.
(l) The execution, delivery and performance
of this Agreement, and the transactions
contemplated herein, have been duly authorized by
all necessary action on the part of the Acquiring
Fund Board, and this Agreement constitutes 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.
(m) The Proxy Statement to be included in the
Registration Statement, insofar as it relates to
the Acquiring Fund and the Acquiring Fund Shares,
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, will (i) not
contain any statement which, at the time and in
the light of the circumstances under which it is
made, is false or misleading with respect to any
material fact, or which omits to state any
material fact necessary to make the statements
therein not false or misleading (provided that
this representation and warranty shall not apply
to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity
with information that was furnished by the
Acquired Entity 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. The
information to be furnished by the Acquiring Fund
for use in registration statements and other
documents filed or to be filed with any federal,
state or local regulatory authority, 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
applicable thereto.
5. COVENANTS
The Acquired Entity, on behalf of the Acquired
Fund, and the Acquiring Fund, respectively, hereby
further covenant as follows:
5.1 The Acquired Fund and the Acquiring Fund each
will operate its business in the ordinary course and
shall comply in all material respects with all
applicable laws, rules and regulations 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
other distributions, and any other distribution that
may be advisable.
5.2 The Acquired Entity will call and hold 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 Acquiring Fund Shares to be acquired by
the Acquired Fund 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 Entity, on behalf of 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 Shares.
5.5 Subject to the provisions of this Agreement,
the Acquiring Fund and the Acquired Entity, on behalf
of the Acquired Fund, each will 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 Acquiring Fund shall prepare and file a
Registration Statement on Form N-14 in compliance with
the 1933 Act, the 1934 Act and the 1940 Act and the
rules and regulations thereunder with respect to the
Reorganization (the Registration Statement). The
Acquired Entity, on behalf of the Acquired Fund, will
provide to the Acquiring Fund such information
regarding the Acquired Fund as may be reasonably
necessary for the preparation of the Registration
Statement.
5.7 The Acquiring Fund and the Acquired Entity,
on behalf of the Acquired Fund, each will use its
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.
5.8 The Acquired Entity, on behalf of the
Acquired Fund, 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 the
Acquiring Fund may reasonably deem necessary or
desirable in order to vest in and confirm (a) the
Acquired Entitys title to and possession of the
Acquiring Fund Shares to be delivered hereunder and
(b) the Acquiring Funds title to and possession of
all the Assets and to otherwise to carry out the
intent and purpose of this Agreement.
5.9 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.
5.10 The Acquiring Fund shall not change the
Acquiring Fund Charter, prospectus or statement of
additional information so as to restrict permitted
investments for the Acquiring Fund, except as required
by the Commission prior to the Closing.
5.11 Prior to the Valuation Date, the Acquired
Entity Board shall adopt the valuation procedures of
the Acquiring Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED
ENTITY
The obligations of the Acquired Entity, on behalf
of the Acquired Fund, to consummate the transactions
provided for herein shall be subject, at the Acquired
Entitys election, to the following conditions:
6.1 All representations and warranties 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 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 the Acquiring Fund on or before
the Closing Date.
6.3 The Acquiring Fund shall have executed and
delivered an assumption of the Liabilities and all
such other agreements and instruments as the Acquired
Entity may reasonably deem necessary or desirable in
order to vest in and confirm (a) the Acquired Funds
title to and possession of the Acquiring Fund Shares
to be delivered hereunder and (b) the Acquiring Funds
assumption of all of the Liabilities and to otherwise
to carry out the intent and purpose of this Agreement.
6.4 The Acquiring Fund shall have delivered to
the Acquired Fund a certificate executed in the name
of the Acquiring Fund by the Acquiring Funds
President or Vice President and its Treasurer or
Assistant Treasurer, in a form reasonably satisfactory
to the Acquired Entity and dated as of the Closing
Date, as to the matters set forth in paragraphs 6.1
and 6.2 and as to such other matters as the Acquired
Entity shall reasonably request.
6.5 The Acquiring Fund and the Acquired Entity,
on behalf of the Acquired Fund, shall have agreed on
the number of full and fractional 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 ACQUIRING
FUND
The obligations of the Acquiring Fund to
consummate the transactions provided for herein shall
be subject, at the Acquiring Funds election, to the
following conditions:
7.1 All representations and warranties of the
Acquired Entity, 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 The Acquired Entity, 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 the Acquired Entity, on behalf of the Acquired
Fund, on or before the Closing Date.
7.3 The Acquired Entity shall have delivered to
the Acquiring Fund a Statement of Assets and
Liabilities of the Acquired Fund as of the Closing
Date, including a schedule of investments, certified
by the Treasurer of the Acquired Entity on behalf of
the Acquired Fund. The Acquired Entity, on behalf of
the Acquired Fund, shall have executed and delivered
all such assignments and other instruments of transfer
as the Acquiring Fund may reasonably deem necessary or
desirable in order to vest in and confirm (a) the
Acquired Funds title to and possession of the
Acquiring Fund Shares to be delivered hereunder and
(b) the Acquiring Funds title to and possession of
all the Assets and to otherwise to carry out the
intent and purpose of this Agreement.
7.4 The Acquired Entity, on behalf of the
Acquired Fund, shall have delivered to the Acquiring
Fund a certificate executed in the name of the
Acquired Entity, on behalf of the Acquired Fund, by
the Acquired Entitys 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, as to the matters set
forth in paragraphs 7.1 and 7.2 and as to such other
matters as the Acquiring Fund shall reasonably
request.
7.5 The Acquired Entity, on behalf of the
Acquired Fund, and the Acquiring Fund shall have
agreed on the number of full and fractional Acquiring
Fund Shares to be issued in connection with the
Reorganization after such number has been calculated
in accordance with paragraph 1.1.
8.
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUIRING FUND AND ACQUIRED ENTITY
If any of the conditions set forth below have not
been satisfied on or before the Closing Date with
respect to the Acquired Entity, on behalf of the
Acquired Fund, or the Acquiring Fund, the other party
to this Agreement shall be entitled on behalf of the
Acquired Fund or Acquiring Fund, as applicable, at its
option, to refuse to consummate the transactions
contemplated by this Agreement:
8.1 This 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 the Acquired Entity Declaration, the by-
laws of the Acquired Entity, and Massachusetts law,
and certified copies of the resolutions evidencing
such approval shall have been delivered to the
Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired
Entity may waive the condition set forth in this
paragraph 8.1.
8.2 On the Closing Date, no court or governmental
agency of competent jurisdiction shall have issued any
order that remains in effect and that restrains or
enjoins the Acquired Entity, with respect to the
Acquired Fund, or the Acquiring Fund from completing
the transactions contemplated by this Agreement.
8.3 All consents of other parties and all other
consents, orders and permits of federal, state and
local regulatory authorities deemed necessary by the
Acquiring Fund or the Acquired Entity 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.
8.5 The parties shall have received the opinion
of Dechert LLP, dated the Closing Date, substantially
to the effect that, based upon certain facts,
assumptions and representations made by the Acquired
Entity, on behalf of the Acquired Fund, the Acquiring
Fund, and their respective authorized officers,
(i) the transactions contemplated by this Agreement
will constitute a reorganization within the meaning of
Section 368(a) of the Code; (ii) no gain or loss will
be recognized by the Acquiring Fund upon receipt of
the Assets in exchange for the Acquiring Fund Shares
and the assumption by the Acquiring Fund of the
Acquired Fund Liabilities; (iii) the basis in the
hands of the Acquiring Fund in the Assets will be the
same as the basis of the Acquired Fund in the Assets
immediately prior to the transfer thereof; (iv) the
holding periods of the Assets in the hands of the
Acquiring Fund will include the periods during which
the Assets were held by the Acquired Fund (except
where investment activities of the Acquiring Fund have
the effect of reducing or eliminating the holding
period with respect to an asset); (v) no gain or loss
will be recognized by the Acquired Fund upon the
transfer of the Assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Acquired Fund
Liabilities, or upon the distribution of the Acquiring
Fund Shares by the Acquired Fund to its shareholders
except for gain or loss that may be recognized with
respect to contracts subject to Section 1256 of the
Code and/or stock in a passive foreign investment
company as defined in Section 1297(a) of the Code;
(vi) no gain or loss will be recognized by the
Acquired Fund shareholders upon the exchange of their
Acquired Fund Shares for the Acquiring Fund Shares;
(vii) the aggregate basis of the Acquiring Fund Shares
that each Acquired Fund shareholder receives in
connection with the transaction will be the same as
the aggregate basis of his or her Acquired Fund Shares
exchanged therefor; and (viii) an Acquired Fund
shareholders holding period for his or her Acquiring
Fund Shares will be determined by including the period
for which he or she held the Acquired Fund Shares
exchanged therefor, provided that he or she held the
Acquired Fund Shares as capital assets. The delivery
of such opinion is conditioned upon the receipt by
Dechert LLP of representations it shall request of the
Acquiring Fund and the Acquired Entity.
Notwithstanding anything herein to the contrary,
neither the Acquiring Fund nor the Acquired Entity may
waive the condition set forth in this paragraph 8.5.
8.6 The Acquiring Fund shall have received on the
Closing Date an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, in a
form reasonably satisfactory to the Acquiring Fund,
and dated as of the Closing Date, substantially to the
effect that, based upon certain facts and
certifications made by the Acquired Entity, on behalf
of the Acquired Fund, and its authorized officers:
(a) the Acquired Entity is a business trust existing
under the laws of the Commonwealth of Massachusetts;
(b) the Acquired Entity, with respect to the Acquired
Fund, has the power as a business trust to carry on
its business as an open-end investment company
registered under the 1940 Act; (c) this Agreement has
been duly authorized, executed and, so far as known to
such counsel, delivered by the Acquired Entity, on
behalf of the Acquired Fund, and assuming due
authorization, execution and delivery of this
Agreement by the Acquiring Fund, constitutes a valid
and legally binding obligation of the Acquired Entity,
on behalf of the Acquired Fund, enforceable in
accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and laws of general
applicability relating to or affecting creditors
rights and to general equity principles (whether in a
proceeding under equity or at law); provided that such
counsel shall be entitled to state that it expresses
no opinion with respect to the validity, binding
effect or enforceability of any contractual provisions
purporting to provide indemnification of any person
for any claims, damages, liabilities or expenses which
may be limited by any applicable federal or state
securities laws or as a matter of public policy;
(d) the execution and delivery of this Agreement did
not, and the transfer of the Assets for Acquiring Fund
Shares and the assumption by the Acquiring Fund of the
Liabilities pursuant to this Agreement will not,
violate the Acquired Entity Declaration or the by-laws
of the Acquired Entity or any contracts or other
documents known to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP which can
affect the rights or obligations of the Acquired
Entity; (e) to the knowledge of such counsel, all
regulatory or court consents, authorizations,
approvals, orders or filings required to be obtained
or made by the Acquired Entity, on behalf of the
Acquired Fund, under the federal laws of the United
States or the laws of the Commonwealth of
Massachusetts for the transfer of the Assets for
Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Liabilities pursuant to this
Agreement have been obtained or made, except such as
may be required under state securities or blue sky
laws as to which such counsel need express no opinion;
and (f) to the knowledge of such counsel, and without
any independent investigation, other than as disclosed
on the schedule provided by the Acquired Entity
pursuant to paragraph 4.1 of this Agreement, the
Acquired Fund is not subject to any litigation or
administrative proceeding that could reasonably be
expected to have a materially adverse effect on the
operations of the Acquired Fund. Such opinion may
state that it is solely for the benefit of the
Acquiring Fund and the Acquiring Fund Board. Such
opinion may contain such assumptions and limitations
as shall be in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
appropriate to render the opinions expressed therein.
Such opinion also shall include such other matters
incident to the transactions contemplated hereby as
the Acquiring Fund may reasonably request.
8.7 The Acquired Entity, on behalf of the
Acquired Fund, shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, in a form
reasonably satisfactory to the Acquired Entity, and
dated as of the Closing Date, substantially to the
effect that, based upon certain facts and
certifications made by the Acquiring Fund and its
authorized officers: (a) the Acquiring Fund is a
corporation existing under the laws of the State of
Maryland; (b) the Acquiring Fund has the corporate
power to carry on its business as an open-end
investment company registered under the 1940 Act;
(c) this Agreement has been duly authorized, executed
and, so far as is known to such counsel, delivered by
the Acquiring Fund, and assuming due authorization,
execution and delivery of this Agreement by the
Acquired Entity, on behalf of the Acquired Fund,
constitutes a valid and legally binding obligation of
the Acquiring Fund, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
laws of general applicability relating to or affecting
creditors rights and to general equity principles
(whether in a proceeding under equity or at law);
provided that such counsel shall be entitled to state
that it expresses no opinion with respect to the
validity, binding effect or enforceability of any
contractual provisions purporting to provide
indemnification of any person for any claims, damages,
liabilities or expenses which may be limited by any
applicable federal or state securities laws or as a
matter of public policy; (d) the execution and
delivery of this Agreement did not, and the issuance
of the Acquiring Fund Shares and the assumption of the
Liabilities in exchange for the transfer of the Assets
pursuant to this Agreement will not, violate the
Acquiring Fund Charter or the by-laws of the Acquiring
Fund or any contracts or other documents known to
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP which can affect the
rights and obligations of the Acquiring Fund; (e) to
the knowledge of such counsel, all regulatory or court
consents, authorizations, approvals, orders or filings
required to be obtained or made by the Acquiring Fund
under the federal laws of the United States or the
laws of the State of Maryland with respect to the
issuance of the Acquiring Fund Shares and the
assumption of the Liabilities in exchange for the
transfer of the Assets pursuant to this Agreement have
been obtained or made, except such as may be required
under state securities or blue sky laws, as to which
such counsel need express no opinion; and (f) to the
knowledge of such counsel, and without any independent
investigation, other than as disclosed on the schedule
provided by the Acquiring Fund pursuant to paragraph
4.2 of this Agreement, the Acquiring Fund is not
subject to any litigation or administrative proceeding
that could reasonably be expected to have a materially
adverse effect on the operations of the Acquiring
Fund. Such opinion may state that it is solely for the
benefit of the Acquired Entity and the Acquired Entity
Board. Such opinion may contain such assumptions and
limitations as shall be in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇▇ LLP appropriate to render the opinions
expressed therein. Such opinion also shall include
such other matters incident to the transactions
contemplated hereby as the Acquired Entity, on behalf
of the Acquired Fund, may reasonably request. With
respect to all matters of Maryland law, such counsel
shall be entitled to state that, with the approval of
the Acquired Entity, they have relied on the opinion
of ▇▇▇▇▇▇▇ LLP and that their opinion is subject to
the same assumptions, qualifications and limitations
with respect to such matters as are contained in the
opinion of ▇▇▇▇▇▇▇ LLP.
8.8 The Assets will include no assets which the
Acquiring Fund, by reason of limitations contained in
the Acquiring Fund Charter or in investment
restrictions in effect on the Closing Date, may not
properly acquire.
9. INDEMNIFICATION
9.1 The Acquiring Fund, out of its assets and
property (including any amounts paid to the Acquiring
Fund pursuant to any applicable liability insurance
policies or indemnification agreements) agrees to
indemnify and hold harmless the Acquired Entity and
the members of the Acquired Entity Board and its
officers 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 Entity and those board members and officers
may become subject, insofar as such loss, claim,
damage, liability or expense (or actions with respect
thereto) arises out of or is based on (a) any breach
by the Acquiring Fund of any of its representations,
warranties, covenants or agreements set forth in this
Agreement or (b) any act, error, omission, neglect,
misstatement, materially misleading statement, breach
of duty or other act wrongfully done or attempted to
be committed by the Acquiring Fund or the members of
the Acquiring Fund Board or its officers prior to the
Closing Date, provided that such indemnification by
the Acquiring Fund is not (i) in violation of any
applicable law or (ii) otherwise prohibited as a
result of any applicable order or decree issued by any
governing regulatory authority or court of competent
jurisdiction.
9.2 The Acquired Entity, out of the Acquired
Funds assets and property (including any amounts paid
to the Acquired Fund pursuant to any applicable
liability insurance policies or indemnification
agreements) agrees to indemnify and hold harmless the
Acquiring Fund and the members of the Acquiring Fund
Board and its officers 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 and those
board members and officers may become subject, insofar
as such loss, claim, damage, liability or expense (or
actions with respect thereto) arises out of or is
based on (a) any breach by the Acquired Entity, on
behalf of the Acquired Fund, of any of its
representations, warranties, covenants or agreements
set forth in this Agreement or (b) any act, error,
omission, neglect, misstatement, materially misleading
statement, breach of duty or other act wrongfully done
or attempted to be committed by the Acquired Entity or
the members of the Acquired Entity Board or its
officers prior to the Closing Date, provided that such
indemnification by the Acquired Entity is not (i) in
violation of any applicable law or (ii) otherwise
prohibited as a result of any applicable order or
decree issued by any governing regulatory authority or
court of competent jurisdiction.
10. BROKER FEES AND EXPENSES
10.1 The Acquiring Fund and the Acquired Entity,
on behalf of 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 ▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC will
pay the printing, proxy solicitation, mailing and
postage costs of the Reorganization. Additional costs,
including expenses related to the preparation and
filing of the Registration Statement, legal fees and
auditor fees, shall be divided equally between ▇▇▇▇
▇▇▇▇▇ Partners Fund Advisor, LLC, on the one hand, and
the Acquiring Fund and the Acquired Entity, on the
other hand. 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 or would prevent the
Reorganization from qualifying as a tax-free
reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The Acquiring Fund and the Acquired Entity
agree that neither party has 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 covenants to be performed after the
Closing by both the Acquiring Fund and the Acquired
Entity, and the obligations of the Acquiring Fund in
Article 9, shall survive the Closing. All other
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 and shall terminate on the Closing.
12. TERMINATION
This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at
any time prior to the Closing Date by resolution of
either the Acquiring Fund Board or the Acquired Entity
Board, if circumstances should develop that, in the
opinion of that Board, make proceeding with the
Agreement inadvisable with respect to the Acquiring
Fund or the Acquired Fund, respectively. Any such
termination resolution to be effective shall be
promptly communicated to the other party and, in any
event, prior to the Closing Date.
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 the
Acquired Entity and the Acquiring Fund; provided,
however, that following the meeting of the Acquired
Fund shareholders called by the Acquired Fund pursuant
to paragraph 5.2 of this Agreement, no such amendment
may have the effect of changing the provisions for
determining the number of Acquiring Fund Shares to be
issued to Acquired Fund shareholders 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
Acquiring Fund or the Acquired Entity, at its address
set forth in the preamble to this Agreement, in each
case to the attention of its President.
15.
HEADINGS; COUNTERPARTS; GOVERNING LAW;
SEVERABILITY; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article 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 may be executed in any number
of counterparts, each of which shall be deemed an
original.
15.3 This Agreement shall be governed by and
construed and interpreted in accordance with the
internal laws of the State of New York.
15.4 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 parties. 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.
15.5 The Acquired Entity Declaration is on file
with the Secretary of State of the Commonwealth of
Massachusetts. Consistent with the Acquired Entity
Declaration, the obligations of the Acquired Entity
with respect to the Acquired Fund entered into in the
name or on behalf of the Acquired Entity by any of its
Trustees, officers, employees or agents are made not
individually, but in such capacities, and are not
binding upon any of the Trustees, officers, employees,
agents or shareholders of the Acquired Entity,
personally, but bind only the assets of the Acquired
Entity belonging to the Acquired Fund, and all persons
dealing with any series or funds of the Acquired
Entity must look solely to the assets of the Acquired
Entity belonging to such series or fund for the
enforcement of any claims against the Acquired Entity.
IN WITNESS WHEREOF, each of the parties hereto
has caused this Agreement to be executed by its duly
authorized officer.
▇▇▇▇ ▇▇▇▇▇ PARTNERS CALIFORNIA
MUNICIPALS FUND, INC.
SALOMON FUNDS TRUST, on behalf of
its series SALOMON BROTHERS
CALIFORNIA TAX FREE BOND FUND
By:
________________________________
By:
________________________________
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Solely for purposes of paragraph 10.2 of this
Agreement:
▇▇▇▇ ▇▇▇▇▇ PARTNERS FUND ADVISOR, LLC
By:
Name: R. ▇▇▇ ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
SCHEDULE 4.1
NONE
SCHEDULE 4.2
NONE
3614531.1
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